It’s become fashionable to talk about an intergenerational divide, but I’m not sure I totally buy this argument.
The latest installment of this argument came yesterday from the ANZ economic report which argued that the wealth gap between the young and old is growing .
That’s because of three things:
- The price of houses
- Rising unemployment mainly borne by the young
- The growing cost of pensions because of an ageing population
They make a bunch of good points, but is this actually a widening gap between millennials and boomers? Or is really a widening gap between the rich and poor?
Personally I am more convinced by the economists who believe it’s the latter.
Because the fact is young people will be able to get into houses if their parents have houses. Their parents – let’s call them wealthy parents – will be able to help their children into property. It’s already happening. But less wealthy parents won’t.
And so really, what we’re experiencing is a crystallising perhaps of wealth classes: if you and your family have assets, you will continue to have them. If you and your family don’t, it’s getting harder to get in.
And the fact is millennials and younger generations don’t have this any tougher than previous generations. Boomers bought houses that might’ve been cheaper up front but when you’re paying 21 percent interest rates that works out super expensive by the end of the mortgage. Unemployment during the 90s hit nearly 11 percent, which is double what it is now. And there have always been existential threats to humanity. It’s climate change at the moment, it used to be nuclear war.
I’m not sure millennials and younger generations can credibly claim that the world is worse off now than it was 30 or 40 years ago when their parents were trying to get ahead.
I think there’s actually a risk attached to mislabelling this divide – especially when it comes to housing - because what it does is add fuel to the calls for so called solutions like capital gains taxes and wealth taxes.
These are just punishment taxes, designed to punish people who have assets that other people want. It doesn’t get anyone into a house. It only punishes you for having a house.
That might make some people feel better but it is not the solution. The solution is to build more houses. The solution is to build more national infrastructure. We need more of what we have, to make sure everyone gets something.
What we don’t need is to punish older generations because we’re grumpy at the (incorrect) belief that they had it easier.
Heather du Plessis-Allan is a journalist and commentator who hosts Newstalk ZB's Drive show.
2 comments:
>"I’m not sure millennials and younger generations can credibly claim that the world is worse off now than it was 30 or 40 years ago when their parents were trying to get ahead."
Maybe not the world, but it's tougher now for many people than it was half a century back. My generation must be the first one in many centuries to tell our kids that we had it better than they did.
Those were the days of the State Advance Corp and free varsity tuition. There was a saying that any man with a pair of hands and preparedness to work could support a family including the purchase of a family home. And it was largely true.
I realise we can't go back to those times but I can fully understand anyone in my age feeling nostaligic about them, and I can understand the resentful looks from younger generations for many of whom home ownership is pie in the sky and who start their careers with a huge debt for their higher education.
Most young people want a house equivalent to where their parents have achieved after a life time
Need to compare parents' first home with like today. They just aren't out there anymore.
The 90 to 100 square metre boxes, three bedrooms. Only wet areas had floor coverings, no carpet or drapes. They came later.
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