The Boomer Supremacy

[think positive]

[Pies4shaw]

^^^ Yes, it's a funny definition of "wealth". Methinks David has a chip on his shoulder about this. That's what passes for political discourse, of course - every parent who ever helped their kid to buy a house always bought them a fabulous penthouse on Sydney Harbour because they were all so wealthy.

My parents helped me out with the deposit on my first home (a rather unprepossessing, run-down, weatherboard hovel in Coburg), many years ago. They were not then wealthy (they didn't own their own home) and they aren't now (though they did become homeowners in their 70s when my - actually poor - grandmother left them hers). They remain people of very limited means who helped out their children through a life of hard work and, frankly, self-abnegation.

In my life-time, there has always been an "Australian housing affordability crisis". There are various ways it might be solved and many of those involve tax and other regulatory reforms - but I'm quite certain that the way to fix it isn't to create some artificially low financial point at which to describe people as "wealthy" that would take away the ability of working class people to do one of the few things they can do to improve their own kids' lives.

Looking at the limits that have been imposed recently on superannuation as a "wealth acquisition vehicle", I can't help but wonder why there isn't some reasonable limit on the value of the home you can own before you get assessed on the capital gain when you dispose of it. Why, eg, is it that superannuation balances over $1.6M will shortly be taxed differently - but people can still "owner-occupy" a $20M house, capital-gains-tax free? My own concern is that if some limit is ever set on that, it will be set so low that ordinary family homes in average areas will finish up being capital-gains-taxed, while the actually rich will dispose of their houses to untaxable entities located in the Bahamas or the Channel Isles, or find some other very effective means of avoiding the consequences, as has always been their wont.

Thus, David and I would both agree that what Turnbull seems to have done for his daughter is, as they say, "a bit rich" - but the answer, in my opinion, is to try to tax the wealthy effectively on what they have now, not to deny working-class families their capacity to improve their kids' lives with a modest inheritance. There are not too many Australians that could buy their 23-year-old daughter a $2.7M penthouse overlooking Sydney Harbour and I don't think the problem is brought into better focus by looking straight at the periphery.

[think positive]

[HAL]

Such an original name!

[Pies4shaw]

I just wasted a few moments of my life reading about the "research" by economists from Sydney Uni and RMIT reported on in the Sydney Morning Herald link embedded in that ABC thing.

It appears that economists at two publicly-funded institutions may have used our taxes to do research - undertaken by them, it would appear, with more or less straight faces - which "proves" that people who are given gifts of money by other people can afford to buy more stuff, or to pay more for the same stuff.

Really, who'd have thunk it?

Was it the great Richard Tawney who said something to the effect that "economics" is a collection of occasionally useful truisms?

[David]

[Pies4shaw]

Parents don't do it because it makes them feel good. Working class parents do it because they know it's the one thing they can do for their children that doesn't leave them to the fickle fate of political whim.

My politics are way further left than yours, yet even I know that governments can't be trusted not to take the financial ground out from under my kids' feet at a moment's notice and without so much as a backward-glance. Why are you so gullible?

[David]

From a position of self-interest (or more accurately, interest in the welfare of your offspring), your decision makes total sense, and if I were in your position I might well be inclined to do the same for my son. But I'm sure you understand that there's a huge difference between the interests of individuals looking out for themselves and their families and the interests of a society as a whole. A system built around presumption of government mismanagement is hardly likely to be an effective one – to some extent, we need to have trust that our society's regulators won't screw us over, otherwise, it's every man for himself – and to some extent it becomes a self-fulfilling prophecy.

Under your logic, we should, for example, be using every trick in the book to avoid paying taxes, because who can be sure that the government won't flush our cash down the drain and leave us on the streets, right? And I'm sure many people do exactly that for exactly that reason. But you'll understand at the same time why I and many others want to see such loopholes closed (and if it's not clear, it's because the inequality and shortfalls in government revenue that result from such behaviour are a more pressing issue than hypothetical mismanagement). I take the position I do on this topic for the same reason.

[Pies4shaw]

That presumption has served the planet well for the last 4 billion years, so I'll be sticking with it.

The reason I presume government mismanagement is because that has always been the norm and, frankly, if there are any exceptions (none readily come to mind), they serve only to prove the rule. Sometimes, people come up with a good idea (eg, social welfare, universal healthcare, free tertiary education) but these things are typically stuffed in their implementation.

Of course, in expressing such views, I have the dubious benefit of having worked as a senior public servant before I finally decided that I was sick of being surrounded by dismal idiots (what you call the bureaucracy, I call "the Mediocracy") who were mostly incapable of complex thought whilst they were busy trying to slide up the greasy pole. Thus, I formed the view that if I was going to be surrounded by self-serving gold-diggers, they may as well be smart, well-educated, well-mannered ones.

When I was a kid, I found "Yes, Minister" and "Yes, Prime Minister" incredibly funny. After working in government, I find those programs wryly amusing as black comedy about an ineffable tragedy at the heart of all our lives.

Moving on from that, what is this abstract "society as a whole", anyway? Properly understood, it's just a bunch of other people with different political views and interests that would quite like to take the little you do have and give it to their (respective sets of) mates, anyway.

We put up with democracy and bureaucratic governance because there's nothing better - but we do so at our peril if we are sycophantic enough to assume that anything about it works properly.

Most of the things that people routinely complain about as leading to inequality (eg, superannuation arrangements, negative-gearing impacts on housing affordability) were actually put in place by supposedly enlightened "progressive" parties - I find it helpful to bear that in mind. It may be politically beneficial to pretend that it was the Liberals who did it - but all they did was tinker at the margins. And, no, that's not a party political observation - I have never voted for a conservative party and I never shall. When Shorten talks about issues with the housing market and superannuation, he's actually talking about dismantling things put in place (as alleged social goods) by his own political forbears when I was a young man.

[stui magpie]

David's theory of abolishing inheritance and having everyone have an equal chance would create the opposite of what he would like, a purely darwinian society.

At the moment, the old chinese crack about 1st generation collie works hard etc applies. People will rise from the pack and do well, but generally in a couple of generations it's heading south.

The whole idea makes me think of Aldous Huxley's brave new world. .

I'm from the working class, 4th generation Australian from a convict forebear. Left home in the bush came to Melbourne at 19 where I knew no one, got a job and a flat and worked from there. Yeah my parents helped out at times when I was young, but that turns around and now my mum has moved in with me to be closer to family.

I'm too angry and I've had too much to drink to be really coherent here, but the idea that hard working people shouldn't be able to give their kids a leg up, particularly coming from someone who's parents raised a cricket team funded by centrelink not hard work, does tend to annoy me somewhat.

[Pies4shaw]

[David]

My parents have a lot of kids (although only five live at home nowadays) and only a single income, basically. That's how my childhood was – we didn't have much more than the basics. When I studied economics in year 12, I did some calculations and worked out that we were living in what would be considered relative poverty, though it didn't feel anything like I imagined poverty to be. My parents would find ways to supplement the weekly grocery shop – we would sometimes collect left over bread from the local bakery after closing time, only wore second hand clothes, etc.

I don't think it should strike you as so unusual – there are, after all, people out there with mountains of debt, others living in government housing, etc. Not everyone in the suburbs has money to spare.

[Pies4shaw]

"And if you told that to the young people of today, they'd never believe you."

It is very, very unusual - and it's slightly troubling that you think it isn't.

Obviously your parents had 6+ children. I don't know what the total number of 6+-child households is in Australia (no stats readily leap out from the ABS - that tells me something pretty important about how unusual it is, right there) - but I'm guessing it's a tiny percentage of the total number of households with children (the average seems to be about 1.5 children per household). With the average cost of raising a kid being measured in the many hundreds of thousands of dollars per child, that's your parents' very expensive life-choice right there. For two families with the same financial resources, the difference between leaving a million dollars between two kids and nothing to 5 kids is, on average, less than the cost of raising the three extras. As for the $400 loan for an airfare, well QED.

You might want to reconsider whether it's viable to be constructing the entire edifice of your proposed retirement-incomes/inheritance and taxation system on learnt experience from a most unusual set of family circumstances.

I have (only very) occasionally wondered about whether me and Mrs P4S are too indulgent with our 2 children. At least you've reassured me, albeit indirectly, that my daily decisions are - when compared to, say, giving them three extra siblings - positively frugal ones.

[stui magpie]

^

My earlier crack about raising a cricket team wasn't totally unfounded. IIRC it's more like 10+ children overall, which would've meant Centrelink was the primary income source, not the single wage.

Otherwise I agree. Mind you, I also know people who are of average intelligence and able bodied but have the work ethic of a corpse and as such are in a parlous position entering their 50's because of a compounding effect of poor lifestyle choices.

[luvdids]

I see customers almost daily that leave me wondering how they ended up as they are... Two incomes, middle aged, renters, no kids, no savings, nothing. I'd understand more if there were a few kids but how can you get to 50 & have nothing?