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.
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