We never had it so good!
Today’s news: Lord Young quits over ill-advised remarks. Nothing too serious, just the suggestion that he might be out of touch with reality. The prime minister’s failure to back him over such a small matter could be seen as casting a biblical first stone.
Lord Young is reported as saying most Brits never had it so good as during the recession. He seems to have been talking about money and what it can buy, so I’ll do the same.
Is he right? Unlikely. But does he have a point? I think he does. He referred specifically to mortgage holders, and it’s true that zero interest rates and money printing have been a huge gift to them. Though unemployment has risen (and underemployment probably more so), the vast majority still have jobs, and those with mortgages have been handed a windfall. Indeed, with government help for mortgage holders set at a much higher level than interest rates, one could argue there has never been a better time to lose your job.
What about those of us without a mortgage? They’ve robbed our future to hand out this largesse, they’ve devalued our currency (and hence our earnings and savings), they’ve raised our taxes. But in an era of both essentials (except housing) and consumer goods at near-zero cost, falling house prices leave us better off too – except those who own outright and therefore have everything short of Larry Ellison’s yacht. Where’s the downside?
Maybe a student running up unavoidable debts could point to a downside. They’ve gained nothing from gifts to mortgage holders. Neither are they in the market for cheaper houses. Only the future affects them, and it’s a future of devalued earnings and higher taxes compared to … well, compared to what? Actually compared to the bubble they’re not so badly-off either, because they too stand to benefit from lower house prices sometime in future.
Therein of course lies the answer. Compared to the bubble we are indeed better-off. Compared to pre-bubble times, or even the relatively-harmless dotcom bubble and bust, we’re ****ed. The bubble has damaged us (nearly) all as our resources were misdirected into unproductive speculation. Not only our wealth, but future wealth and imaginary wealth borrowed into existence, eventually busting the banks. That, not the money-printing that followed, is what destroyed our incomes and savings. A classic case of bad money driving out good.
When did we have it better? Maybe the mid to late ’90s to the turn of this century, when only slightly more expensive essentials and consumer goods were offset by cheaper houses? As against that, we’re better off for modern LCD displays saving the eyes, mobile connectivity, e-readers that give everyone the chance to own a library, a host of gadgets. Yes, Lord Young has a point even there.
The only thing that’s not in doubt is that we would be better off now if we’d never had the bubble. Never as a society lived beyond our means, and handed our wealth to a new generation of spivs.