Where money comes and goes

The issue of student loans is essentially an inter-generational contract. We pay in during working years for early education and then for older care. If those figures don't balance then we have an issue. We currently have an issue. There has been a load of work done modelling how we move money between generations (the pinch by david willetts being the most obvious), but this is also really good: http://simonpwalker.blogspot.co.uk/p/five-charts-that-explain-your-childrens.html


So housing is a bad example.
As is student debt.
As is adult social care
As is anything to do with state provision.

We don't have many good examples right now of things that are reducing in cost beyond the cheap TVs and electricals and clothes from Vietnam.

The only work currently ongoing is reducing costs (via efficiencies in the current system) and reducing demand (by raising thresholds and making people more responsible for them).

The twin issues of older people needing care, and working families unable to live, rent or buy a house in the same areas seems to me the same issue. We just don't currently have a way of putting the two things together.

One way to change the system long term is to look at the family model so in Spain for example everyone lives with their family while they go to college which significantly reduces costs. And in Italy every older person lives with their family which significantly reduces costs.

The second main option is to significantly reduce the costs of running a household or business. So rent at 40% of our wages is unsustainable in a country where productivity is not growing. Ditto the vast numbers of business everywhere which would cease to run if they had to carry a £200,000 mortgage on the property. Caravan sites, book shops, antique shops, corner shops, hardware stores - who will buy these businesses and run them at a profit?
All in all there is a limited way of moving money around a system. Someone pays, it's just a matter of who and when.

I think we probably need to think a bit more about what we're working towards and how we do it.