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The Republicans



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Rediscovering the Great British Republican Tradition


For a Civic and Constitutional Republic



Issue No 56 Friday 05 March 2010




This week 


·        Intergenerational Conflict Is Wrong - The Young Must Not Blame The Old For Their Problems

·       The Ideas That Captured Thatcher Are Actually A Very Strange Mutation Of Capitalism


News Stories

Highlighting news stories important to the Civic Republican view, particularly those that are overlooked or little covered in the main media.





·       Intergenerational Conflict Is Wrong - The Young Must Not Blame The Old For Their Problems


The really interesting stories in the media are often those that deal with long term issues rather than immediately topical ones. BBC’s Newsnight yesterday (Thursday, 4th March 2010) looked at the so-called generational divide whereby the “baby boomers” (people born in the decade or so following the Second World War) are said to have had everything easy and everything free and that subsequent generations, particularly the present young generation, will be picking up the tab. Young people today are having to pay for everything (such as higher education) and will get nothing (such as state pensions) back.

Now if we are really going to see the society in which we live divided in this way, along generational lines, then the prospects for general happiness and harmony are bleak indeed. The Newsnight edition showed two opposing groups facing each other like opposing parties in a political debate. On the one side were three, now aging, boomers and on the other three people in their twenties. The representatives of the young were clearly extremely alive to what they considered the disadvantages of their generation and the prospects of a hard economic life ahead. They saw the three oldsters facing them as beneficiaries of a benign economic and social world where society had provided them with free education and state pensions – things that were totally removed from their experience. The older representatives were defensive and equivocated on the real measure of universal benefit that their generation had received and pointed to the tough economic crises which they had lived through.

The question of house prices reared its ugly head. At least one of the young representatives felt he had no hope of ever owing a house and the enormous rise in house prices during the adulthood of the people opposite he presented in sharp contrast to his own position in relation to the property ladder.

But what made the discussion confrontational at times was that the young generation representatives clearly saw matters in terms of a zero sum game. The older people had benefited and were leaving a malign legacy from which the young would suffer for the rest of their lives. Even the current banking crisis was blamed on the old for, after all, it happened on their watch. And whereas they may have benefited from the boom in the run up to the bust, it was the young who would pick up the pieces with austerity and high taxes for the foreseeable future. One of the young participants went so far as to say that, as he was having to pay for his education, it was only reasonable that the middle aged people sitting opposite should now belatedly pay for theirs. This suggestion predictably fell on deaf ears.

The problem with this kind of debate is not just that it is horribly divisive but that it is based on premises that are plain wrong. The generations may be encouraged to feel that their interests fall on different sides of the fence but in reality they don’t. There is resentment; that is clear to see. But this is based on a fundamental misreading of what has really happened in the economy since the war and of what the social shifts, that have accompanied this economic change, really mean.

The factor that was missing from the Newsnight discussion, and the one that never plays into the so-called generational debate, is the matter of debt – private and public debt. The reason why the post-war generation were and are better off than the present young generation is quite simply that individuals and the nation had far less debt when they were young. You know from running your own personal finances that if you have little debt you have more to spend and more to save for the future. It is completely false to imagine that somehow the baby boomers borrowed from today’s young to finance a profligate lifestyle. Present day private and public debt has arisen not because the baby boomers borrowed from the future generations but because the banks lent to them. To understand the difference you need to understand where debt money comes from in our economy, and why debt is now so catastrophically high.

Take government debt. Now we know that this has increased dramatically over the last two years to bail out the bust in the banking industry. But that is just the knife being twisted in the wound caused by a public debt that has been accumulating for decades. Under the economic model that is currently used. Public debt in “normal” times is inevitable because of the need of the economy to have more liquidity. Government debt plays a crucial role in providing this liquidity for if the government owes it must have spent and that spending means money flows into the economy.

Now take private debt. Private debt accumulates because people simply do not have enough money in their pockets to live in the way that most people expect, and have a right to expect, these days. Furthermore, central to the amount of private debt we have is the amount we spend on property – on our houses and flats. This has gone up and up with the increase in property values which, in spite of some recent slippage, remain at absurdly high levels. Consequently, people now trying to get onto the property ladder have to pay an absurdly high premium to do so. Such people are, above all, the younger generation and so they feel they are paying for the gains made by the older one.

But the biggest gainers from the rise in debt are those that collect interest. This may sound again like an intergenerational payoff as it is the old who are more likely to have savings and so it might be thought that it is to them that the transfer from the young occurs. But if you ask a saver these days about return on their money this is likely to be greeted with a hollow laugh. No, the real beneficiaries of the high debt levels are the financial institutions.

The notion of the generational divide that was so clearly depicted in the Newsnight discussion is a damaging distraction away from the real culprits for our lack of money to pay for a good life and good future for our young. If you just stand back from the problem and reflect for a moment, there has to been something wrong with the way we are running the country and its economy. We have seen great technological advance during the lifetimes of the boomers. And, in spite of ill-advised military adventurers, we have not suffered the ravages of total war. Crucially, in spite of everything, we still live in a society with a functioning democracy, law and civil society. So why cannot we provide for the future? There has to be some explanation that goes beyond expressions of despair and the need for further hardship and belt tightening.

We do not have to look very far. The culprits do not hide under a bushel. The vast wealth that they extract from our government and our citizens is staring us in the face. Our politicians are too timid to stand up to them and in any case believe that their interests align with them. International corporate finance has for decades and centuries been sucking the life blood out of our economy and its genuinely productive companies and individuals. By fighting amongst ourselves in generational debates we are only serving the interests of those who have no interest in us.

But we have to come to an understanding that we do not need the usurious money created by private banks. The people, through their government, can and must create their own democratic sovereign money. To do that we only have to recognise that we have no need of the City of London’s accounting chicanery, their snake oil salesmen, and their Ponzi money.

Let us put the blame for our indebtedness where it really lies. It is the greatest and most damaging error for young people to see the destructors of their future life as being their parents and grandparents.


Recommended of the week




  • The Ideas That Captured Thatcher Are Actually A Very Strange Mutation Of Capitalism

Documentary film maker is always interesting in his regular blog. Here he gives his take on the Great Banking Crisis



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