I consider myself privileged to have been born at the right time.
I arrived ten years into the post-war phenomenon that would later be called the Baby Boom. It was a time of growth, change and opportunity. Although I was blissfully unaware of it at the time, my parents were the manifestation of unprecedented social mobility. I was born in a council flat in Aberdeen, yet just five years later we were living in a 1930’s semi in the posh end of Whitley Bay with two cars on the drive. Both parents had careers so I was looked after by my gran. I remember the excitement at the arrival of a twin tub washing machine and thought all my Christmases had come at once when we acquired a radiogram that had an autochanger on the record player.
A 45rpm single took most of my pocket money, so in the mid 1960s I had to make tough weekly choices between the Beatles, the Rolling Stones, the Four Tops and the Supremes. Today they would call that a form of child abuse. Only in later decades would I realise that my good fortune extended to growing up in the halcyon days of pop music. It was also the beginning of habits that have stayed with me, including delayed gratification i.e. saving four week’s pocket money to buy an album and buying ex juke box singles with a plastic centre for two and six.
When I went to university they paid me rather than sending me a bill for £9,000 a year. It may only have been £50 a term, but we hadn’t discovered coffee culture back then so I wasn’t forced to blow it all on a round of cappuccinos. When I dropped out of uni there were plenty of jobs to go to which did not require a degree. To my eternal shame, I must confess that my first job was with HM Inland Revenue, followed by everything from managing a Visionhire TV rental shop – those places went the same was as Blockbuster would a decade or two later – to being a driving instructor with the British School of Motoring in Camden Town.
The pain of being paid £1.90 an hour while people tried to kill me forced me into a proper career. I applied to join the IT department at the Daily Telegraph in Fleet Street. To my amazement I passed the aptitude test but thought I’d blown it when the boss looked at my CV and said ‘mm, you’ve had a chequered career!’ Thankfully, his next words were ‘I like a man with a chequered career’ so I was in. Thus began a twenty-five year career that ended with a global director role running a software division of the American giant Texas Instruments. It would take three redundancies in nine years to make me jump off the corporate leader and buy my first business, something I now wish I’d done a lot sooner.
If you’ve stuck with my trip down memory lane this far, I promise you there’s a reason for it. I don’t believe that Gen Z has the same opportunities that I did, and I think that colours their attitude in a way that portends trouble ahead. I grew up in an era of huge economic growth which in turn led to the social mobility that I and my parents took full advantage of. My first home cost three times my annual salary. Today its closer to ten times. I began my career with no degree and no debt – today’s graduates are in hoc for £45,000 or more. And there are so many of them that the graduate premium has been steadily declining.
When I started work artificial intelligence meant a desktop calculator, not a set of supercomputer algorithms that could replicate the knowledge of a top lawyer or a robot that can mimic the intricate work of a brain surgeon. What do careers advisers tell school leavers today? Become a social media influencer? Become a failed politician, have an affair then go on I’m A Celebrity?
A few years ago we brought one of Americas top demographic analysts, Harry Dent, over to the UK to speak at one of our live events. The trends he pointed out have only become more marked since then, and they combine with the forecasts in the book I keep telling you to read called The Fourth Turning to put the crisis period we are now entering into sharper focus. You can’t have economic growth without population growth. The problem is, developed Western nations are simply not having enough babies. Just to replace ourselves we need the average figure to be 2.1 births per woman, Right now the UK barely reaches 1.5. The only other way to increase the population is through immigration, and we all know what a hot potato that’s become. Japan has never been immigrant-friendly and its birth rate is just 1.38, while Taiwan has more than a Chinese invasion to worry about with a birth rate stuck at 1.07.
Another big trend we’ve seen that’s been helped along by the pandemic is a changing attitude towards work. My generation had a work hard, play hard ethos that meant long days in the office followed by a few beers with colleagues. Sometimes work commitments crept into the weekend especially if your role involved a lot of foreign travel. Today, work life balance is all important and is reflected in fewer people than ever choosing to be economically active. 22% of UK citizens who could work now choose not to. It’s not as bad as the United States, where 38% have decided that Making America Great Again doesn’t need to involve any effort on their behalf.
My generation has benefited from major advances in healthcare such that we can live a lot longer than our parents and grandparents. We’ve also got relatively generous company, private and state pensions to keep us afloat in retirement and we’ve ridden property values up to their current bubble territory for the last five decades. Governments know that there are a lot of us so we receive vote-winning bribes like the triple lock on state pensions, winter fuel allowances and bus passes.
All of which means we have more people living longer and receiving higher benefits while being economically inactive. A growing army of inactives which has to be supported by a declining working age population. The result? The highest tax burden for 80 years with much of the pain falling on the middle class. I can relay these facts with a clear conscience as I have no intention of retiring and my bus pass wouldn’t work here in Portugal.
But you can see why a simmering, cross generational resentment is growing and why it’s likely to only get worse over the rest of the 2020s. Current UK GDP growth is 2.4% and that’s only likely to fall next year. If you want GDP growth above 6% just three nations are open to you – Saudi Arabia, Argentina and my tip for the top, India.
So what does the future hold for young people in the West today? A shrinking workforce paying higher taxes to support ever more over 65s is clearly not sustainable. No wonder two thirds of GenZers think they’d be better of living under a socialist or communist regime. The maths is simple. In order to have more, we need to produce more. The measures of what we produce are overall GDP and, perhaps even more important, GDP per capita. Liz Truss and Kwasi Kwarteng understood this. Every measure they announced was designed to incentivise growth and productivity. Yes, they went too far in announcing unfunded tax cuts. But look at what we’ve got in their place. I can only describe the direction of current policy as managed decline. We’ve been living beyond our means and funding it with almost free money as emergency interest rates were kept in place for over a decade.
Countries face the same choice as businesses – you’re either growing or dying. With every growth oriented policy snuffed out, it’s clear which path this government has chosen. It’s hard to imagine a Starmer-led Labour government being more pro-business and pro-growth than the nominally Conservative incumbents, so is there anything that can be done to reverse this slow train to oblivion? Yes there is.
We need to harness the science and technology of our universities with a better approach to entrepreneurship that sees value creation remaining in this country rather than being sold early to foreign bidders. We need new political leadership that remembers where improved living standards come from and who the real wealth creators are. We need to re-discover our work ethic at every level of society and we need articulate champions for the cause of capitalism who can explain to a jaded yoof how we got to where we are today in the post war world. Don’t shoot the messenger, but if you want more than managed decline you’re going to need to work harder and smarter to succeed. Here at Beaufort we keep coming across clever people with exciting new technologies that can make the world a better place and make a lot of money while doing so. These are the people who give me hope and reason to get out of bed in the morning.
Remember, you only asked me if it’s possible to reverse the current trend. You didn’t ask me if it was going to be easy!