Published On: Fri, Nov 22nd, 2013

A Lost Generation: why the personal story of the beautiful Yulia is also our story

Looking back…

Many years ago HFN spent a wonderful day in the company of a beautiful Russian woman.  She had a warm smile and long legs that never seemed to stop. She was also very smart and had a master’s degree in engineering.  I had met her the previous night at an expensive Moscow restaurant.

I say restaurant.  But that was upstairs.  Downstairs, it was a brothel.

This beautiful young engineer was a prostitute and her job was to have sex with any man willing to pay her.

The year was 1996. I was 21. Boris Yeltsin was President and would remain so for another three years.  He had become President of the Russian Federation in 1991, after the Soviet Union collapsed, and for five drunken years he had stuffed the country into a gigantic blender of economic reform, price liberalisation and privatisations.  Out of this emerged a shredded and mangled society. Corrupt, desperate and ruled by oligarchs and kleptocrats.

It was my first trip to Moscow. I was there for a finance conference along with my boss and a colleague from my office in London.  My colleague had lived in Russia as a teenager and spoke the language well.  After our first day he invited us out on a tour of the best places in town.

I had already spent some time living in Poland and Hungary so was reasonably familiar with life in former communist countries.  My father had been involved in the privatisation and the reform of their banking sectors.  Eventually he would move to Armenia, where I would visit him as well.

What struck me most of all was how topsy turvey society had become since the collapse of communism.  Our driver in Poland, for example, had once been a senior electrical engineer, with a PhD, and had worked for the railways.

Our Moscow destination was even more extreme. An eye opener to what can happen to a rich, well educated, western society in under five years.

We went to a restaurant.  The three of us had dinner upstairs.  We sat in a pen in the middle of the room.  All around the edges of the room, on elevated stools, sat beautiful women.  There were mirrors on the walls so they could look at us indirectly.  The food and wine was excellent.

The downstairs area had a long bar and a dance floor. It was filled with western men, mainly middle aged Americans and Europeans from the same finance conference, and beautiful young Russian women.  My eyes were telling me that I was in a brothel, but my brain was telling me that this could not be the case – why would my married boss and colleague have taken me here? They couldn’t seriously have taken me to a brothel?  Surely not?  No!

Well, yes.

At the time I was unfamiliar with the social etiquette of brothels.  Normally if you go to a bar and you are young and single and there are young and single people there that you find attractive you would go over and start up a conversation.  Perhaps tell a joke, or ask them about what they did.

But I knew what all these women did.  They were prostitutes.  I asked my Russian speaking colleague for advice.  “Ask them about their families and what they studied at university,” came the response.

And so I did. It emerged that most of these women were not just beautiful but also very well educated.  They were witty and spoke English with a delightful, soft, accent.  Most appeared to have a degree of some sort.  Many were engineers and scientists.  Many had husbands and children.

After the collapse of the Soviet Union people would work without pay for months.  That is if they had a job to go to.  Factories and whole neighbourhoods had been abandoned, as if taken out by some strange non-destructive bomb.  There were no science jobs.  No engineering jobs.

And yet while there was nothing that their men could do, there was one ancient profession that these women could resort to when no other option was available.  These women had collectively made a difficult choice.  Starve. Or lie on your back for a few hours a week.  Earn enough money to pay for food, the rent and to keep your family safe.  Maybe even find a nice western man who could suddenly take you away from this mockery of life and everything that you had hoped for.

The evening was over.  We got into a taxi.  My boss was in front, with the driver. I sat in the back, with my colleague.  In between us was Yulia, who was beautiful.  We arrived at the hotel and Yulia was ushered through the lobby.  The hotel staff looked at us disapprovingly.  They had seen her before.  They also knew what she did.


Looking around us today…

It is now November 2013.  The weather is cold, like it was in Moscow, and as I reflect on events seventeen years ago I have a terrible sense of deja vu.  Except I am not in Moscow, I am in London.

All around me are economic migrants.  The young waiters are Spanish, Greek, Portuguese and French.  They are dressed smartly and are hard working.  There are few jobs for them in their own country.  61% of young people in Greece have no job.  51% of young people in Spain have no job. 40% of young people in France have no job.

But these foreign waiters and nannies do have jobs.  They were smart enough to leave.  The unemployment percentages would be higher if so many had not emigrated.  Talk to them.  You will discover that most say that they were university educated.  When they were growing up they were told how exciting their futures would be.  They would leave university and get a great job and become upwardly mobile young professionals.

Instead they found that there were no jobs to go to.  No employer wanted them.  After a while they packed their bags and got a cheap flight to Gatwick and ended up living on the floor of a flat, rented by a fellow emigrant.  Friends told them of job openings and they put aside their aspirations and started to serve food instead.  Those with good English had more opportunities.  Young women with masters degrees got jobs as nannies or au pairs.  A few got jobs with professional companies, making use of their talents.  None of them expect to return home. Nothing awaits them.

Over twenty percent of young Britons have no job either.  This is not as bad as it is in other European countries.   But it means that the job market is very tight.  Those that do have jobs are aware of how lucky they are.  Wages are kept low and expectations of what they will be able to achieve in life are kept even lower.

Twenty years ago it was still possible for young people to leave university, get a job and shortly afterwards put a down payment on a small house or flat.  Thatcher had made home ownership for millions a distinct possibility.  Council houses were sold off to the private sector and financial deregulation had allowed banks to flood the housing market with cheap, no questions asked, mortgages.

Today that dream is dead for most young people.  House prices are so far in excess of normal salaries that the only way they can get onto the housing market is for them to be given big deposits by their family.  Most young people rent until their late twenties or early thirties.

This has a knock on effect on when they get married and when they have children.  In some European countries, like the Netherlands, renting and having children out of wedlock is not only acceptable, it is quite normal.  In the UK it is not.  Yet.

So young professional couples are waiting until their early thirties to get married.  Do they have a big wedding, or a small civil service and use the money that was going to be spent on the wedding towards a downpayment on a house?  If they wait too long it will be hard for many couples to have more than one or two children.  With heavy levels of debt and no decent jobs most couples will find stressful fertility treatments too expensive, unless they are paid for by a national health service that is already strapped for cash.

But this truncated dream of owning a small house late in life and having one or two children is only going to be available to those who can afford it.  There are two other options.

One is that you skip the whole job angst, live off unemployment and social benefits, and have as many children as you want.  This will work for a while.  But at some point there will be such a strong public backlash that those benefits will be taken away.  Hoping for charity when people don’t have the money to even look after themselves is risky.  Disappointment is likely.

Another option is to set your aspirations even lower.  Don’t expect to own a house or ever have have more than one child. This is what most Russians had to do after the fall of the Soviet Union.  They put off having children.  For twenty years, between 1965 and 1985 Russia’s fertility rate bumbled along at around replacement level, between 2.13 and 2.05 per woman.  The early Gorbachev era saw an increase in fertility as life seemed to be better and the fertility rate moved up to a high of 2.22 in 1987.  Then times became uncertain.  A mere 12 years later, when Yeltsin left office in 1999, the fertility rate had dropped to 1.17.  It gradually recovered under Putin and as of 2011 stood at 1.54.  Russia’s population is still going to contract.

Some people will do well in the new economy. Capital is becoming more important.  Capital buys robots that can do factory work.  Capital buys software and servers to siphon off many service sector jobs.  If your job enhances the use of this capital you should do well financially. If your job requires you to compete with this capital you will do badly.

Those that do well will be able to afford more “home help”.  But it is not realistic to hope that even the very rich will have lots of servants.  We will not be returning to a life of Downton Abbey.  Machines and labour saving devices take care of most servants’  jobs.  Houses are also no longer compatible with large numbers of servants packed into attics and cellars. But they may need one or two people to help with managing their affairs and children.  For many university educated people this might be a good option.  You might get to live with a family in a nice area. Even if they pay you a low wage, your discretionary income could be greater than if you had to commute and rent your own place with a more conventional job.


Looking forward…

This Lost Generation does not just affect young people.  If young people don’t have jobs or only have badly paying jobs they can’t afford to buy many things.  This is bad news for those that sell goods and services to this market.  Those companies will close down, laying off workers, making jobs harder to find and to keep. If younger people don’t have jobs they will pay very little in taxes – they will still pay VAT – and are likely to take out more in terms of unemployment benefits.

Everybody else will have to pick up the slack.  That means higher taxes for those that have incomes and lower levels of services as less money is available for spending.  If you are a pensioner who is going to pay for your pension? Don’t make the mistake in thinking that your government pension is going to be paid out of money that you put into your pension pot years ago.  That money was spent looking after people who were pensioners when you were young.  Your pension comes directly out of taxpayers today.  Populations were once described as pyramids – with a few old people at the top and lots of young people at the bottom.  They could afford to pay for the few old people. Now populations in developed countries are described as kites, with lots of old people and few young people.  Pyramids are stable.  Kites fall over.

Governments are currently in denial that the Lost Generation is a real problem. A little bit of growth and we will get out of this slump. Everything will be fine. Don’t worry. They are sleepwalking towards a cliff.  In their dreams all these problems will go away, as if life were a movie and some crazy plot device will be introduced which will miraculously make everything better.

Soon they will flounder around trying to find solutions.  The problem is that any solution will take time to work its way through.  Politicians will not have a lot of time.  With four year electoral terms they should expect to lose every election as a disgruntled electorate kicks them out for failing to resolve the crisis and for failing to meet their unrealistic electoral promises.   Political parties already lack credibility and legitimacy.

Another problem is that any solution will use the entire country as the experiment.  There will be a lot of pressure to fiddle with the solution on a continuous basis, meaning that the initial solution, which might have worked, won’t be followed through, making it impossible to tell whether the solution was good or bad.  Scientific experiments need a control – in democratic politics there is none.

One easy solution to this crisis is mass immigration.  This will be a tempting solution for many governments.  Large numbers of young immigrants will pay the taxes for the older people. The kite becomes a pyramid again. But if there are no jobs for the indigenous young people will mass immigration really fix the problem? Or make it worse?  Immigrants will come in, find no jobs and will stay.  It is almost impossible to discriminate against them in the European Union by not allowing them access to unemployment and social security benefits.  Deporting them is also next to impossible, for legal reasons.  And eventually they will get old and will want a pension too.  In the meantime the country will become unrecognisable for the indigenous population.

Another tempting solution is to get rid of annoying voters.  Change voting requirements to make it harder for young people to have a political voice.  The US already has clever ways of stopping African Americans from voting.  Many states make registration a requirement. And then make it next to impossible for African Americans to register.  Others make criminals ineligible to vote.  And then they lock up millions of African Americans for petty drug related crimes.  It would be an easy step to make owning a property a requirement for registering to vote. If you don’t own a property you can’t register, and if you can’t register you can’t vote. At a stroke most young people will have no official political voice. Older voters are wealthier, more reliable, own property and are more populous.  This will help ensure politicians protect the needs of older people over younger people.

But it won’t solve the problem.


Conclusion: Back to 1996

My short time living and traveling in former Communist block countries after the collapse of the Soviet Union demonstrated to me personally that wealthy, well educated, western societies can fall apart relatively quickly, even in modern times.  The collapse of the Soviet Union took everybody by surprise.  Russia still has not really recovered. In its aftermath political scientists could point to factors that made the whole soviet experiment unsustainable.  Hindsight is perfect.

The West and the world today have so many structural problems that, unlike the Soviet Union, it requires little imagination to forecast a collapse. Crises can take a long time to resolve.  The Great Depression that started in 1929 was a crisis of western capitalism that was only resolved by the Second World War.

This Lost Generation is a significant social crisis. Really bad things will happen to people that you know and love if it is not resolved.

The good news is that if you look at previous empires, ranging from the Roman Empire to the Byzantine Empire to the Ottoman Empire it is amazing how long systems that are broken can survive.  Sometimes not just for years, but for centuries!



So what happened with Yulia, the beautiful Russian engineer, the long legged prostitute?

I woke up the next morning, alone.

I knocked on the neighbouring bedroom door and my Russian speaking colleague opened it, tightening his dressing gown.  At the back of the room I got a glimpse of Yulia getting dressed. A silhouette against the window.  Since I had nothing on that day- my role at the conference was over-  he suggested that Yulia take me on a tour of the city.

For the rest of the day I wandered the streets of Moscow with this beautiful, long legged, woman who was wearing high heeled black boots, a short leather dress and fishnet stockings.  There was no mistaking it – she looked like a prostitute.

We were stared at by soldiers as I walked through Red Square, past the Kremlin’s red walls and St Basil’s Cathedral’s iconic multicoloured onion domes.  We were stared at by gnarled old women as we went down into Moscow’s absurdly deep subway system and got off at train stations that looked like rich palaces, fitted with chandeliers.  Finally, we were stared at by my Russian speaking colleague, in horror, as Yulia took me back to the office reception at the end of the day.

As I look back at my delightful day with Yulia I think how her story could have been the story of many of my female friends.  I could have gone to university with her.  She could have been my sister.

What frightens me personally about this youth unemployment crisis, this Lost Generation, is that time is running out to fix it.  Soon my daughters will be Yulia’s age.

What choices will they have to make? What choices will your daughters have to make?

History Future Now, ebook edition, is now available from the Apple iBookstore!  So if you have a iPad or iPhone click on this link to download it.  It is currently on at a special offer of 99c.   The Kindle version has been submitted to Amazon and should be available shortly.

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