Inter-generational tensions arose from a recent, testy exchange involving Martyn Bradbury and Chris Trotter. The former noted the declining life chances of young adults compared to their baby boomer parents. Since the early 1990s, growing unemployment, precarious jobs, student loans, rising property prices and declining living standards had impoverished an entire generation of New Zealanders. Meanwhile, an older generation of New Zealanders reaped the advantages of full employment, tax-funded tertiary study and affordable home ownership. For these people the protections of the welfare state would be nicely complemented by the prospect of weekly superannuation payments from the age of 65. One should also mention the prospect of a raised age limit, introduced just in time to discriminate against younger cohorts as the baby boomers die off. These trenchant observations provoked an even more trenchant response. In a recent blogpost Chris Trotter accused his younger ‘comrade’ of ‘fomenting inter-generational warfare’ and suggested that this would turn ‘children against their parents or grandparents’. At this point, more heat than light was being generated. My purpose here is to lower the temperature and clarify the issue at hand.
Our discussion must first acknowledge growing inequalities of class. Back in 1996, after 12 years of neoliberal policies, a study of household income data revealed the rate and extent of socioeconomic polarization. In 1983-84, New Zealand’s top income decile received 25.62% of the national ‘cake’. In 1995-96, they received 29.61%, a rise of 25%. The top 5% increased their national share from 15.28% to 19.04% over the same period. The lowest decile received 2.05% of national income in 1983-84 and 1.7% in 1995-96. Meanwhile, the bottom eight deciles all suffered a loss of cash benefits. According to the authors of this study, ‘New Zealand’s economic reform programme over the period 1984-96 saw the very rich becoming even richer while the bulk of the rest of the population because poorer in relative terms, with the poorest faring worst’ (Chatterjee & Podder, 1998, p. 13)1.
This was the net result of reducing the progressivity of income tax, privatizing state assets, cutting unemployment and single parent benefits, and commercializing the provision of health and education. For those within the bottom decile, living costs increased, secure jobs disappeared as homelessness and overcrowding became the norm. Just think of food banks, crime, drugs, gangs and the disintegration of working class culture – in Porirua, East Tamaki and former Bay of Plenty forestry towns. No inter-generational differences of opportunity in these places. Everyone is poor – kids, parents and grandparents. For families within the top decile, life is comfortable; freehold home ownership and safe surroundings, mum and dad are on high salaries with sufficient investments to cover their children’s education. Of course, the ‘one percenters’ live on a different planet, the millions invested in shares, property and financial holdings will easily cover the costs of raising a family. Teenagers can look forward to a trust-funded university education, overseas travel and the likelihood of career success. No inter-generational conflict here either. I’m sure that John and Bronagh Key are not at odds, financially, with their children, Max and Stephanie. At the same time, however, the middle classes have been squeezed. Without inherited wealth, it is increasingly difficult for parents on professional incomes to provide a future for their children. Student loans eat into family income and saving for first homes in a desirable suburb becomes an impossibility. Although the resulting inter-generational conflict is real, it must be seen as an effect of socio-economic polarisation. In these surroundings, middle class life chances and social mobility diminishes as inherited wealth becomes essential for a decent life. Thomas Picketty argues that this has become the norm in all Western countries:
… younger people, in particular those born in the 1970s and 1980s, have already experienced (to a certain extent) the important role that inheritance will once again play in their lives and the lives of their relatives and friends. For this group, for example, whether or not a child receives gifts from parents can have a major impact in deciding who will own property and who will not, at what age, and how extensive that property will be – in any case, to a much greater extent than in the previous generation. Inheritance is playing a larger part in their lives, careers, and individual and family choices than it did with the baby boomers (Picketty,2014: 381).
The ‘one percenters’ must be enjoying the spectacle of young adults fighting baby boomers for the privileges of a diminishing middle class lifestyle. Unfortunately, the inter-generational conflict frame pervades many conventional analyses of social inequality. A recent Guardian Weekly investigation entitled ‘The Betrayal of Generation Y’ illustrates the point. Caelinn Barr and Shiv Malik conclude that
A combination of debt, joblessness, globalisation, demographics and rising house prices is depressing the incomes and prospects of millions of young people across the developed world, resulting in unprecedented inequality between generations (Barr & Malik, 2016: 1).
I don’t doubt the statistical evidence here, only the causal analysis. Debt, joblessness and rising house prices resulting from austerity policies are not just ‘depressing the incomes and prospects of millions of young people’. This plight consumes everybody from all age groups without access to inherited wealth. I rest my case.
1 Chatterjee, S. & Podder, W. (1998). Sharing the National Cake in Post-reform New Zealand: Income Inequality Trends in Terms of Income Sources, paper delivered to New Zealand Association of Economists, Wellington, September.
2Picketty, T. (2014). Capital in the Twenty First Century. Belknap: Harvard University Press.
3Barr, C. & Malik, S. (2016). The Betrayal of Generation Y. Guardian Weekly, 11-17 March.