Generation Y has never had it so good

‘Generation Y will be the first generation to be worse off than their parents’ is a prediction that has been made by numerous commentators, in the UK and across the developed world – most recently by Leanne Wood in the recent UK party leaders debate. Such dramatic pronouncements make for good headlines and buy into the general sense of pessimism that has gripped the western world in the wake of the Great Recession. The pundits and politicians are riding this tide more than shaping it – they want to be seen as the solution (‘vote for me’). And therefore they come armed with statistics and charts, talking about home ownership, protected pensioner benefits and the ever elusive 'job for life'. They argue that generation Y (those born between 1980 and 2000) is to be pitied - they will never own homes, will have to work until they keel over (that is if they ever get jobs) and will have to compete for everything from school places for their children to hospital beds with endless hordes of immigrants.

I seek to make a different case – that Generation Y has never had it so good. Yes, house prices have risen dramatically this century; yes, pensioner incomes have been rising whilst the numbers have stagnated for other groups; and yes, youth unemployment has increased. But despite all of this we are the luckiest generation yet – a fact that is often lost in the mire of figures. I have two main points: firstly, that the pundits’ statistics prove very little because they rarely focus on what I believe is the most important metric – quality of life. Secondly, there have been other improvements in certain aspects of private life in recent decades that can’t be quantified, but which make Generation Y – which has the youth and vision to exploit these advancements – immeasurably better off than preceding generations.

Firstly, I believe that statistics comparing the portion of national income held by different age groups are unhelpful because they are metrics measuring our relative share of wealth, not our quality of life. Generation Y might have a smaller piece of it, but the figurative pie is much bigger. One popular tactic is to compare discrete aspects of life today with, say, the 1960s – such as home ownership amongst people under 30. Unfortunately dramatic overall improvements in the quality of life make such comparisons unhelpful. For example, my dad, growing up in 1960s Derby, had an outdoor toilet, no washing machine and a basic refrigerator. Generation Y might have to rent more, but life is clearly better overall. There are a variety of appliances that make household life easier. We like to tell ourselves otherwise, but we have far more leisure time than ever before – mainly because cooking, cleaning, ironing, paying our bills and even household shopping (now done online) take far less time. There have also been vast improvements in the choice, relative price and quality of consumer goods. Smaller comparative real wages, compared to the 60s or 70s, don’t factor in the extent to which the relative price (how much something costs as a percentage of income) and range of goods has improved. We can buy an immeasurably bigger and better basket of goods with our paychecks. Did they have Cadburys filled with Turkish delight in the 1960s? No! Chocolate was a luxury and cost a bigger part of peoples’ disposable income. The efficient operation of the market has also made many of the other luxuries of yesterday almost universally available. Think of travel – flights to certain destinations abroad are now cheaper than a train ticket from London to Manchester. The explosion of destinations globally, married with the ever-strong pound, has driven relative prices down dramatically.

Secondly, there have been continuous – indeed exponential – improvements in the quality and accessibility of information technology in the 21^st century. Generation X (those born between1960 and1980) arguably has benefited from this, but they’re the followers whilst we are the shapers. This is partly because Generation Y doesn’t know an alternative to hyper-connectivity because it’s always been there. That is a powerful thing – taking something for granted makes it a right not a privilege. We are constantly redefining not just human interaction, but methods of consumption, medical diagnosis and leisure. Various surveys put mobile phone ownership among young adults well above 80%, the vast majority of which are smartphones. Hand-held devices are here to stay – you’d probably have more luck separating a Texan from their gun than the average teenager from their smartphone. 

None of this is to say that successive governments are justified in screwing young people in order to bribe grey voters. That pensions are being uprated in the UK by the highest measure of inflation and the winter fuel allowance is universal are flagrant breaches of the social contract. However, this is a structural flaw in our democracy, not a constraint of our age, which is as much the fault of those young people who fail to vote as it is of the politicians.

Generation Y is navigating a brave new world where knowledge is at the end of our fingertips, where we are redefining human interaction at a startling pace – it’s a privilege to be a part of it. The impact of technology on government is, as ever, dramatically behind the private sector – but recent technological advancements will allow us to completely re-invent society and the way it is governed. There are challenges ahead and we have work to do, but for Generation Y the sky is truly the limit.

The HSBC affair

On the Wednesday 19 February, Swiss authorities belatedly raided the Geneva offices of HSBC, accusing the bank of money laundering in what clearly was a face-saving exercise. If Switzerland's long history of providing banking services to nasties teaches us anything, its that the Swiss don't really care where the money is coming from so long as its flowing into their coffers.  Scenting positive headlines and an easy target, ten different national authorities are now investigating HSBC and its clients (mostly for tax-evasion). Some of these authorities - such as the Danish - have failed to request the incriminating data (detailing individuals holding bank accounts in the Swiss branch of HBSC) off the French during the seven years it had been available. Yet the most worrying probe from HSBC's standpoint is probably the Department of Justice investigation; it has previous in the US - HSBC settled DoJ money laundering charges in 2012 for a record $1.9bn - and is no doubt also fearful of being banned from clearing dollar transactions (as BNP Paribas was following a guilty plea to DoJ charges in 2014).

In a global sense, the HSBC affair is an example of the increased scrutiny of practices that were tolerated in the boom times or of the difficulty for national authorities to chase sophisticated, footloose and wealthy tax evaders across international boundaries - unless they get caught with their pants down, as in this instance. Unfortunately, in the UK at least, the HSBC affair has become ludicrously polemical and binary.

The basis of the affair is a list of bank accounts taken by a former employee of HSBC's Swiss branch in 2007, which was given to the French tax authorities in 2008 and to the UK authorities in 2010. It is alleged that HSBC actively aided tax evasion and also turned a blind eye to money laundering. The the UK Tax Authority (Her Majesty's Revenue and Customs) has recovered £135 million pounds in tax, but has only prosecuted one measly individual out of 1000 alleged British tax evaders. And here begins the supposed tale of deceit, corruption and intrigue. Ed Miliband, leader of the Labour opposition in the UK, has had one of his rare successes in catching the public mood - shaming implicated Conservative Party donors and questioning the government's decision to appoint HSBC's former chair as a minister shortly after the allegations were received. Chris Bryant, Labour MP, has implied that HMRC is in cahoots with shadowy rich and powerful interests. And, predictably, Lin Homer, head of HMRC, was hauled in front of Margaret Hodge's Public Accounts Parliamentary Select Committee - the kangaroo court over which she presides with populist panache -  to be accused of incompetency and nepotism.

The HSBC affair, in the UK has elsewhere, has been characterised as just another incident in a long history of banker abuses dating back to before the Great Recession. Unfortunately, as politicians probably grasp, but are too caught up in the anti-banker whirlwind that they have helped to create, the facts are (one shade of) grey. There are several pertinent reasons why HMRC hasn't prosecuted more individuals:

1. The difficulty of achieving the criminal threshold - the criminal burden of proof generally requires the judge/jury to be sure beyond 'reasonable doubt' that the suspect perpetrated the crime (99.9% sure they did it). Add to this fact that the offences themselves are often incredibly complex, whilst UK prosecutors lack the various tools used by US authorities to imply guilt without having to prove it in open court (such as deferred prosecution agreements - due to be introduced in the UK later this year). Therefore, civil settlements - where the defendant does not admit guilt - are often more cost-efficient. It appears that the majority of these cases were settled using the Lichenstein disclosure facility - which involves HMRC taking only a 10% penalty as opposed to 100% of the tax due (or more). This was despite the fact that the facility was set up for individuals to volunteer information that HMRC didn't otherwise know about (clearly not the case here).

2. A lack of resources - HMRC has seen some of the most brutal cuts of any department (25% since 2010) for quite a while (its budget has been falling steadily since 2005). Whilst it has beefed up its enforcement team in recent years, the department is clearly under-resourced.

3. Pick on someone smaller than you - HMRC is under pressure to increase the number of tax-evasion convictions it achieves (more than doubling the 2011/12 figure of 365 to approximately 800 in 2013/14). In practice this means that they are just pursuing criminal charges in relatively straightforward cases where otherwise a civil remedy is sought. With such pressure for successful prosecutions combined with falling resources, investigators have little choice but to ignore the HSBC list of sophisticated individuals with their well-paid and combative lawyers.

Clearly HMRC is not entirely to blame here; the fault lies with the myriad of actors and politicians who, over decades, have drawn up the legal and regulatory framework within which UK plc operates. The pre-2007 onus was on a 'light touch' regulation and supervision and - dare I say(!) - it was with good reason. For, after all, up until 2007, and even to this day, the financial services industry generates an enormous amount of revenue - in 2010-11 the banking sector alone contributed £21.0 billion to UK tax receipts in corporation tax, income tax and national insurance. In the UK since 2008 investment banking has been stigmatised to a detrimental extent. Whilst it is great that politicians rail against retail deposits being used to collateralise trading and underwriting activities, the tie-ups have long since happened and look very difficult to undo - as underlined by the delaying of plans to ring fence retail deposits from investment banking activities. Meanwhile, endless political intervention at the Royal Bank of Scotland and other banks is harming lending to small businesses and destroying the value of the state's large shareholding.

It is very convenient to place the blame for the Great Recession at the door of the bankers; in fact fault lies more broadly. Central bankers, funds/private equity, consumers and governments all played their part. Bearing in mind the delicacy of the UK's economic recovery, it might finally be time to stop bashing the banks.

I am Charlie (’s neighbour)

The 11th of January saw more than 50 leaders from across the world join more than a million French in a march through Paris as a show of solidarity following the 'Charlie Hebdo' terrorist attacks that killed 17. It was the largest exercise in collective national self-expression since the liberation of Paris from the Nazis. The beleaguered French leader Francois Hollande looked presidential; Paris was the capital of the world. And the French are once again united in fraternity? Well, not quite.

A CNN correspondent, reporting on the eve of the attacks, said that France's large Muslim population represented '5 million problems'. He clearly misspoke, but at least his analysis was clear - no one else can agree on what exactly the problem is, let alone alight on a solution. Predictably, when asking why so many young citizens (in both the UK and France) seek to fight in Syria or kill their fellow citizens, the two poles of opinion have lined up against each other in their usual order.

On one side the liberally-minded, with Nick Clegg (the deputy Prime Minister of the UK) as their spokesperson, decry a 'perversion of Islam' and maintain that 'many, many British Muslims feel fervently British but also are very proud of their Muslim faith'. Topping that, the Financial Times decided this weekend to interview five different French Muslims about their views on discrimination and racism in French society - they all feel 'French' but are not accepted as such. Whilst this is a fair indictment of French society, the FT clearly isn't really interested in their views. Their not-so-subtle point is that the French are to blame for the attacks - they (kind of) deserved it because they weren't/aren't particularly tolerant.

And on the other side are the socially conservative; Nigel Farage, the leader of the UK Independence Party, called certain British Muslims a 'fifth column' and raised questions about the 'gross policy of multiculturalism'. On both sides of the channel, such individuals have used the incident as a podium to, not-so-subtly, brand Islam as fundamentally incompatible with "western" values.

The French and British government responses have been equally predictable - they are endeavouring to pass more anti-terrorist legislation and crackdown on 'extremism'. In the UK, through legislation to force internet companies to store content, they prescribe a slightly updated form of the remedy offered in 1914, 1939 and during the Troubles in Northern Ireland - to protect our liberty we need to give greater powers to the security services. If that sounds like a paradox - ceding our freedoms to protect our liberty - its because it is. The basic bargain is that we should trust the security services to use their extra power responsibly because they're the good guys; this doesn't quite stand up in the post-Snowden era. Even worse, there is no appetite to update the confusing plethora of hate and anti-terrorism laws, restricting freedom of speech, which are hopelessly out of date, selectively enforced and hypocritical in places. Somewhat bizarrely, controversial French comedian Dieudonné M’Bala M’bala was arrested the week after France marched in defence of freedom of speech for saying that he felt like he was Charlie Coulibaly (one of the attackers); apparently he was 'apologising for terrorism'. Why should the French state defend the rights of the Charlie Hebdo cartoonists to publish what they wish - thereby tacitly justifying the magazine publishing its latest cartoon of the Prophet Muhammad - but crack down on Dieudonné's less-popular, but equally legitimate view?

If the debate and analysis is stale, media coverage of such incidents is even worse. It is the same, tired post 9/11 narrative that the UK and US governments used to justify costly and largely pointless wars in Afghanistan and Iraq - society itself is being targeted by shadowy 'radicals', who are given orders by mysterious organisations in Yemen or Afghanistan; places that don't have internet or mobile phone signals. Al-Qaeda may well run training camps, but is it really co-ordinating a global network of operatives, with sophisticated cells in London and Paris? Or could this possibly be a home grown phenomenon? Not everyone has to be 'radicalised' by 'extremist' online preachers - perhaps multiple loyalties and identities, long encouraged by liberal approaches to integration and cultural heritage, have reached a logical conclusion? In most places around the world (from Ukraine to Egypt), 'extremist' and 'terrorist' have become bywords for people governments don't like - we're rapidly approaching a similar situation in the UK and France.

On balance, it does seem that the lot of British and French Muslims has been worsened by the actions of a few bad apples. The insipid debate that has followed hasn't really proposed any interesting or helpful solutions. Perhaps its because we know that the real, long-term antidotes to (all) religious fervour are iPhones, Starbucks coffee and Burberry jeans. It is abundantly clear that people are more fervently religious in the tribal areas of Pakistan than in the upmarket cafes of Oslo. In the UK, not much will change in the short run - there might be more attacks; there will certainly be more hysterical media coverage. The security services will probably be given more power and use it unwisely. And in the long run, as in 1914, 1939 and during the Troubles, Britain will endure - she always has, she always will.