Monday, May 10, 2010

Goodbye, Tooth Fairy politics

Baby boomers will have to accept deep cuts to their benefits and pensions so their children can have jobs
May 10, 2010
by Thomas L Friedman

Sitting in America, it's hard to grasp the importance of the British elections and the Greek riots. Nothing to do with us, right? Well, I'd pay attention to the drama playing out here. It may be coming to a theatre near you.

The meta-story behind the British election, the Greek meltdown and our own Tea Party is this: Our parents were "The Greatest Generation", and they earned that title by making enormous sacrifices and investments to build us a world of abundance.

My generation, "The Baby Boomers", turned out to be what the writer Kurt Andersen called "The Grasshopper Generation". We've eaten through all that abundance like hungry locusts.

Now we and our kids together need to become "The Regeneration" - one that raises incomes anew but in a way that is financially and ecologically sustainable. It will take a big adjustment.

We baby boomers in America and Western Europe were raised to believe there really was a Tooth Fairy, whose magic would allow conservatives to cut taxes without cutting services and liberals to expand services without raising taxes.

The Tooth Fairy did it by printing money, by bogus accounting and by deluding us into thinking that by borrowing from China or Germany, or against our rising home values, or by creating exotic financial instruments to trade with each other, we were actually creating wealth.

Greek politicians used the easy money and subsidies that came with European Union membership not to make themselves more competitive in a flat world, but more corrupt, less willing to collect taxes.

Under Greek law, anyone in certain "hazardous" jobs could retire with full pension at 50 for women and 55 for men - including hairdressers who use a lot of chemical dyes and shampoos.

In Britain, everyone over 60 gets an annual allowance to pay heating bills and can ride any local bus for free. That's really sweet - if you can afford it.

But Britain, where 25 per cent of the government's budget is now borrowed, can't any more.

Britain and Greece are today's poster children for the wrenching new post-Tooth Fairy politics, where baby boomers will have to accept deep cuts to their benefits and pensions today so their kids can have jobs and not be saddled with debts tomorrow.

Mr David Willetts, a British Conservative candidate told me that the Tories' most effective campaign ad was a poster showing a newborn baby under the headline: "Dad's eyes, Mum's nose, Gordon Brown's debt." Beneath was the caption: "Labour's debt crisis: Every child in Britain is born owing £17,000 ($35,000). They deserve better."

What is most striking about the British election, said The Economist's John Micklethwait, was that it may be the first Western election "based on pain".

All the leading candidates warned voters that "cuts are coming", but none were even close to honest about how deep.

Here is how The Financial Times described it: "The next government will have to cut public sector pay, freeze benefits, slash jobs, abolish a range of welfare entitlements and take the axe to programs such as school building and road maintenance." Too bad no party won a majority mandate in the British elections to do this job.

After 65 years in which politics in the West was, mostly, about giving things away to voters, it's now going to be, mostly, about taking things away.

Goodbye Tooth Fairy politics, hello Root Canal politics. The New York Times

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