131022debt

The Guardian has an article today about an index that purports to measure intergenerational fairness, according to the alittleecon blog:

“Young people face a steeper climb to achieve the lifestyle of today’s baby boomer generation, according to an index measuring intergenerational fairness which recorded a rise from last year.

“The declining affordability of housing for the under-30s accounted for the increase alongside a rise in government debt, which future generations must pay.”

The blog states: In response, economist Bill Mitchell has written a great blog questioning some of the indicators used to build the index, in particular the government debt measure, which Mitchell argues in no way places a burden on future generations. The blog is excellent but a little long, so I thought I’d just quote some choice sections here:

“…the inclusion of public debt and unfunded pension liabilities for government workers in the index are based on a misunderstanding of what actually will burden the future generation.

“The fact is that the current government has as much ‘money’ now as it had yesterday and the same amount it will have tomorrow. That is, it has whatever it wants to spend. It always has that. It has no more or less capacity to spend today because there were surpluses in the past than it would have if there had have been deficits in the past.

“The implication of the IF Index components is that fiscal surpluses provide more spending capacity in the future or lower tax rates. That is plain false.”

You should go to alittleecon and read the rest.

The article finishes on a disturbing note. Quoting the Mitchell blog, it states: “The best thing this government can do to prevent entrenched disadvantaged among our youth is to ensure they have work now or are in education and training programs.”

Isn’t that exactly what this government would say it is doing? The fact that the work doesn’t pay enough, and the education and training programmes are profit-making schemes for employers, rather than real education and training, doesn’t come into current thinking at all.

Your comments are invited.

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