Heroes: Millennials vs Baby Boomers

 

‘Television man is crazy 

Saying we’re juvenile delinquent wrecks’ 

 
 

Before we get to the crux of the matter, let’s deal with Sunak, Johnson, WhatsApp, and the covid enquiry. 

 
By way of background, the PM and the Cabinet Office are seeking a judicial review of the demand by the inquiry chair, the retired judge Heather Hallett, for full access to phone messages and other documents from Johnson. 

Their reasoning was explained by Sir James Eadie, the barrister who in his role as first Treasury counsel advises ministers on the law: ‘The compulsory powers conferred on inquiries by the 2005 [inquiries] act do not extend to the compulsion of material that is irrelevant to the work of an inquiry‘. 

In addition, the government is keen to avoid precedent for the future. 

Hallett vehemently disagrees and it will now be up to the high court to decide, a decision likely to take weeks even in the expedited hearing sought by the government. 

Johnson has made it plain he is very happy for the Cabinet Office, to which he handed his diaries and notebooks and WhatsApp messages, to be passed these to Hallett in full. Johnson further upped the ante, saying; ‘You have quite properly decided to leave no stone unturned in your search for the truth about government decision-making during the pandemic.’ 

However, in true Johnson style, he only has access to WhatsApp messages from May 2021 onwards as earlier ones are locked in a phone he was advised to never turn on again after the number was leaked. 

Johnson actions have stripped away the veneer of supposedly disinterested justification that Sunak had applied to his application for a judicial review, of Hallett’s insistence on seeing everything. Sunak can no longer claim to be defending the privacy of a predecessor, because the predecessor is happy to reveal all, well, some at least. I suspect the best bits are on the ‘locked’ phone. 
 

‘For the enquiry to have any merit it must be above politics and self-interest’

 
For the enquiry to have any merit it must be above politics and self-interest. The best arbiter of what the inquiry should or should not see is the inquiry itself, rather than one of the institutions or individuals under examination.  

Other than traveling by air whenever possible, the other thing Sunak likes is to be right! The word often used to describe him is ‘technocrat’, a term more commonly used for politicians who try to modernise countries, for example Mario Draghi in Italy. Technocrats are generally seen as clever, rigorous and a bit aloof, but practical rather than ideological.  

There is, however, another side to Sunak; his government is proving just as extreme as those of Truss and Johnson. In its legislation, rhetoric and more hidden manoeuvres against strikers, protesters, lawyers, refugees, civil servants, the BBC and any group that displeases the Tories or their supporters, the Sunak administration is enthusiastically continuing the Conservatives’ post-Brexit journey to the dark-side. 

Technocrats and democracy are not easy bedfellows. Technocratic government is usually about a small number of experts, full of their own self-importance, thinking they know best how to solve a country’s problems, which others are then told to follow. For example, President Macron, in his hugely controversial attempt to raise the French pension age by presidential decree rather than a vote in parliament.  

Historically, there is a crossover with right-wing  dictatorships, such as Franco in Spain and Pinochet in Chile, who were eagerly served by technocrats enjoying the absence of democracy and the existence of a police state as ideal conditions in which to conduct socially disruptive economic experiments.  
 

‘Other than traveling by air whenever possible, the other thing Sunak likes is to be right!’

 
Perhaps, a better word for Sunak’s style of government is authoritarian, which goes some way to explaining the Tory’s unpopularity with millennials.    

Authoritarian might explain ‘how’ the Tory’s govern, but it is the ‘what’, I.E., their policies, that have disenfranchised younger voters. 

The Tory’s sell themselves as being the party of low taxation, but taxes are the price we pay for living in the society we want. Put another way, you can’t have Scandinavian-style public services and ‘low’ taxation. 

Tory policy is self-serving, they look after their own. If you don’t vote Tory you don’t count. Which is why we have the multimillionaire Tory MP Nadhim Zahawi campaigning to scrap inheritance tax, on the grounds that taxing the unearned income of rich people’s children is supposedly a ‘spectre that haunts‘ us all.  

As quoted in last week, ‘Could the UK Swing Further to the Right?‘,  millennials are poised to overtake baby boomers as the biggest electoral grouping. And, unlike previous generations they aren’t becoming more right-wing as they age; only 21% are reputed to be voting Tory at the next election.  
 

‘millennials are poised to overtake baby boomers as the biggest electoral grouping’

 
The centre-right thinktank Onward reports that millennials are in favour of government redistributing income (as opposed to people keeping more of their own money) and they prioritises taxes over social justice.  

This is primarily because, compared with previous generations at the same age – or older people now – many of them really do pay higher marginal tax rates. Or more accurately, they’re paying what feels like an extra tax, for example student loans at usurious rates, currently RPI (11.4%) plus 3%.  

If you commuted that into a tax, by the end of last year, young graduates were facing a marginal rate of 41% for basic-rate taxpayers or 51% for higher-rate ones. That’s before they have to worry about s expensive childcare, soaring rents and the unlikely prospect of ever being able to buy a house, plus the same painful food and fuel inflation everyone is experiencing. In short, even before housing costs, a 30-year-old earning a theoretically good salary just doesn’t have the spending power of previous generations on equivalent wages. 
 

‘young graduates were facing a marginal rate of 41% for basic-rate taxpayers or 51% for higher-rate ones’

 
As Onward suggests, millennials are a new kind of voter, shaped by particular economic circumstances, as such politicians need new policies to attract them. 

We have ageing demographics meaning a shrinking tax base, coupled with decrepit public services, and an expensive but unavoidable decarbonisation programme that needs to be funded; as a result taxes should go up not down. Bim Afolami, the Conservative MP for Hitchin and Harpenden who co-authored the Onward report, argues that the answer is to cut national insurance for the under-40s and hike it for older workers. Another alternative is a wealth taxes not unlike Biden’s proposed ‘Billionaire Tax’ in the US, ending tax breaks for non-doms and VAT on school fees. 

A wealth taxes would shift the burden away from under-40s, who, in most cases, haven’t been able to build up many assets, and on to older people, who have accumulated more by dint of being born at the right time. The latter have previously enjoyed an effective veto on wealth taxes given their power at the ballot box. 

But, as Onward points out, it’s millennials who are now the biggest age cohort in just over half of British constituencies. The basic progressive case for paying your taxes remains unchanged. It’s who, and what, we tax that now must move with the times. 

Another researcher into this is Peter Turchin, a Russian-American complexity scientist, specializing in an area of study he and his colleagues developed called cliodynamics—mathematical modelling and statistical analysis of the dynamics of historical societies 

The most common pattern he presents is ‘an alternation of integrative and disintegrative phases lasting for roughly a century’. His predictions are timely as western societies, especially the US, are, as he suggests, very near the end of that latter disintegrative phase, which makes the likelihood of civil war or potential systemic collapse far more likely.  
 

‘makes the likelihood of civil war or potential systemic collapse far more likely’

 
His model considers certain factors to predict this social meltdown, such as the rapidly growing inequality of wealth and wages, an overproduction of potential elites (children of wealthy dynasties, graduates with advanced degrees, frustrated social commentators), and an uncontrolled growth in public debt. In the US, he suggests these ‘factors started to take an ominous turn in the 1970s. The data pointed to the years around 2020 when the confluence of these trends was expected to trigger a spike in political instability. And here we are.’ 

He focuses on the presence of a ‘wealth pump‘ which, after years of more equitable wealth distribution, takes from the poor and gives to the rich. In 1983 there were 66,000 households worth at least $10m in the US. By 2019, that number had increased in terms adjusted for inflation to 693,000. But while those numbers of the super-rich increased so the income and wealth of the typical American declined. 
 

‘capitalism needs to be reinvented to serve all of society, not just a privileged section’ 

 
For the US read the UK, there is little, or no difference.  

In effect, capitalism needs to be reinvented to serve all of society, not just a privileged section. 

Source for the following quotes: https://www.cnbc.com/2019/12/31/what-billionaires-said-about-wealth-inequality-and-capitalism-in-2019.html 

As  Ray Dalio, President & CIO of Bridgewater Associates said; ‘Capitalism needs to be reformed. It doesn’t need to be abandoned. So like anything, like a car, like anything, a plane, a school system, anything, it needs to be reformed in order to work better,’ as he explained why the U.S. economy is not ‘redistributing opportunity.’ 

In Dalio’s view the current situation is not sustainable; we can do it together, or we will do it in conflict, that there will conflict between rich and poor.’ 

Or, as Bill Gates said; ‘you want the proportion that comes form the top 1% or top 20% to be much higher.’ 

Somehow, the Tory’s just look very out-of-touch, with everyone except the baby boomers. 
 

‘You want more and you want it fast
They put you down, they say I’m wrong
You tacky thing, you put them on’ 

 
An unexpected bonus from Philip to kick off the week, and a really pithy state of the union address; it really feels as though we are at a political inflection point.

His well researched and very personal account, would not benefit one jot from further comment from me:

Sunak’s attempts to control the Covid inquiry typify the man. He has the arrogance born of wealth, in his case married rather than earned, and the know-it-all attitude common in [former] GS bankers. It’s no wonder he and Macron have buddied up, they are both technocrats who know best and broach no argument.

Where Sunak differs from typical technocrats is that he possesses an ideology; it is little different to Johnson and Truss, but he delivers it in a more intellectual manner.

His ideology, and that of many Tory’s, is yesterday’s solution to today’s problems. Just as Thatcherism and monetarism were something different as a way of fighting the legacy economic issues of the 1970’s, we need something similar.

In the past weeks I have stated several times my belief the Tories will win the next election, and I stand-by that prediction. They will, I fear, win by default; the “left’s vote will be dispersed too thinly, and they aren’t yet offering anything different.

Data shows the millennials are the coming electoral force, and with Gen Z even more disenchanted with the Tory’s it is hard to see the party remaining a political force without a radical reset.

Tax is at the key to all of this, it is the tool that funds government finances, and therefore spending. Spending has to increase, and from a smaller base of taxpayers. Whilst the Tory’s and their media acolytes will immediately scream “tax and spend” implying higher taxes they are being disingenuous. More tax revenues need not mean higher taxes, instead everyone should pay their fair share. Even billionaire tech moguls and hedge fund managers can see this.

If society continues to become increasingly unequal it will falter. Voters will look for solutions and be seduced by radical politicians, typically of the right. If you don’t believe me, look at the sweeping election victory’s won by Johnson and Trump; they provided an alternative that ordinary people latched onto.

Biden and others in the US have the foresight to see this and do something about it. The challenge for Labour is to tap into younger voters who are the coming electoral power. To achieve this, there needs to be new thinking, not the current reheated soup served up by “light blue” Kier.    

Lyrically, I have looked to songs that highlight youthful rebellion. We enter with “All the Young Dudes” a song Bowie gifted to Mott the Hoople. To finish Bowie’s “Rebel, Rebel”. Enjoy!

 
@coldwarsteve
 

Philip Gilbert is a city-based corporate financier, and former investment banker.

Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s

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