Margareta Pagano: It's guilt for dinner – served up by the jilted young
Sunday 05 September 2010
There's a new and noisy book just out which you must read to discover why the young and the old are shouting at each other over the supper table in a way I've not heard since those great divides over drugs'n'rock'n'roll or even the Iraq invasion.
It's Jilted Generation: How Britain has Bankrupted its Youth by journalists Ed Howker and Shiv Malik, who blame the baby boomers for making such a mess of this country over the past 30 years that the next generation is saddled with student debt, can't find work, can't afford to buy homes or rent, and has little hope of doing so for years.
I saw just how raw a nerve they have touched when one of the angry young men, Howker, came to dinner recently. It was astonishing to watch the other guests – aged 16 to 56 – react to his thesis and how quickly the boomers rounded on him with red-hot fury while the young hailed him as a hero. There was even a Norman Tebbit moment when one said the young have too big a sense of entitlement, suggesting a move to the Hebrides where land is cheap. Howker ignored the brickbats, demonstrating his argument with pure maths: numbers and figures to show how we, the profligate, have left them with £1.5trn of consumer debt and unfunded pensions, and facing higher taxes while we benefited from decades of never-never credit, free education and a tripling of house prices. By the end of the evening, all of the guests, bar one, agreed that our selfishness has led to a pretty lousy legacy.
Without doubt the biggest issue facing the young today is housing, whether buying or renting. As figures showed last week, new mortgages are at their lowest for years. But solving the housing problem is not difficult, certainly not M-theory league. One of the most telling moments of the last election was during one of the leaders' debates when a young accountant asked the wannabe prime ministers how she and her husband would ever be able to buy a home. None dared admit to the elephant in the room – that housing is so expensive because of land scarcity caused by generations of politicians who have been complicit with local councils, developers and builders holding the country to ransom.
To be fair, the Coalition understand the need for change and is pushing through reforms that will allow local councils and parishes to decide on new housing developments. But the politicians will need nerves of steel to enforce these changes and stop the nimbys from keeping us in the dark ages. It's why we should all be lobbying Eric Pickles as he tries to get them through.
Even if he succeeds, we need much more. Here are a few ideas; tax incentives to help community land trusts, housing associations and other competitive models to break the grip of property developers and builders who sit on land banks; new regulations forcing builders to build contemporary houses of far higher standards; relaxation of the more absurd rules governing building in conservation areas; and tougher laws to protect tenants. Finally, we should ask Scandinavian house builders to lead a second Viking invasion bringing attractive, affordable and sustainable housing to replace the "boil in the bag" sort which we have been forced to swallow. If the baby boomers have any hope of redeeming themselves in the eyes of the jilted, we must be even braver than we were when we fought the Establishment in the 60s and 70s.
The difference between now and then is that we had hope.
Handle with care: the ticking pay time bomb that is terrifying US bosses
Buried away in the 2,319-page Dodd-Frank Wall Street Reform act, passed recently in the US and hailed as the most sweeping overhaul of finance since the 1930s, is a provision that could prove a ticking time bomb unless handled with care. The little-noticed measure requires all listed companies – not just the banks – to update shareholders on how the pay of their chief executives compares to that of their staff by giving the ratio of the bosses' salaries to the median annual pay of their employees.
At the latest count, the median salary of the average S&P chief executive last year was around $1.02m, while that of the average private-sector employee is about $40,000, making a multiple of about 25 times – which by US standards is not that high. But when the total package is accounted for – bonuses and options – the average median pay package of chief executives shoots up to $7.5m, making it about 187 times that of the average employee. As you can imagine, bosses are already worried that when these numbers get published they will lead to uproar among investors, already upset over high pay. Bosses also claim the numbers won't be particularly accurate or comparable, as there are so many variables, and that multiples are a bad guide to assess board pay anyway.
It's now over to the Securities and Exchange Commission to decide on the details of how these ratios will be drawn up and whether the new rules should include non-US workers, for example. As long as the SEC comes up with something workable, my own view is that the principle behind the provision is rather fine – chief executives should be forced to consider whether they really are worth many hundreds of times the pay of their workers, and be prepared to stand up and say why. Who knows, it may even force them to revise some of their more egregious packages.
Sir Bob Geldof: Capitalism is the new saviour of Africa
It's fascinating to see Sir Bob Geldof switching from African philanthropist to capitalist, with the news that he's raising $750m to set up the biggest private equity fund in Africa. Apparently, he's launching the fund, to be called 8 Miles, as he's been persuaded the continent can best be helped through direct investment rather than aid. With him at 8 Miles is the private equity doyen and Tory donor Mark Florman of Spayne Lindsay & Co. They hope to close the first tranche soon. So far, backers include the African Development Bank and NL EVD International, part of the Dutch ministry of economic affairs. Geldof is taking his role seriously: He will chair the fund and help hunt down new investments in agribusiness, financial services and telecommunications where, over time, he has built up many contacts. Hopefully, first aid will prove even more effective than Live Aid.
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