It has been too long since i last wrote something – apologies. Will try harder.
The resolution foundation’s report on inter-generational fairness was released earlier this week, it has certainly caught attention. Having taken some time to read it and reflect on it, whilst reading what everyone has said on it – there is, for me, something about the report in that it seeks to do a lot whilst being somewhat limited in how. Yet this should not in any way detract from the more fundamental issues the report highlights.
At its core it reflects the pivot in public policy discussion away from reform of structures in an era of austerity to policies which break with our recent history and suggest a more proactive role for the state in addressing structural issues. For me, aside from the headlines of giving people £10,000, the real crux of the research is the evidence that the burden of goods and services which where once public have been shifted from the state and communities to households. This point was made by one of the commissioners Duncan Weldon via social media and i couldn’t agree more, but this creates an additional problems.
Firstly, public goods are defined by their non-rival and non- exclusive benefits – that is to say that the consumption of them doesn’t diminish the amount left for others and there is an open access defined by law. Whilst proposing a direct transfer (among other suggestions) between the generations there is a chance that this principal is eroded bearing in mind the myriad of potential ways each unit of £10k could be spent. In essence, if someone can take there wealth and spend it in a variety of ways, then the associated outcomes will vary – this potentially means that the total volume of unfairness is reduced whilst specific inequalities between groups emerge based on how they choose to use their £10k.
For example, if one chose to invest that £10k in a deposit versus another choosing to pay for a year of their degree, both are benefitting and making an active choice but the long-term returns on £10k will vary massively.
Secondly, the transfer of wealth into revenue means the effective confiscation of a part of private property by the state and limiting the transfer of wealth between generations within families. This raises questions about the extent to which the state can address such inequalities through an enforced inheritance that is held at communal or societal level.
No-one can really ignore the difficulties which millennials face, but it may not require such an extreme adjustment in the foundation principals of private property. That said, this is not necessarily a problem if capital accumulation is lead primarily thought the development of intangible assets rather than physical assets in which case the principal of Private property hasn’t been eroded because the asset in question remain intangible, however the long term benefit of such a scheme is likely to diminish in the face of shifts in ownership within families (what is to stop a family transfer the propriety to someone at the requried age so they acheive captial ownership and £10k – the point maybe specific but goes someway to demonstrate the legal extents which any legislation would need to pass).
A third issue, is that the creation of future wealth relies upon the investment of revenue and a level of return which is created, in part, through productivity gains. (Chris Giles has written something similar in the FT) Whilst the report talks about the need for additional training for technical and vocational and proposes the resources for this, it doesn’t take the central point of how such a wealth transfer could be used to fix systematic inequalities that would potentially create greater capital ownership later. If we invested £10k per 16 year old to support initial training and technical education, this could create a step change in lifting educational achievement by removing a cost pressure that can lead those without the economic means to leave at level 2, rather than level 3. A more extensive argument could be to target £30k of resource at people from the polar 4 postcodes, focusing that on covering the cost of education up-to masters level. Such an idea isnt new and has most recently been suggested as a National Learning Endowment by researchers at UCL.
In essence, the resolution foundation has once again created the context for a debate which is needed. My concern is that in the headwinds of Hurricane Brexit and the emerging eclipse of a new spending review the policy ideas need to be based on resource we already have and using them in new ways.
A learning endowment funded through the under-spends on adult learner loans could be a solution targeted at certain students, postcodes or categories (such as ex-offenders) and would give them the access to sort of investments that will given them the access to their own capital.
Crucially, it would encourage adaptation at a change in the structure of productivity affected by automation and new digital impacts, simply transferring wealth into a restricted yet broad set of expenditures may only delay the impact of these trends on households.