Will the boomers ever stop bleeding younger generations dry?
No matter who loses the upcoming election, you can be sure the luckiest generation ever will keep on winning
Fourteen years ago, I wrote a think piece for the Fairfax broadsheets about Generation X belatedly starting to move into positions of power. (This was the era when Barack Obama, Julia Gillard and David Cameron either had the top job or were well on their way to getting it.)
The tl;dr version of the think piece was that, after an interminable period of them hoovering up all the attention, money and good jobs, perhaps the boomers would drift off into retirement and give up-and-coming generations a chance to have their time in the sun (and maybe even get promoted to a job that paid enough to make home ownership viable).
In my piece, I quoted a prescient 2003 warning from Ian Macfarlane, the then Reserve Bank governor. Macfarlane, himself a boomer, warned, "The young may resent the tax burden imposed on them to pay for the pension and health expenditure on the old … this will particularly be the case if they see the old as owning most of the community's assets."
Back then, boomers accounted for a quarter of Australia’s population but controlled half of the national household wealth. A decade and a half on, I’d guess that boomers make up a smaller proportion of the population but have hoarded even more of the wealth. (That’s certainly the impression I get from this report. And this one. Oh, and this one as well.)
Heroically, Macfarlane continues to point out that Generations X, Y and Z are still getting brutally arse raped by the most fortunate and self-obsessed generation the world has ever known. A few days ago, in the middle of an election campaign, Macfarlane spoke truth to grey power by making the following observations:
*“You actually have to have probably a fall in house prices [if younger generations are going to be able to buy homes] – that’s not going to be very popular, but that’s probably essential to any solution.”
* “The people who hold all the wealth are the older people – we don’t really tax wealth. The people who depend on income are the young people who have no wealth and our tax system relies very largely on taxing income, so we have a problem going forward. I’m surprised that the younger generation aren’t actually squealing louder… this explosion of wealth we have seen over the last 30 years is largely in the hands of older Australians.”
*"I think the biggest influence of globalisation was that for a lot of firms and workers the realisation that your job or business is not safe where it was. It could always be moved to a different part of the world. That robbed businesses of pricing power and influenced labour too, because they knew they could lose their jobs. Labour became more and more concerned about maintaining jobs, rather than putting up wages.”
(NB: When China joined the WTO in 2001, all the boomers had established their careers and some of them were already contemplating taking early retirement.)
The standard objections
At this juncture in articles about generational inequities, it’s traditional to engage in a certain amount of throat clearing. So, let’s address the inevitable, boomer-exculpating contentions before going any further.
*These are class differences, not generational differences: Well, yes, in the narrow sense that it’s not difficult to find a 70-year-old surviving on cat food in their unheated flat or a superyacht-owning, 30-year-old tech billionaire. But these individuals are outliers. The argument Macfarlane makes and which all the available statistical evidence supports is that boomers are much more likely to be leading a home-owning, upper-middle class, or at least solidly middle class, lifestyle than their children and grandchildren.
*Generational inequity doesn’t matter because an enormous wealth transfer is pending: Once again, yes but no. They didn’t get their wish of dying before they got old, but Boomers will increasingly head off to the great Beatles concert in the sky as they start entering the late seventies-early eighties death zone. Nonetheless, I’d caution all whippersnappers given to mentally calculating what the parental home will go for when the time comes to consider the following:
1) Your parents may not want to, or be able to, pass down much of their wealth to you. Nothing tickles boomers’ funny bone harder than talking about how they are planning on ‘Spending the kids’ inheritance’. Indeed, boomers find this notion so delightfully hilarious that they will often harp on about it in the presence of the very kids they are speculating about disinheriting. Even I accept that most boomers probably won’t sell all their properties and drain their super accounts dry to splurge on luxury cruises, Get Smart box sets and Liberal Party donations. But neither are they likely to start skimping during their prolonged retirements, which brings me to my next point…
2) Until recently, few people made it much beyond the Biblically allotted three score and ten; it was only half a century ago average life expectancy began increasing. As with so many things, boomers got the timing just right. As a result, they will enjoy retirements that stretch for 20-30 years. Possibly even longer if there are significant medical breakthroughs in the coming years.
Though no politician is yet willing to publicly concede it, the only way for millions of boomers to live in anything like the manner they have become accustomed to if they are out of the workforce for the last quarter of their lives is either for them to ‘eat their house’ (i.e. liquidate their assets and use that money to fund their retirement) or for confiscatory rates of taxation to be imposed on those still in the workforce. So, choose your poison, post-boomers – you either give up on inheriting your parents’ wealth or get taxed out the wazoo. This brings me to my next point…3) Back when most people died before hitting 70, their heirs were still in the family-forming, home-buying and business-launching prime of their lives. Even if I’m being overly pessimistic about the prospect of a significant generational wealth transfer, most post-boomers won’t get their hands on their parents’ assets until they are in their fifties or sixties. Of course, it’s helpful to come into money at any age. But an inheritance is a lot less life-changing when your life is already two-thirds over than when there’s still two-thirds of it left to go.
*We live in a perfectly functioning meritocracy. If boomers are disproportionately well-heeled compared to all preceding and succeeding generations, that can only be because they embraced a Calvinist work ethic and a commitment to dour frugality that would put the Amish to shame. As any reader of the ‘Letters to the Editor’ page will be aware, boomers deserve everything they’ve got. Sure, the boomers’ parents went through two world wars and a savage depression, then spent the late forties and fifties trying to create a less Hobbesian world (see: the United Nations, socialised health care, nation-building infrastructure investments, indoor plumbing, workers’ rights, wealth redistribution, full employment, the creation of an upwardly mobile working class and growing middle class, etc). But they were old-fashioned squares who didn’t dig where the kids were at, man! As for those Gen X/Y/Z arse clowns, well, did they leave school at age 16, then get a job that involved walking barefoot over broken glass for 20km – uphill both ways – save for several years to buy a three-bedroom house on a quarter-acre block an entire 10kms from the CBD, then pay 17 per cent interest rates for nine months decades?(OK, I’ve got to concede this one. We post-boomers, having squandered the vast amounts of money we all make from our secure, well-paid jobs on avocado-and-toast café breakfasts, only have ourselves to blame for our impecuniousness. It’s definitely not the case that, having despairingly given up on saving the $150,000 deposit required for a bleak 1.5 bedroom flat out in the boondocks, we console ourselves by occasionally splurging $30 on Sunday brunch.)
Hustle hard enough, youngsters, and you could live like a boomer someday!
Gen Y and Z: don’t moan, organise
Hope still flickered, albeit dimly, in my breast when I wrote that Gen X-championing Fairfax article in my late thirties. I’m not sure exactly what I believed would happen when the boomers’ withered hands were finally prised off the levers of power and members of my generation started moving into corner offices. I guess I assumed that in the years to come, life would somehow become less of a grind. That wages would start to grow strongly. That some semblance of sanity would return to property prices. That technological breakthroughs (such as the newly released Apple iPhone) would result in people working fewer hours. That post-boomer generations would get a bigger slice of the pie, either due to the pie growing significantly or the boomers belatedly deciding not to monopolise so much of it.
Looking on the bright side, I do make a bit more money now than I did when working as a journalist. We all know how the rest of it turned out. Nonetheless, for a long time, I thought it could just be me who was battling and that lots of other Gen Xers might be living the dream. Then I read another think piece published in the Fairfax (now Nine) broadsheets about Gen X. Noting that she and most of her friends classify as ‘elites’ – in the sense they are university educated, inner-city dwelling cosmopolitans with a certain amount of cultural power – author and freelance journalist Julie Szego described lives that have turned out to be unexpectedly constrained and precarious:
My friends might still travel but not too frequently because such expeditions clean out their savings. Posh plays or concerts are also out because they have finely tuned weekly budgets… A dental check-up is classified as a luxury, much like posh theatre… My friends, and friends of friends, work fixed-term, short-term and casual jobs... A few have regular, permanent jobs with dignified salaries though these climb incrementally while the cost of necessities soar… My women friends fear getting old and sick – and poor, single women over 60 are most at risk of poverty. We never used to fear getting old and sick… Some of my friends are hanging on by the fingernails servicing mortgages. Many are hanging on by the fingernails paying rent. The luckier ones have bought homes courtesy of the bank of mum-and-dad. Most live with the cruel paradox that housing security will only be theirs once mum-and-dad are no more. A few don’t even have that cruel paradox to fall back on… This heaviness we carry is not, I don’t think, the enduring cynicism of the “slacker”. I would diagnose it more as regret. Or maybe an irrational sense of failure… When you’re awake in the wee hours – blame perimenopause, or whatever epic disruption takes your fancy – fear has a way of turning into recrimination.
I’m with Szego up until the last sentence. We Gen Xers never did recriminations. Grumbling about our lot in life? Sure! Darkly humorous cynicism about the state of the world? Absolutely. Grim, impotently rageful or just plain incomprehensible punk-heavy metal fusion songs? Well, yes, in our youth.
But recrimination in the sense of, you know, actually recriminating with the older generation (rather than ourselves)? Telling them their sons and daughters were beyond their command, that their old road was rapidly ageing, that they should get out of the new one if they couldn’t lend a hand? Nup, there was none of that. And look where three decades of responding with resigned fatalism as our elders relentlessly and ruthlessly pursued their self-interest has gotten we fortysomethings and fiftysomethings.
If I’ve got one piece of advice for the twentysomethings and thirtysomethings out there, it’s this: don’t make the same mistake Gen Xers did. Don’t meekly offer up your neck when the boomers show up on your doorstep looking to figuratively or literally suck the lifeblood out of you. Start squealing loudly about negative gearing, zoning restrictions, franking credits, tax shelters, non-means-tested seniors benefits and all the other lurks and perks the boomers have so shamelessly availed themselves of.
Side note: If you’re a post-boomer eager to raise your generational consciousness, I can’t recommend Bruce Cannon Gibney’s A Generation of Sociopaths highly enough. If you don’t have time to read the book, you can find Julie Szego’s excellent article here.