All Hail Our New Austerity Overlords

Niall Ferguson takes to the BBC to lecture the Millenials on the "benefits" of austerity and why they should buy into now.

"Society," says Burke, "is indeed a contract. The state is a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born."

In the enormous inter-generational transfers implied by current fiscal policies we see a shocking and perhaps unparalleled breach of precisely that partnership.

I want to suggest that the biggest challenge facing mature democracies is how to restore the social contract between the generations.

But I recognise that the obstacles to doing so are daunting. Not the least of these is that the young find it quite hard to compute their own long-term economic interests. 

It is surprisingly easy to win the support of young voters for policies that would ultimately make matters even worse for them, like maintaining defined benefit pensions for public employees.

If young Americans knew what was good for them, they would all be in the Tea Party.

To an extent, Ferguson is correct:  Americans under 40 should buy into the notion of Austerity Uber Alles because that's what the Boomers are going to inflict upon them anyway as they approach retirement.  The only way this works is if the Boomers vote for it, and any vote of that nature will of course not change anything for ten years or so, meaning anyone born up to 1955 or earlier will get full benefits.  Anyone after?  Well, hope you enjoy the Tea Party and squabbling over if roads, schools, public safety, and government should even exist.  Boomer voters still hold an outsized chunk of the electorate, so they'll vote themselves the spoils and leave the rest of us the check and a brave new world of "privatized" care at the tender mercies of insurance corporations and their profit margins.  Meanwhile, the savings on this will all go to tax cuts for the "job creators" of course, necessitating further cuts down the road as deficits fail to close...

What Ferguson is advocating is surrender and grim resignation to the fact that it's very likely that my generation and anyone younger than myself is going to get thrown in the incinerator, so we might as well get used to the economic conditions of 2012 and assume they will continue for the next 40 or 50 years or so.

Have a nice day.