How super corrupts our 'bourgeois bohemians'

The younger generation’s anticipation of inheriting a massive chunk of baby-boomer money is distorting the economy, and influencing the tone of Australia's Left-Right divide.

Friends from both left and right ends of the political spectrum have asked me in the past fortnight what I thought of Peter Hitchens’ remarkable performance alongside Germaine Greer on Q&A the Monday before last. 

Lefties ask: “You can’t possibly agree with him, can you?” And Righties ask: “Don’t you think he’s a breath of fresh air?”

Hitchens, brother of recently deceased journalist and intellectual Christopher Hitchens, is a former Trotskyite, turned Burkean-conservative, who is waging a one-man war on the cultural and political trends that have emerged since the liberationist movements of the 1960s and 70s – movements of which he was very much a part. That’s femininism, gay rights, various strains of socialist and environmentalist utopianism and so on. 

But though one could spend hours talking about some of his outrageous theses – ‘women are better at childcare than men’,’same-sex relationships produce pleasure but not happiness’, and so on – today I wish to focus on just one intriguing part of his sermonising. 

Hitchens complained that: “... the labour parties of the anglosphere have ... become the factions of metropolitan bourgeois bohemians who couldn’t care less about the conditions of the poor, but who are concerned about the luxury lives they lead in their capital cities”.

There is, in that one statement, the seed of a mighty debate about what Australia has become, and whether there really are large slices of the population whose material actions, rather than their ‘altruistic’ rhetoric, suggest they just want to be left alone to lead cushy lives. 

Australian Righties often complain about the ‘inner-city, latte sipping Lefties’ who enjoy riding their retro bicycles to organic bakeries in the morning – while in the outer suburbs, tradies load their vans with the tools required to fix inner-city toilets blocked with something that looks uncannily like spelt sourdough. 

There is no doubting which side of this argument the Abbott government is taking. 

Firstly, public service job cuts will cause many a spilled latte. There is almost a slavering eagerness among younger Coalition supporters to see them “get real jobs!”

Secondly, pressure from the likes of Maurice Newman, head of Abbott’s Business Advisory Council, may in the longer term lower wage rates and penalty rates relied upon by other sections of Hitchens’ “metropolitan bourgeois bohemians”. Looks like they’re in a world of trouble.

Or are they? 

As I have explained in two previous articles (How half our retirement savings went missing, November 8; A huge opportunity in retirees' hidden wealth, November 12), Australia’s wonky superannuation system has produced a historic imbalance in wealth distribution across the generations.

Where once Australians expected to leave a modest inheritance to their children, now many expect to leave a whopping stake, tied up as un-taxed capital in their homes.

Conversely, where once young Australians could afford to save a housing deposit of their own, they now find themselves paying too much tax relative to income (partly to pay the expanding pensions and other benefits funded by federal and state budgets) and facing much higher income-to-price ratios to buy a house of their own (or, dare one say it, start a business). (The grant rotting housing from the inside out, November 13)

And this is where I will add my own controversial thesis to the Hitchens view of the world (much of which, by the way, I do not support). 

While the younger generation finds it incredibly difficult to get into the housing market, or even just to save to ‘get ahead’, they are also corrupted by the knowledge that one day, they will inherit a massive chunk of baby-boomer money that will sort out their own ‘spiders in the cupboard’ finances.

Clearly this does not apply to all younger Australians. But the imbalance that Ian Harper talks about – prompting his suggestion for older Australia to release equity from their homes to get things going again – is an unhealthy facet of the economy. 

And, in my view, it is a useful way of viewing the much loathed “metropolitan bourgeois bohemians”. 

If you can’t save and invest as easily as the older generation did, and you will one day inherit a large chunk of capital, surely the best thing to do is buy a nice retro bike, pop down to the organic bakery, put in a few part-time hours at relatively comfortable rates, and then stop off for a latte on the way home. 

Instead of wasting time hating people who have enviable lifestyles, perhaps a gutsy politician will stand and address the growing imbalance our super and tax system continues to exacerbate. Indeed, our future prosperity demands it.

To recap, that means assessing a retiree’s eligibility for public benefits/entitlements based on their entire retirement savings (house, plus direct investments, plus super) – not just on their income stream. 

And, as Ian Harper suggests, it also mean preventing capital sitting around, tied up in houses, for the next decade or two when it could be funding new business activity, home-building, infrastructure development and so on. 

There are two main impediments to fixing this problem, which I will look at tomorrow. But in the meantime, think what Australia could do if all that capital were mobilised. 

It would simply not be possible to convert it all into lattes.

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