Austerity and Abundance Special:
In the Age of Abundance, politicians could promise the earth. Kenneth Baker asks, how will they fare in this new Age of Austerity?
Frances Weaver gives a graduate's perspective that is not all doom and gloom
Welcome to the Age of Making Do
The Age of Abundance is dead; the Age of Austerity has begun. The Age of Abundance (1980-2007) was a unique phenomenon in which wealth was created and spread on a scale unprecedented in the history of the world. Huge prosperous middle classes emerged in China and India, and many other underdeveloped economies; life expectancy shot up; college and university became the norm for millions; and all this against a background where a war between the two major power blocs became inconceivable. “Bliss was it in that dawn to be alive/But to be young was very heaven.”
In Britain and other Western economies a comfortable old age moved from being a dream to being a reality for most. Life was made infinitely more comfortable by affordable technology in the kitchen, the office and the home. Car ownership shot up and the industries supporting it produced graphs that pointed forever upwards. A generation whose parents might never have gone beyond a Butlins holiday camp went to sunny, exotic and romantic places, some even unheard of 30 years earlier. Home ownership became a right for hundreds of millions, but unfortunately it also became their Achilles’ heel.
Governments and politicians flourished in the Age of Abundance since they could offer a cornucopia of rising expectations. Promises of a better future “dropped from their pockets like plates” and the promises became even more ambitious: the abolition of child poverty; inflation-proof pensions for all; and a university place for every other child. These were a great advance on “a chicken in every pot”, but it will be infinitely more difficult for governments and politicians to address the inevitable constraints of an Age of Austerity, where falling expectations will be the norm.
As so often happens in the history of the world, people are in advance of their governments in responding to change – they have already started to tighten their belts. Skiing holidays have been cancelled, home improvements postponed, old cars kept going and gym subscriptions dropped. This year, Skegness instead of the Adriatic beckons. Fewer are flying first- and club-class – 20 per cent less, according to British Airways – and the head of every private school has a list of pupils withdrawn. There can be no one who does not know of someone who has lost their job. Applications to go to university have increased as young people postpone the time when they may have to join the ranks of the unemployed.
This spring, a popular book on mail order has been Fix It, Clean It and Make It Last: The Ultimate Guide to Making Your Household Items Last Forever. It’s full of useful tips. To make your liquid soap dispenser last longer, fill it with water when it is half empty. To make your batteries last longer, file both ends with an emery board. Cola stains can be removed not by dry-cleaning but by applying white vinegar within 24 hours. Don’t buy expensive aromatherapy oils – just add two teabags with a couple of orange slices to the bath. And there are tips on how to iron your trousers, something that anyone who has done National Service doesn’t need.
This book is in stark contrast to the magazine published by the Financial Times called “How to Spend it”, where you have a choice of watches starting at £25,000, a real snip of a yacht for £10 million and, to keep your girlfriend happy during the recession, some earrings for £170,000. But the Age of Bling is dead. Conspicuous consumption is an insult and will only exacerbate social tension. In this new age the FT should bring out a magazine on “How to Get it” and then a second on “How to Keep it”.
The British people are scrimping and saving in order to survive. The British government is doing the opposite, splashing out, hoping that by spending more the recession will be halted. Not a week passes without Gordon Brown announcing a new spending gimmick – the cost doesn’t matter, budget deficits are in, and the next generation can pay. There is a complete disjunction between the psychology, the instincts and action of the people and those of the government. The cry is that if only the banks would lend more and the public buy more as they did in the Age of Abundance then the black clouds would roll away and we would bask in the bright, sunlit uplands. This is a delusion for it fails to recognise that there will be much less economic activity in the years ahead – less will be made and less will be bought. Downscaling is going to be very painful.
A recent report from PricewaterhouseCoopers has shown how painful. In March 2008, the Budget deficit for this year was forecast to be two per cent of GDP. In November 2008, the Chancellor of the Exchequer, Alistair Darling, increased it to eight per cent and it is now likely to be 12 per cent. This will lead to a fiscal gap of £175 billion in 2009-2010-how can that be met? One way would be a cut in all public spending of 1.4 per cent a year. That seems very little but it has never been achieved over the last 40 years. If health and education spending is protected, then the cuts for police, prisons, defence, local government and the environment would be three per cent. The other prospect is significant tax increases. Both government and opposition must face up to the deep problems of the new Age of Austerity. Every part of government expenditure should be questioned. Do we need two aircraft carriers or even one? Why are we sending troops to Afghanistan when the major source of instability has moved to the tribal areas of Pakistan? How can the state meet the increasing demands of an ageing society and the cost of expensive life-saving drugs?
The private sector is already responding to lower economic activity by reducing pay; four-day working weeks; pay freezes; 15 per cent cuts with no redundancy. Will the next round of public sector pay start with a freeze or a cut? Ireland cut public sector pay and Dublin marched. The disparity between pensions in the public sector and the private sector with its devastated pension pots is now vast and seen to be totally unfair. A start should be made by the new MPs after the next election entering a new pension scheme based upon direct contributions-they must give a lead.
In this Age of Austerity, people know that they are in for a long haul. As there are no quick fixes they want burdens to be shared fairly, a return to financial probity and common sense, savings to be rewarded and not penalised, past mistakes to be recognised and learnt from, more modesty and no false hope.
We’ve Never Had it so Good
Many older people assume that someone in my position – a 22-year-old girl who graduated from university last June – would be getting quite a shock as I enter the job market. And yes, the “real world” is certainly grimmer than I’d anticipated at university (and even there, during the “Age of Abundance”, I’d slightly dreaded the prospect of trying to get a job).
Friends who had secured jobs with banks in their last year of university have been told to go away and come back in a couple of years when conditions have improved. Others are living on expenses as they move from internship to internship, hoping that a permanent position will open up somewhere. So much for the idea that life would be pretty cushy as long as you got a decent degree – after all, if things didn’t work out, then you could always sell out to the City.
But for those of us lucky ones who have somehow managed to snatch at a job and hang on to it, the Age of Austerity has an almost carefree atmosphere. In fact, things are pretty great, if you know how to manipulate the situation. Most restaurant chains are advertising two-for-one meal deals and so you can’t dine out without spending half the money that you used to. Consequently, instead of keeping the money that I’ve saved for a time when I might need it, I’m dining out twice as much – it’s the credit crunch, you’ve got to have some fun to take your mind off the doom and gloom.
And I’m doing this in newer clothes. Since the early sales hit the shops last November, they don’t seem to have stopped, and a girl must take advantage of the deals while she can. After all, who knows when the recession will end and the Age of Abundance will return, with its unaffordable clothes? Bling isn’t dead, it’s just half-price. There are special credit-crunch nights at nightclubs, with discounted entrance fees and happy hours, and constant deals on theatre tickets. The other day, I even extravagantly made credit-crunch champagne cocktails at home because the local off-licence was selling bottles at around half-price. This young person has never had it so good – at least for now.
And ultimately, the recession provides a nice excuse for new graduates to faff around for a bit. Without the same range of opportunities to get a well-paid and stable job, the pressure has been taken off us. We can try out lower-paid jobs in areas that we’re passionate about without having the stress of wondering where our career is going: the recession has provided the excuse for us.
This isn’t about being well-off-most of my friends are slogging away in bars or taking temporary local office jobs to earn money so that they can go to drama-school auditions or do unpaid work in the field of their choice. And they can do this without feeling that they’re wasting time by not getting a well-paid and steady job, because during a credit crunch no one expects you to be doing that well anyway.
So maybe the Age of Austerity is more like the Age of Opportunism for the younger generation. It’s certainly a time to sit back and enjoy the discounts while you can. And if everything becomes too much then I can always get a short-term job, save up some money, take a cheap flight and go travelling – I’m sure I won’t be missing much.