Wealth, inheritance and inter-generational conflict

By   /   March 23, 2016  /   83 Comments

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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.

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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.

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83 Comments

  1. Afewknowthetruth says:

    Most young people are yet to discover the extent to which they have been lied to and betrayed by politicians and ‘community leaders’.

    One reason, probably the most important reason, we do not see young people rioting in the streets is the phenomenon of baseline shift, whereby people growing up in a particular set of living arrangements believe those living conditions to be normal; a child born in yurt in Mongolia and growing up in a yurt society believes yurts are normal; a child born in a war-torn ghetto knows nothing else and believe ghetto life is normal; a child born into a world of digital screen believes digital screens are normal.

    In practice, everything most people take for granted in modern industrial societies -everything from comfortable houses to pension schemes- is a gross aberration in the grand scheme of things, and none of what we see around us is sustainable because it is all dependent on the consumption of fossil fuels and the generation of pollution that will render the Earth largely or completely uninhabitable.

    Young people will live through one of five scenarios:

    1. Use of fossil fuels will decline fairly soon because the cost of extracting them and the Energy Return On Energy Invested continues to fall: starved of fossil fuels, industrial societies will disintegrate.

    https://gailtheactuary.files.wordpress.com/2014/01/tverberg-estimate-of-future-energy-production.png

    2. Use of fossil fuels will continue because governments will prop up any insane scheme imaginable in a futile attempt to maintain status quo, and the overheating of the Earth will continue to accelerate until life become unbearable.

    https://scripps.ucsd.edu/programs/keelingcurve/wp-content/plugins/sio-bluemoon/graphs/co2_800k_zoom.png

    3. There will be military conflict amongst nations to secure the last of the fossil fuels and the ‘winners’ will continue to use them whilst the losers will have none and will be plunged immediately into reality.

    http://www.zerohedge.com/news/2015-10-17/us-warships-en-route-islands-china-asks-what-earth-makes-them-think-we-will-tolerate

    4. Use of fossil fuels will be phased out because the magnitude of the planetary emergence will finally be accepted by governments.

    (Cannot see this happening)

    5. Societies will become increasingly fascistic and those at the top will ‘push the general populace off the cliff’ in order to maintain their privileges in the short term.

    http://www.zerohedge.com/news/2015-06-06/slide-toward-%E2%80%9Cvelvet-glove%E2%80%9D-fascism-continues

    • Nick says:

      I can see Afewknowthetruth, (good name, does that include or exclude you?) that your heart really wasn’t in “4”. But one way or another, surely “4” is the only outcome possible. The question is really only whether it will happen in time to have a useful effect on climate change.

      Of course, there is an outside chance that you are right and the planet turns into a smoking cinder wheeling endlessly in space. In that case, please feel free to say “I told you so” and by all means include yourself among the Fewwhoknowthetruth. My bad.

      • Sam Sam says:

        No way. We can’t rely on a bunch of bitching toddlers to solve problems, MP’s just take all the credit

      • Afewknowthetruth says:

        Nick, do you see any indication governments are remotely interested in curtailing emissions? Do you see anything other than empty rhetoric and lies?

        The Key government narrative is:

        1. Extract fossil fuels and waste them as quickly as possible on corporatized sport, entertainment, tourism and consumerism etc.

        2. Ignore all the scientific evidence (and simple logic) that fossil fuels are finite.

        3. Ignore all the scientific evidence that accelerating environmental meltdown is underway, a planetary emergency due to out-of-control emissions:

        https://www.co2.earth/co2-acceleration

        and

        http://www.stuff.co.nz/environment/climate-news/78164975/carbon-emissions-highest-in-66-million-years-since-dinosaur-age

        4. Promote policies that make everything that matters rapidly worse.

        The Key government is not alone in such insanity and similar polices are established throughout the ‘developed’ world.

        This dismal state of affairs is a natural consequence of a near-global political system that primarily serves the short-term interests of the few and in doing so sacrifices the many….. including the next generation.

        I have been raising the alarm with respect to resource depletion and Abrupt Climate Change for over 15 years, and every year have witnessed everything that matters being made worse by governments, whilst fuckwits have denigrated the very concept of limits and governments have made everything worse.

        Hence, I have no faith in governments (as currently configured) ever doing the right thing when it comes to the next generation.

        I am ‘lucky’ because, at nearly 66 years old, I won’t have to face what younger people will have to face in a few decades.

        • fatty says:

          “made worse by governments”

          Or made worse by voters? It’s all very well blaming governments, but people keep voting for a fossil economy.

          I do agree with your overall points though

          • Afewknowthetruth says:

            I believe the important question is this: would people vote for continued use of fossil fuels (and planetary meltdown and their own demise) if they were not lied to on a continuous basis by the government and the corporate media?

            We know the government is not going to tell the truth about anything (the fraudulent nature of the monetary system, the demographic ‘cliff’, the phony nature of GDP, the real reason for wars, the true state of the energy system, the true state of the environmental and the prospect of collapse etc.) because we have confidence based system, but at some stage in the near future the official narrative will be plainly seen to be a pack of lies. Then what?

      • Nick J says:

        Agree AFKTT that we are due for the chop when fossil fuels run out. Our theft is not merely intergenerational, it is planetary on future generations. We have caused the latest mega extinction event, we have ruined our environment. Man has acted as a global parasitic virus.

        I don’t see any realistic chance of redemption until we go through the stages of alcohol / addiction recovery. We first need to recognise that there is a problem. We need willingly to get rid of the SUV, try that with a petroleum addict!

        Unlike others I do not blame neoliberalism or the one percent, they are us and we are them. Industrial fossil energy man, that’s us. At worst we are their willing slaves.

        And to prove our addiction you and I blog away using a technology that is impossible without petrochemicals and fossil energy. Soon I will catch the diesel bus to air-conditioned work.

    • Quick Thinking says:

      You forgot an option, The nations were angry, and Your wrath has come, And the time of the dead, that they should be judged, And that You should reward Your servants the prophets and the saints, And those who fear Your name, small and great, And should destroy those who destroy the earth.” (Rev 11:18).
      Lots of different views about the existence of God but the worse things get here the more chance there is that an outside power is what we need.

  2. International Rescue says:

    Hi Wayne. I grew up in a single income, working class family in Auckland. My family couldn’t afford to put me through university, so I worked full time and studied part time. I had no special privileges, I had to work for everything I had. Soon after I bought my first house in 1985 interest rates reached close to 20%, and the economy, and with it my job prospects, suffered immensely as the country adjusted to the economic reforms.

    Today my children have far more opportunities than I did. The job market is more diverse, the education system provides a wider choice of options. In NZ today we have close to full employment, indeed we have many industries/occupations with significant skills shortages. Interest rates are low, inflation close to zero, and we take home more of what we earn.

    If I had a time machine, I would swap with my children in a heartbeat.

    • Sam Sam says:

      Those choices you speak of is just plastic trinkets and junk gmo.

      Nobody acknowledges let alone understands that for every dollar you save at the warehouse, your losing a dollar in wages.

      NZ’s clothing ranges are from two seasons ago, you can jump the cue by paying a bit extra online, but that kind of defeats the purpose of tricking working poor in to thinking they live like kings through junk GMO sold at the warehouse.

      Our fruit an veg is on average two thirds less nutrient rich than its 1970’s equivalent. Disastrous health effects there.

      It’s hard to say when New Zealand was more happier, what with the phenomenon of white supremacy. But judging from my family photos I’d have to say the seventies was the more happier lifestyle. Then of course capitalism peaked in 1980, and we’ve been bitching about muh wage gap ever since.

      • Richard Christie says:

        Our fruit an veg is on average two thirds less nutrient rich than its 1970’s equivalent.

        I call bullshit on this.
        Have you a source?

        • Sam Sam says:

          Here is the raw copy and pasta. I’ll let some one with a bit more manners worry about fixing the structure. Enjoy the light reading 🙂

          ———————/-/-/-/—/—————————————

          Energy use, blue water footprint, and greenhouse gas emissions
          for current food consumption patterns and dietary
          recommendations in the US
          Michelle S. Tom
          1

          Paul S. Fischbeck
          2

          Chris T. Hendrickson
          1
          Ó
          Springer Science+Business Media New York 2015
          Abstract
          This article measures the changes in energy
          use, blue water footprint, and greenhouse gas (GHG)
          emissions associated with shifting from current US food
          consumption patterns to three dietary scenarios, which are
          based, in part, on the 2010 USDA
          Dietary Guidelines
          (US
          Department of Agriculture and US Department of Health
          and Human Services in Dietary Guidelines for Americans,
          2010, 7th edn, US Government Printing Office, Washing-
          ton,
          2010
          ). Amidst the current overweight and obesity
          epidemic in the USA, the
          Dietary Guidelines
          provide food
          and beverage recommendations that are intended to help
          individuals achieve and maintain healthy weight. The three
          dietary scenarios we examine include (1) reducing Caloric
          intake levels to achieve ‘‘normal’’ weight without shifting
          food mix, (2) switching current food mix to USDA rec-
          ommended food patterns, without reducing Caloric intake,
          and (3) reducing Caloric intake levels and shifting current
          food mix to USDA recommended food patterns, which
          support healthy weight. This study finds that shifting from
          the current US diet to dietary Scenario 1 decreases energy
          use, blue water footprint, and GHG emissions by around
          9 %, while shifting to dietary Scenario 2 increases energy
          use by 43 %, blue water footprint by 16 %, and GHG
          emissions by 11 %. Shifting to dietary Scenario 3, which
          accounts for both reduced Caloric intake and a shift to the
          USDA recommended food mix, increases energy use by
          38 %, blue water footprint by 10 %, and GHG emissions
          by 6 %. These perhaps counterintuitive results are pri-
          marily due to USDA recommendations for greater Caloric
          intake of fruits, vegetables, dairy, and fish/seafood, which
          have relatively high resource use and emissions per
          Calorie.
          Keywords
          Energy use
          Blue water footprint
          GHG
          emissions
          Food consumption
          Diet
          1 Introduction
          Most media discourse surrounding overweight and obesity
          tends to focus exclusively on human health and healthcare
          costs (Thompson et al.
          1999
          ,
          2001
          ; Dixon
          2010
          ). However,
          there is a growing recognition that dietary behaviors
          associated with overweight and obesity have environmen-
          tal effects in addition to health implications. As a sign of
          this growing recognition, the US Dietary Guidelines
          Advisory Committee (DGAC) has recommended for the
          first time that sustainability should be an integral part of
          developing the
          Dietary Guidelines for Americans
          (Merri-
          gan et al.
          2015
          ), which are published by the US Depart-
          ment of Agriculture (USDA) and US Department of Health
          and Human Services every 5 years. In light of this devel-
          opment and mounting evidence that diet and sustainability
          are intertwined, our study analyzes the environmental
          implications that food consumption patterns contributing to
          extra body weight and diet-related diseases have on energy
          use, blue water footprint, and greenhouse gas (GHG)
          emissions in the US food supply system. Furthermore,
          while Heller and Keoleian (
          2014
          ) have evaluated the GHG
          emissions impact of adopting the USDA recommended
          diet, our analysis is the first to examine the multiple effects
          that shifting to the USDA dietary recommendations has on
          energy use, blue water footprint, and GHG emissions. The
          blue water footprint refers to the volume of freshwater
          taken from the surface or ground to create a product, and
          which has then evaporated, been incorporated into the
          product, or been returned to a separate catchment from
          which it was originally withdrawn (Hoekstra et al.
          2011
          ).
          Heller and Keoleian (
          2014
          ) determined