Damian Green is a former First Secretary of State, Chair of the One Nation Caucus, and is MP for Ashford.
The extra choice provided by DAB radio has meant a growth of age-specific stations. My personal favourite happens to be Absolute 80s, but the most upfront in its aim to serve a particular demographic is Boom Radio. Music from the 1960s is combined with adverts for comfortable mattresses, pensions advisers and the Daily Telegraph. It even advertises a service offering to make your ashes into a disc for your loved ones, called the Vinyl Countdown. It is unapologetic in its celebration of all things Boomer.
I fear that this celebration may enrage the members of Generations X and later who are fixed in their view that this ageing cohort has lived an unfairly privileged life, and should perhaps stop rubbing it in. However, in the interests of balance I should also point out that the Boomers lived through some terrible times, notably the 1970s, and therefore have some experience to pass on.
In particular (and I am getting round to politics, honestly) they lived with inflation in a way that future generations have been spared. Therefore, as a public service to improve inter-generational harmony, I thought it would be useful to pass on some simple phrases that have fallen into disuse in recent decades, but might sadly be needed again if the authorities don’t get their act together to stop inflation taking hold. If it does, it will be miserable and we will all get used to boring on about:
- The cost of living. As Opposition Leader before 1979 Margaret Thatcher would often be filmed holding up a shopping bag to illustrate how much the price of basic foodstuffs had risen in the past few months. At the time, it was a killer political tactic which, during the past two decades, would have been absolutely pointless, ironically because at the end of 18 years of Conservative Government inflation was not much of an issue.
- Wage-Price Spirals. If prices go up, people demand higher wages to pay them. When wages go up, firms have to put their prices up to pay them. When prices go up…You get the picture.
- Cost-push or demand-pull. Economists used to debate whether the price rises or wage rises were the main factor behind inflation. No one much cared because they set each other off anyway.
- Prices and Incomes Policies. There was a time when the Government’s reaction to a wage-price spiral (see above) was to intervene to fix the price of goods. Think the Energy Price Cap, but applied to thousands of goods. Yes, that effective.
- Trade Union Barons. This feels really retro but when large parts of the country are demanding pay rises more people will be attracted to collective action to gain them. It really was a different world when the union leaders were the most powerful men (always in those days) in the country, and it certainly was not a better one.
- The Sick Man of Europe. Maybe post-Brexit this particular phrase cannot come back into use, but high inflation was a key factor in making the UK less dynamic that the Continental economies in the 60s and 70s, in particular as it hampered investment and encouraged short-term thinking in both politics and business.
There is a serious purpose behind this parade of half-forgotten monsters. The official view has been for months that any increase in inflation will be transitory. Only in the last week has there been any recognition that this stance may be dangerously complacent. Even though there is now recognition in words that the transitory phase may be longer than first thought, there has been no action to accompany it.
I can quite see why the Bank of England is reluctant to see an early rise in official interest rates, as it will be deeply painful for the Government’s finances. Indeed, the rise in market rates has already added billions to the debt burden. But I am at a loss why the Bank is continuing with the last £50 billion of the QE project, knowingly adding to the risk of inflation in the coming months and years.
It does not take long for inflation to become embedded in an economy, as those who lived through the 1960s and 1970s can testify. If it does, it can take a couple of decades to eliminate it, and even then it needs a very determined set of leaders who are prepared to brave short-term unpopularity. Better by far to tackle the problem at the outset.
You have to be the most oddly nostalgic Boomer to look back fondly on the 1970s (apart from punk music, obviously). Absolutely no one wants the 70s economy back, whether they had to live through it the first time or read about it in textbooks. It’s time to take action to make sure we don’t.