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Customer Review

33 of 49 people found the following review helpful
1.0 out of 5 stars Shoddy analysis leading to an incorrect predetermined conclusion, 23 July 2011
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This review is from: The Pinch: How the baby boomers took their children's future - and why they should give it back (Kindle Edition)
If this book had been advertised as a description of the importance of inter-generational cooperation, accompanied by useful social statistics, I would have given it more stars. But its real theme is instead identified by its sub-title: "How the baby-boomers took their children's future - and why they should give it back". It is an unjustified attack on the baby-boom cohort as a whole, leading to wrong conclusions about how we arrived at the current state and what the lessons are. Generalized criticisms made about baby-boomers are not supported by the (interesting) facts given, but needed a contorted interpretation of those facts.

Disclaimer: I am one of the older baby-boomers, born in 1947. I retired some time ago when the company I worked for went bust, and I live on my company pension and my savings built up while working. When I claim my state pension next year, it will be significantly less than the taxes I pay, so I claim that I will be paying for my own state pension!

My issue with the book's analysis is illustrated (for example) by a key chapter: "4: Spending the Kid's inheritance". Table 1 identifies the net housing wealth of various age groups. To quote his interpretation: "The table shows that half of all [this] wealth ... belongs to the the baby-boomers and only about ... 15 per cent to everyone under 44". If true, this implies that, as a whole, this huge number of young people just haven't got a start on the housing ladder. But this is a poor interpretation of the table, and the real message is very different. Taking the GROSS housing values (prices of bricks and mortar) for the different age groups (ignoring mortgages), the figures are: under 35 years, 11%; 35-44, 21%; 45-54, 21%; 55-64, 19%; and 65+, 25%. So (perhaps because of his definition of baby-boomers spanning 20 years), the baby-boomers have about 40% and the up-to-44s have 32%. In terms of the values of the houses they own (albeit with mortgages) this appear to be a very high value for the up-to-44s, and even high for the under 35s. My house when I was under 35 was a tiny rubbish house on a poor estate, only worth now perhaps a quarter or less of my current house.

What he has done is subtract the values of the mortgages to produce his quote. What the table is really saying is "there isn't a large difference in bricks and mortar values for the various age groups, (in fact, the 35-44 value is greater than the 55-64 value!), but young people haven't paid off their mortgages, whereas to a large extent the 55-64 and especially the 65+ groups have done so". Wow! So people nearing retirement and after retirement tend to pay off their mortgages, while younger people haven't yet done so! Who would have thought it? (When I bought my current house at the age of 40, I had a 19.5 year mortgage so that it would be paid off by the time I was 60). But this interpretation doesn't support his thesis.

Another problem with this book is that is treats the baby-boom cohort as a sort of "collective intelligence", to which criticism can be applied, injunctions be made, and motives assigned. Apart from the book's sub-title itself, there is "the boomers increasingly came to think of their house as ... their own personal goldmine"; "however, we [the author is a baby-boomer] thought we were richer and ... we all became alchemists, converting paper increases in the value of our homes into extra money to spend". (Etc). Perhaps he and some others did that, but many of us didn't.

The baby-boomers are about 10 million individuals. We span the complete spectrum of politics; of financial state (from rich to broke); of parental and social standing; of education; of health, of aspirations; of number of children. (But we probably don't include rich footballers or WAGS!) We do not share a single agenda, strategy, motive, or degree of activism; in fact, we may sometimes not even be on speaking terms with one-another! Few of us ever managed to influence the resultant (current) society to a measurable extent. Since I gained the vote at the age of 21 my vote has never had the slightest effect on who got elected in local or general elections! And we are only about one-quarter of the electorate - does anyone seriously think that we really significantly influenced where we are now?

It is my last paragraph above that identifies a fault with this and other books on this topic. Any failure to understand that we are actually 10 million individuals, connected only by age, just living our lives while the world changes around us in ways we can't control and sometimes don't even understand, may cause people to focus on imaginary agendas, and make false assumptions that we can act as one to change things for the "better" (whatever that means). Hence my single star, which reflects the failure of this book to understand what happened and draw lessons for the future.

Edit: Since writing this review I've realized that there wasn't actually a single baby-boom! Search for the official statistics document "The UK population: past, present and future", file-name 01_fopm_population.pdf, and look at figure 1.13 on page 11. (Enlarge it to have a closer look). Here are important facts:

There was what I'll call a "baby-spike" immediately after the war. This 2nd highest birth rate of the 20th century peaked in 1946/7, and lasted very few years. The reason for that spike is obvious. (For example, my parents met during the war and I was born in 1947).

Then there was what I'll call a "baby-peak" 19 years later. This highest birth-rate of the 20th century peaked about 1965, and was much greater and longer-lasting than the 1946/7 baby-spike. In fact, the birth-rate during the baby-peak stayed at least at the 1946/7 baby-spike rate for about 10 years, and arguably (make your own choice from figure 1.13) the baby-peak lasted from about 1959 to 1971 or much longer. I don't know what caused that baby-peak, (but see chapter 3 of the book).

This suggests that there are really 2 relevant cohorts rather than one, and the term "baby boomer" masks the truth. The smaller of these cohorts covers births from 1946 to about 1950. The larger, and potentially more important, cohort covers the range from about 1959 to 1971 or longer. (But judge for yourself from the graph of figure 1.13). These should probably be thought of as separate generations, although they overlap a bit. The early lives of these cohorts were vastly different from one-another on average. The baby-spike children of 1946 to 1950 arrived in an immediate-post-war nation. We know the baby-peak children centred on 1965 were born into a different world! (And many of them are young enough to be the children of the baby-spike cohort).
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Showing 1-7 of 7 posts in this discussion
Initial post: 25 Jan 2012 12:53:13 GMT
Tyler Durden says:
The glaring hole in your reasoning is to be found in the words "ignoring mortgages". By taking the gross value (I assume you mean current value) you are completely excluding the effects of both rocketing house prices over the past 30 years and the effect of inflation in the 1970s that massively reduced the real values of the boomers' mortgages.

I accept your statement about intra-generational inequalites but the book isn't about that subject.

In reply to an earlier post on 25 Jan 2012 15:51:15 GMT
Reply to Tyler Durden:

It is important to ignore the value of any remaining mortgage when analysing what sort of houses different generations are able to live in. This book actually shows: "there isn't a large difference in bricks and mortar values for the various age groups", as I said. (Presumably the houses that younger people are currently living in have been just as influenced by rising house prices as those that older people are currently living in). But anyone reading the book might falsely think that older people dominate the bricks and mortar values of houses.

The danger with subtracting the values of the mortgages is that this confuses the fact, that should be blindingly obvious, that older people have tended to pay off their mortgages, especially close to and after retirement, with an impression that younger people have hardly started to get a foot on the housing ladder. It gives the impression that perhaps older people have shut younger ones out of the housing market, when the real story behind the numbers is that mortgages take 20 to 30 years to pay off and older people are further along this process.

Typically, what has reduced the real value of the mortgages of the people near and at retirement is that there has been this 20 to 30 years available to pay them off! When you have paid off a mortgage, it no longer exists, so the effect of inflation decades ago doesn't influence its value. (It will have influenced the ease with which it was paid off, but that isn't the point I was making, nor, as far as I can tell, the point that the book was making. And perhaps there will be future inflation which will similarly affect the mortgages being taken out by younger people today).

If your argument is actually that the mortgages of older people haven't been paid off, but are smaller only because of inflation decades ago, then your point might be valid. But I don't believe that is true. My observation is that typically people tend to time the period of their mortgages to their expected remaining working life. (For example, my last mortgage was taken out for 19.5 years because that period terminated just before I was 60).

The subtitle of this book, "How the Baby Boomers Took Their Children's Future", makes it pretty clear that this book hasn't got the theme "older people have had longer to pay off their mortgages, and all younger people have to do is wait for 20 or 30 years and they can have paid off their mortgages too". The latter has a lot of truth in it, but wouldn't sell a lot of books! Better to play down that inconvenient fact.

It is obviously wrong simply to compare the net state of a younger person in 2012 with the net state of an older person in 2012. They are different partly for obvious and non-contentious reasons. It would be more interesting to compare the current state of a 30 year old with the state 30 years ago of a current 60 year old. Or to predict the state in 30 years time of a current 30 year old with the current state of a current 60 year old. This would help us see whether the differences are simply effects common to everyone as they age, or whether there is a structural change between the world 30 years ago and the current one that dooms younger people to a worse life than older people.

In fact, of course, there are lots of such changes, but typically for the better. Longer life expectancy through advances in medicine, reduced risk of dying by violence, expanded opportunities for education, better established human rights, etc. They are not the theme of this book, but there is a risk of taking them for granted, and focusing only on the downsides of being younger.

When talking about housing, as we have been here, a major problem is that that there aren't enough houses. I don't recall making this happen! Why didn't rocketing house prices cause more house building? I don't know. But what I do observe is that, now we are in this state, some people are looking for people to blame.

ps: You mention "boomer". In the UK, there was a "baby pop" from about 1946 to about 1949, and it was a fairly small effect. Then there was a real "baby boom" from about 1956 to about 1974. This book asserts that there was a baby boom from about 1946 for about 20 years, which is incompatible with UK national statistics; just plain wrong! (But the USA was more like the book asserts). Part of the disagreement here may be to do with the definition of "boomer".

Posted on 4 May 2012 23:39:24 BDT
msCX says:
Excellent review (and postscript comment and counter comment!), Barry. Having read most of the many starred and barely starred reviews of this book, yours is the one that has determined me not to buy or (life being too short) read the book. Thank you for taking the time to write such a clearly argued and careful review.

In reply to an earlier post on 31 Oct 2012 10:48:20 GMT
Last edited by the author on 31 Oct 2012 10:56:59 GMT
pumpkin says:
Access to house ownership is a key to the relative self-determination of both generations. Owning a roof over your head allows self-reliance in retirement.

Previous generations were able to get mortages on properties closer in value to their incomes. House prices rocketed during their mortgage terms in a way that is unlikely to repeat.

The children of the babyboomers are locked out of the housing market due to lack of ability to save large enough deposits.

Unable to get mortages we rent, paying the mortages of landlords, (babyboomers or otherwise), who snap up all the cheaper housing as 'buy-to-let' investments, rent it back to us, and ultimately benefit from the investment.

Without house ownership, the chance of self-reliance in retirement is reduced.

I am in my early 30s, the child of babyboomers, and so are all of my friends. All of us rent and the cost of living is too high to save meaningfully.

That is the reality we experience. Not sure you can argue with that.

In reply to an earlier post on 31 Oct 2012 10:58:52 GMT
Last edited by the author on 31 Oct 2012 10:59:37 GMT
msCX says:
Excellent points Pumpkin and, as you very rightly say, not points that anyone can credibly dispute or argue with.

I think, from memory, that the reviewer was taking issue with the book's collecting together all people from the so-called "bay-boomer" generation and treating them as a homogenous social group. That seemed unfair to him (and me). However, it's not as unfair as the current housing/property situation which I am sure is just as bad as you describe and made worse by the scourge of the petty "buy-to-let" brigade!

In reply to an earlier post on 31 Oct 2012 11:58:03 GMT
In reply to "msCX" and "pumpkin":

I sympathise with these housing problems. I'm puzzled about how they arose - why aren't more houses being built, when "everyone" appears to agree that far too few houses are being built?

(Until TODAY I've never owned a house outright. I've often wondered whether I would be better off not trying to buy one. It's taken 38 years of mortgage payments to own one, I lost lots of money when my endowment mortgage went bad, and I've had worries and sleepness nights about my mortgage for much of the time since I lost my job. Fortunately I'm childfree).

In reply to an earlier post on 31 Oct 2012 13:03:45 GMT
Last edited by the author on 31 Oct 2012 13:04:04 GMT
pumpkin says:
All good points and would agree with the reviewer that it's not constructive to treat a particular generation as one homogenous social or economic group.

Similarly, I also remember my parents suffering in the late 80s, but with high interest rates.

And building more houses quite possibly would help the situation. Although it does seem there are plenty of suitable houses built already, but no access to finance to purchase them.

Thanks for your responses.
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