The older generation is speaking out. Bloggers like Vilhjalmur Ari Arason have told the younger generations that they are fine with things the way they are. Those who bought their homes long before the boom and still have considerable home equity are alright with not taking a stand on EU membership, or rejecting it altogether. Those who are expecting retirement and pension in the next couple of decades have no need to look to the future. The price indexed krona is taking care of them.
In all the commotion about the Independence Party’s medieval stance towards the EU, no reporters have gotten down to the business of asking them or the Left Greens what their thirty year plan for Icelandic consumers and households or the country’s place in the world.
Apart from the Social Democrats, none of the other three parties have offered a vision for the generations that are supposed to pay for the excess of the noughties. Just diversions about relationships with China and India or taking up the dollar or the Norwegian krona. But perhaps it would be too much to expect the guard-dogs of special interests and backwards thinkers to have a vision.
But in all honesty, the future does not concern the older generations, the people who have been in charge for the past couple of decades. It is not theirs to worry about. Therefore they can take a stand like the otherwise excellent blogger Vilhjalmur Ari, on not taking a stand.
“But we should not enter into talks from a weak position, right after an economic collapse and most of us hurt. The timing is simply wrong and under unnatural circumstances, and besides, the nation needs to mature to be able to realistically weigh the benefits and the costs.”
Putting aside the fact that nations choose to cooperate to compensate for their weaknesses, Vilhjalmur is right on the Icelandic nation being so shortly removed from the third world that it lacks a certain maturity. But while that may be true for the older generations which still view the deprivation and poverty of Iceland’s past in a romantic light, the younger generations are learning fast. The only thing standing in our way to grow up fast, is the mindset of the disaster generations nearing the end of their careers. With us working overtime to pay for the money in their bank, they are doing just fine and don’t have to stretch their minds that far.
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Lino
1 year ago
ther first paragraph is equivocal: do people fully owning their homes, think they are really insulated from the crisis? Sure they do not fear repossession, but since they live in a “modern” state (in terms of organisation, that is tax and service) they will be hit fully as far as tax hike, service degradation and krona depreciation will hit all icelanders.
In a way those who have assets will be hit more just because of that.
As for “the indexed krona will take care of them”, that is wishful thinking: indexation will not be able to protect pensioners.
Nor would the government find that desirable, pension depreciation is one “resource cow” that governments in distress are resorting more and more, yes indexation won’t even protect the old from their own goverment generated inflation and its erosion of purchasing power!
And in an unwillingly open icelandic econommy, indexation will not cover them from imported inflation that will further erode purchasing power.
Inflation will only make sure you have more zeroes in your bank accounts/bills, and of course to perpetuate the inflation spyral.
Of course old people are not concerned by the future: they have none.
It’s not just a biological evidence but an mindset attitude that explains more and more of the ludicrous tragedies of the modern state, more often than not perpetrated not only by old people but 30-60 years old politicians: I’m talking about (generational) moral hazard: medical cover, state pension funds, and public/sovereign debt would be the most evident examples.
Assuming unconvered liabilities NOW to be paid “later” by younger generations: anyway who cares? They will have benefitted NOW and not ne around when it’s time to pay.
Dadi
1 year ago
The most cited reason for not getting rid of the price indexation is that it would affect the pension funds which depend on it for meeting their required rate of return.
Kind of sets them up to be run irresponsibly…
Lino
1 year ago
“The most cited reason for not getting rid of the price indexation is that it would affect the pension funds which depend on it for meeting their required rate of return”
either the people who stated such reason do not understand anything in economy (you never know in Iceland…) or they do indeed understand it but saying, without honestly admitting it, in effect that pensions funds have negative rate of return… real one, not nominal.
Or perhaps, even more dishonestly, pension funds are just used as figleaf/scapegoat, the reason for not ditching indexation being political since indexation “masks” loss of (real) value hoodwinking the people, in a general merry-go-round of inflation spyral, that they are protected.
And in some circumstances, inflation is government initiated/favoured.
Dadi
1 year ago
“but saying, without honestly admitting it, in effect that pensions funds have negative rate of return… real one, not nominal.”
Well, that is the situation in Iceland…no one expects a positive rate of return unless they have a belt and suspenders in the price indexation…
Knute Rife
1 year ago
@Lino
If pensions in Iceland operate like pensions in the US, I’ll take Door #3. Pensions here of all sorts (corporate, union, private, government) have been underfunded at best and outright looted at worst for my entire life and longer. One of the reasons I went into law was because I could see 30 years ago that I would have to work until they carted me off feet first.
Lino
1 year ago
“Well, that is the situation in Iceland…no one expects a positive rate of return unless they have a belt and suspenders in the price indexation…”
that’s as smart as the ostrich putting its head underground in dqnger forgetting that the rest of its body is aboveground…
Why are people so gullible as individuals and as group, I’ll never understand: studies indeed seems to indicate that people will prefer a 10% salty increase with a 20% inflation rate than a 5% reduction with 7% deflation.
Well, icelanders, rejoyce! You’are going to have your 10% increase!
:):)
Lino
1 year ago
salary, not salty