You are here

COMMENTARY

A worrying future for the next generation?

Washington

IT has long been an accepted axiom in the United States - and also in many advanced democracies - that the future would be better than the past. People take it for granted that living standards would rise. Well, kiss that optimism goodbye.

A new survey of 27 countries finds that confidence in the future is weak, especially in the richest societies. One question asked whether "children will be better off financially" than their parents when they're adults. Only 33 per cent of respondents in the United States answered yes; the comparable figures were 37 per cent for Germany, 19 per cent for Italy, and 15 per cent for Japan and France. Among the 18 advanced countries surveyed, only Poland (59 per cent) and Russia (51 per cent) had majorities who felt the future would be better than the present.

What's curious about the survey, conducted by the Pew Research Center, is that the expectations for the future are much more downbeat than views of the present. These have risen sharply from their low points after the 2008-09 financial crisis and the Great Recession. Here are confidence ratings in the same countries when asked whether their "current economic situation is good": the United States, 65 per cent; Germany, 78 per cent; Japan, 44 per cent; France, 43 per cent; Poland, 69 per cent; and Russia, 42 per cent.

sentifi.com

Market voices on:

The obvious question is: What explains the gap between the present and the future? Unfortunately, Pew - a non-partisan think tank - doesn't have an answer. It started asking about future well-being only in 2013. This means it can't tell whether today's pessimism is long-standing or just recent, says Bruce Stokes, Pew's director of global economic attitudes.

Still, overall trends are suggestive. People may compartmentalise their economic views, accepting the reality they see all about them for the present but using the Great Recession as a point of reference for the future.

People - not just Americans - may also have unconsciously broadened their definition of well-being to include harsher recessions, reflecting recent experience. In the past, surveys of economic well-being implicitly concerned wages, salaries and household incomes. If these slow, as they recently have, and damaging recessions occur more often, the future might well be worse than the present. This would also be true if economic inequality continues to siphon income from the poor and middle class.

It's also possible that the combination of slow economic growth, social unrest and ageing populations will overwhelm post-World War II welfare states, forcing them to raise taxes or cut government benefits. Losing faith in the future is a big deal, especially for Americans who believe that life is - or ought to be - a constant upward trajectory of economic and social progress. The larger issue concerns the lasting influence of the financial crisis and Great Recession on consumer and business behaviour and attitudes. We should hope that the Pew survey simply reflects a passing moment and not a permanent new reality. THE WASHINGTON POST WRITERS GROUP