Wednesday, October 13, 2004

A generational powder keg?

Ross Gittins is on the right track here, but first he needs to understand basic generational breakdowns. The gilt-edged Old themselves (i.e. those currently aged 55+) straddle three cohorts: older boomers (1946-49), Depression and War babies (1930-45), and parents-of-boomers (born pre-1930).

More significant than the differences between the Old inter se, however, are the differences between the three groups of Old and their children. Here, Gittins over-generalises, by setting up a near one-size-fits-all Old vs Young, Parent vs Child trope.

In fact, the respective attitudes of GenX and boomers to their parents – and hence the broader implications of the ageing population – vary strikingly. At the core here is an inverted inter-generational wealth imbalance: GenX are, and probably always will be, poorer than their parents, while for boomers (as with most other generations in history) the opposite is usually the case.

Gittins’s mistake is easy enough to make. We “young”* (GenX were born between 1964 and 1979) are indeed largely locked out of the big-city housing market, and often carry crushing HECS burdens. When they look at the comparative affluence of their parents now, and also when they were one's current age, some jealousy is natural.

Such low-level antipathy has nothing on boomers’ distaste for their own parents, though – a distaste which of course must come from a very different place than have-not financial jealousy. Rather, boomers with parents aged 75+ are terrified with the prospect of their parents becoming a private financial burden on them – hence Labor’s precisely-targeted Medicare Gold policy, which Gittins, to his credit, does see as an overt bribe also to the adult (boomer) children of the over-75s. Where Gittins loses it is in his conflation of these two very different types of parent-child antipathies, and the financial realities that underpin them.

Put bluntly, the boomers have never believed in a future for anyone past themselves (possibly barring their own offspring*). Boomers either orchestrated, or were conspicuously silent during, the great privatisations of the last two decades, which sold-off the common wealth for short-term private consumption by, and overpaid employment of insiders (= boomers, in most cases). Not surprisingly, general boomer greed and callousness often extends to the personal realm, in terms of their relationships with their own parents.

The state's remaining apparatus, so much of which has been mass-stripped and melted-down by boomers, is thus expected to devote a disproportionate portion of its stretched resources to caring for parents-of-boomers. This is not because such is good policy, and certainly not because it is nominally consistent with money-talks economic fundamentalism (the boomer credo). In substance though, it is just another form of privatisation – covert theft from the future, in return for immediate boomer gratification.

While boomers have the welfare state stretched to breaking point – all in the name of not having to spend a dime on their own parents – GenX is meanwhile left in a no-win position re the welfare state. With even 40 years of compulsory superannuation likely to never amount to the house-price equity held by today’s typical retiree, GenX is going to need the welfare state much more than any recent preceding generation. Because of this, GenX is all the more not going to be rocking the boat on excessive welfare generosity to the Old, even though they clearly see the current generosity as unsustainable. GenX thus has a kind of investment in the status quo, even if the age pension and associated benefits of 2025 are, realistically, going to be a bare-bones version of the present system.

But even this modest prospect of leaving a few crumbs for the next generation is anathema to the boomers, of course – they are too busy siphoning welfare state’s last vestiges into their own pockets.

* On account of Generation Y (born post 1979), as I have previously noted, it is still early days

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