The Generational Burden
How Current Fiscal Policy Mortgages the Future
Introduction
The fiscal policies being implemented today will cast shadows that extend far beyond the current political cycle. While governments rise and fall, the consequences of borrowing, spending, and taxation decisions create obligations that span generations. This document examines how present-day fiscal choices impose burdens on those who have no voice in making them - children and young people who will inherit not just the infrastructure and institutions of our society, but also its debts and diminished opportunities.
This is not an abstract economic discussion. These are real consequences that will shape the lives of real people for decades to come. Understanding the generational impact of fiscal policy is essential for anyone concerned with justice, fairness, and the kind of society we are building for the future.
The Arithmetic of Generational Burden
How Government Debt Transfers Across Generations
Government borrowing represents a fundamental transfer of resources from future taxpayers to present-day beneficiaries. When a government borrows money to fund current spending, it creates an obligation that must be serviced through future taxation. This creates a direct financial burden on those who will be working and earning in the decades to come.
Consider a child born today. By the time they enter the workforce around 2042, they will begin contributing taxes to service debt accumulated before they could speak. Throughout their entire working life - potentially until 2080 or beyond - a portion of their earnings will go not to public services they benefit from, not to infrastructure investments, but simply to paying interest on money borrowed decades earlier for purposes they had no say in.
The mathematics is stark. Current government borrowing, combined with projected interest rates, means that substantial portions of future tax revenue will be consumed by debt servicing rather than productive investment. Some economists estimate that each billion pounds borrowed today will require several billion pounds in total repayment over a typical 30-40 year debt servicing period, when interest is factored in.
The Compound Effect of Policy Decisions
The generational burden is not limited to direct debt. Current policy decisions compound over time in ways that amplify their impact on future cohorts. When governments simultaneously increase borrowing while implementing policies that damage productive capacity, they create a double burden: future generations must service higher debt while having fewer economic resources to do so.
Recent fiscal measures illustrate this compound effect. Increases in employer taxation raise the cost of employment, potentially reducing job creation and wage growth. Changes to agricultural inheritance taxation may lead to the break-up of productive farmland. Cuts to benefits for elderly citizens may reduce their ability to financially support younger family members. Each of these decisions has immediate effects, but their consequences multiply over time.
A young person today faces not just higher taxes to service debt, but also a potentially weaker economy with fewer opportunities, reduced family wealth that might have been transferred across generations, and a business environment made less dynamic by regulatory and tax burdens. The cumulative effect of these factors can dramatically reduce lifetime earnings and living standards compared to previous generations.
Specific Policy Impacts on Future Generations
The Destruction of Productive Assets
Perhaps the most insidious form of generational burden comes not from what is taken, but from what is destroyed. When policy decisions force the sale or break-up of productive assets - family businesses, agricultural land, accumulated capital - they eliminate opportunities that would have been available to future generations.
Agricultural policy provides a clear example. Multi-generational family farms represent not just land, but accumulated expertise, relationships with suppliers and customers, and proven business models. When inheritance taxation forces the sale of farmland to pay tax bills, this productive capacity is often permanently lost. The land may be consolidated into larger holdings or converted to other uses. The expertise dies with the previous generation. Young people who might have continued the family business instead find themselves without that option.
This pattern extends beyond agriculture. Small businesses, family enterprises, accumulated capital that might have funded education or business ventures for younger family members - all of these can be eroded by policy decisions that prioritize current revenue generation over long-term wealth creation and transfer.
The Erosion of Economic Dynamism
Young people entering the workforce in the coming decades will face an economic environment shaped by today’s policy choices. Increases in employment costs, regulatory burdens, and taxation of business activity all reduce the dynamism and flexibility of the economy. This translates directly into fewer opportunities, slower wage growth, and reduced social mobility for younger cohorts.
The effect is particularly pronounced for those starting their careers. When employers face higher costs for hiring, they become more risk-averse, favoring experienced workers over young people without established track records. When business formation is discouraged through taxation and regulation, fewer opportunities for entrepreneurship exist. When established businesses struggle or close, the entry-level positions they would have provided disappear.
Economic dynamism is not an abstract concept. It is the difference between an economy where a young person can find their first job, gain experience, perhaps start their own business, and steadily improve their circumstances, versus an economy where opportunities are scarce, advancement is difficult, and financial security remains elusive throughout their working lives.
The Expansion of Structural Commitments
Current governments often expand ongoing spending commitments that will continue far into the future. Public sector pay increases, welfare expansions, and new programs create expectations and constituencies that make these commitments politically difficult to reverse, even when circumstances change.
Future generations will face a fiscal environment where large portions of government spending are effectively locked in, limiting flexibility to address their own priorities and challenges. They will be paying for programs and commitments made when they were children or not yet born, with limited ability to redirect resources toward their own needs.
This creates a fundamental unfairness. Each generation should have the opportunity to make its own choices about the balance between public spending, taxation, and private economic activity. When previous generations lock in spending commitments that consume large portions of future tax revenue, they constrain the choices available to those who come after.
The Democratic Deficit
Taxation Without Representation
The principle that citizens should not be taxed without representation is foundational to democratic governance. Yet current fiscal policy systematically violates this principle when applied across generations. Children and young people who will bear the burden of today’s borrowing and policy choices have no voice in making those decisions.
A child of ten years old will be working and paying taxes for decades to service debt accumulated now. An infant will spend their entire working life in an economy shaped by decisions made before they could walk. Yet neither has any representation in the democratic process that makes these decisions. They cannot vote, cannot protest, cannot petition their representatives.
This represents a profound democratic deficit. The social contract that underlies democratic governance assumes that those affected by decisions have some voice in making them. When policy decisions create obligations that extend decades into the future, they bind people who have no voice in the present.
The Accountability Gap
Those making fiscal decisions today will not face the full consequences of their choices. Politicians and policymakers will likely be retired or deceased when the bills come due. They will not experience the higher taxes, reduced opportunities, and diminished living standards that result from their decisions. This creates a fundamental accountability gap in democratic governance.
Democratic accountability traditionally works through the threat of electoral consequences. Governments that implement unpopular policies or mismanage the economy face voters who can remove them from office. But this mechanism breaks down when the consequences of decisions are delayed for decades. By the time future generations experience the full impact of today’s choices, those responsible are long gone from political life.
This accountability gap creates perverse incentives. Politicians can pursue policies that provide immediate benefits to current voters while imposing costs on future generations who cannot hold them accountable. They can borrow to fund current spending, expand commitments that will burden future budgets, and implement regulations that will constrain future economic activity, all without facing electoral consequences for the long-term damage they cause.
The Path to Correction
The Austerity Required
Eventually, fiscal reality asserts itself. When debt becomes unsustainable, when interest payments consume too much of government revenue, when markets lose confidence in a government’s fiscal position, correction becomes inevitable. The longer correction is delayed, the more severe it must be.
The correction required to address accumulated fiscal burdens will likely involve some combination of spending cuts, tax increases, and extended periods of very slow economic growth. Each of these options imposes costs on the population, but the costs fall most heavily on those entering the workforce and building their lives during the correction period.
Spending cuts typically affect public services and benefits that young families depend on - education, healthcare, support for early-career workers. Tax increases reduce the take-home pay of those in their peak earning years who are trying to buy homes, raise families, and save for their own futures. Slow growth means fewer opportunities for career advancement and business creation.
The generation that must implement and live through fiscal correction did not cause the problems they are fixing. They are paying the price for decisions made by previous cohorts who enjoyed the benefits of borrowed money and expanded commitments without facing the full costs.
The Window for Reform
There is still a window - perhaps a narrow one - for reform that could reduce the generational burden. This would require political courage to prioritize long-term sustainability over short-term popularity, but the alternative is to continue loading ever-greater burdens onto those who come after.
Meaningful reform would need to address several dimensions simultaneously. Fiscal discipline to reduce borrowing and begin paying down accumulated debt. Regulatory and tax reform to restore economic dynamism and opportunity. Protection of productive assets rather than forcing their destruction for immediate revenue. Recognition that today’s young people and children deserve a future not completely mortgaged to service the past.
The political challenge is immense. Reducing current spending or raising current taxes to benefit future generations requires political leaders willing to accept unpopularity today to prevent greater harm tomorrow. It requires current voters to accept some sacrifice for the benefit of those who cannot yet vote. It requires breaking the pattern where each cohort prioritizes its own immediate interests over long-term sustainability.
Conclusion
The generational impact of current fiscal policy represents one of the most profound moral and practical challenges facing democratic societies. We are making decisions today that will shape the lives of people who have no voice in making those decisions. We are loading burdens onto children and young people that they will carry throughout their working lives.
This is not simply an economic issue, though the economic consequences are severe. It is a question of justice - whether it is right to constrain the futures of those who come after us to fund our present preferences. It is a question of democratic legitimacy - whether decisions that bind future generations without their consent can be justified in a system built on the principle of self-governance.
A child born today will work for five or six decades. Throughout that entire working life, they will pay taxes to service debts accumulated before they could speak. They will navigate an economy shaped by decisions made without their input. They will inherit productive assets that current policy is destroying. They will face limited opportunities because current policy has reduced economic dynamism.
And they will do all of this not because these outcomes were inevitable, but because the current generation of policymakers and voters chose to prioritize present consumption over future opportunity, immediate popularity over long-term sustainability, political expediency over generational justice.
The question facing us is whether we will continue down this path, loading ever greater burdens onto those who come after, or whether we will find the political courage to change course. The answer will determine not just economic outcomes, but whether we can honestly claim to be building a society that treats all generations fairly.
Those children who will inherit these burdens deserve better. They deserve a future not completely mortgaged to the past. They deserve an economy with opportunity and dynamism. They deserve to make their own choices about how to balance public and private spending, rather than having those choices constrained by commitments made before they were born.
Whether they receive the future they deserve depends on decisions being made today. The window for reform is still open, but it will not remain open indefinitely. Each year of continued fiscal irresponsibility, each additional policy decision that prioritizes present benefits over future sustainability, narrows that window further.
The generational burden is not an abstraction. It is real children who will become real adults working real jobs and paying real taxes for decades to come. Their futures are being shaped now. The question is whether we care enough about those futures to make difficult choices in the present.