Europe's War Between the Generations

A theme of this blog is trying to predict the future. It is difficult under the best of circumstances. My prediction of the Chinese economy being headed for a crash, for example, has yet to be vindicated. But in "The Welfare-State Squeeze," I wrote the following in 2005: "Population aging there [Germany, Italy, France] means a future of diminished expectations and intergenerational bitterness." The argument was that welfare-state spending will in aging nations more and more crowd out other public spending, including that which would benefit the young. Instead, they will be hit with a gigantic tax burden.

Now William Underhill and Tracy McNicoll write that fundamental resentment of the old by the young has arrived:

It's election time in France, and the promises are flowing fast. If you believe the candidates, young voters are in line for a fat slice of state largesse, no matter who wins the vote. On offer from Nicolas Sarkozy, the right's presidential candidate: interest-free loans for young entrepreneurs and a €300-a-month allowance for training. Not to be outbid, his rival, meanwhile, the Socialists' Ségolène Royal, has pledged more housing, €10,000 loans and guaranteed jobs or training after six months of unemployment. As Royal told a party rally last week: "As a mother, I want for all children born and raised in France what I wanted for my own children."

They now seem unlikely to get it. Young adults in France, like their contemporaries across Europe, face a slew of problems never experienced by their middle-aged leaders. Consider: a 30-year-old Frenchman earned 15 percent less than a 50-year-old in 1975; now he earns 40 percent less. Over the same period, the number of graduates unemployed two years after college has risen from 6 percent to 25 percent, even if they typically have better degrees. Thirty-year-olds in 2001 were saving 9 percent of their incomes, down from 18 percent just six years before. Young people who snag stable jobs, gain access to credit and buy homes later in life are particularly angry that the older generations continue to rack up public debts for which they will get the bill. And they are very skeptical of the pledges of boomer-generation politicians. "If all this were financially possible, it would have been done long ago," says Clément Pitton, the 23-year-old leader of Impulsion Concorde, which recently circulated a petition declaring "We will not pay your debt."

The whole article is worth a read if you care about Western Europe and its future.