Lucy Hooker’s excellent analysis of Mary Poppins (the remake) suggests the basis of the film’s financial education is flawed, tuppence a day does not add up to financial security in later life, didn’t back in 1910 nor in 1935 when the remake is set.
The original Mary Poppins hit London just as the financial shackles of post-war austerity were coming off and its unremitting cheerfulness suggests that even the run on the bank which nearly brings disaster. Of course we are coming out of the slump caused by the banking crisis and the remke is set just a few years after the great depression
And if that 1960s audience had opted to save their pocket money, points out Paul Johnson of the IFS, it would have stood them in very good stead since the stock market has performed extremely well in the 50 years since then, one reason the baby boomer generation has done so well.
Cheerful doom-monger that he is, Johnson goes on to point out that we’ll never have it so good (again)..
That doesn’t mean it still holds true. “Now, saving is not [worth] a great deal,” says Mr Johnson. Interest rates are so low it’s almost impossible to save enough for your retirement, he reckons.
So what would be a better take-home message for today’s generation?
“Passing your exams,” says Mr Johnson. “Get yourself the sort of education that gets you a high-paying job. That’s probably the best advice if you want to be better off.”
I’m not sure that Paul Johnson has any more idea of how successful the next 50 years will be for investors than they had in the 1960s, anticipating how the world will look in 2069 is not a gainful occupation, it will certainly not make you better off. We are best off focussing on our immediate futures and – as Johnson says, preparing to make the money to pay tomorrow’s bills.
Get rich slow
Perhaps the one message that comes from the passage of time, is that no matter how many depressions and crashes and world wars we endure, we come out alright in the end, providing we don’t just feed the birds (the original metaphor for spendthrift behaviour in Mary Poppins).
The maintenance of a savings culture, and in particular the creation of a pensions culture has been a feature of our post-war economy. We have created a means of insuring our money lasts as long as we do and despite serious concerns over the future of our geriatric healthcare and the cessation of defined benefit pension schemes, we are slowly getting richer -individually and collectively.
What is not happening – and perhaps this is what Paul Johnson is really getting at – is that we are becoming more productive. Per capita productivity in Britain is not increasing as was expected and this may be because we are not getting ourselves the sort of education that makes the country better off.
A spoonful of sugar
IF the financial economics of Mary Poppins 1 and 2 are flawed, then is Johnson right to be so curmudgeonly about saving for the future? Should we be be feeding the birds rather than the City with what we earn?
Johnson himself seems amused by the episode.
Never thought I’d be quoted in context of Mary Poppins. But your best investment is definitely your own education and skills.
If only my own children would take my advice… https://t.co/3iIL2YGtHa
— Paul Johnson (@PJTheEconomist) January 12, 2019
I think he’s right on our needing to invest first in ourselves. I suspect he knows that his doom- ridden prognosis for our children’s retirement finances is based on their getting better off.
Just as we have a habit of outliving previous generations, so I suspect our children will get in the habit of out-earning us, outsaving us and ultimately spawning further generations who will do the same to them.
A spoonful of sugar is always a good idea, especially when you’ve got timesheets and a self assessment form to fill in – on a cold and windy January Sunday!