Equality or equity: which is a better gauge of community health?

In a story published by the Sydney Morning Herald on Sunday 18 August, journalist Eryk Bagshaw wrote, “Young Australians are being locked out of a ‘generational bargain’ as the wealth gap between children and their parents soars, new figures show, as the government prepares the terms of reference for its landmark retirement income review.” The story goes on:

In a report to be released on Monday, the Grattan Institute found Australian household wealth has tripled over the past 30 years from $2.8 trillion in 1990 to $10.3 trillion in 2018. 

"But the wealth bonanza has been far from equally spread. Most of the increase in wealth has been accumulated by older households, who benefited most from the housing boom and growth in superannuation assets," researchers Danielle Wood and Kate Griffiths found.

This story feeds a common source of discontent in the community broadly, and it’s a gripe that is almost as old as Modernity itself. From the downfall of China’s Qing dynasty to the October Revolution in 1917, around the world people with not much wealth have been mobilising their forces in order to try to capture the wealth of the better-off parts of societies. But this impulse – the idea that all people in the community should share in the community’s wealth equally, regardless of their profession or their talents or their industry or their dumb luck – has been a source of untold suffering. The 20th century is strewn with the bodies of the dead, people killed in the service of promoting equality. The corpses of martyrs to this idea, if they were all placed above ground, would probably stretch from the top of Mount Everest to the moon.

The image above is a piece of propaganda produced in the wake of the French Revolution, the originary cash grab launched by the proletariat. It’s a curious image. In the left of the image you have two symbolic figures, a man and a woman. The man holds a pole on which a pennant, the Tricolor – the flag of the revolution – is flying. The woman has bare breasts to show that she is liberated. But in the right of the image there’s a heteronormative couple with three children: a girl, a boy, and a toddler. The boy and the girl obediently hold their arms out toward the titulary figures, encouraged by their mother. The father, obligingly bent a few degrees at his waist, brings up the rear as the supporter of his family. There’s a plough in the frame, a symbol of industry. The woman with bare breasts holds against her knees a cornucopia to embody plenty – the benefits available to be enjoyed by the people if they follow the dictates of the state. The image is full of interest and shows how, at that time, in the final years of the 18th century, French people were expected to obey in order to prosper. Obey not the king but the state.

The state today fulfils some of the same roles, particularly through taxation and redistribution of wealth. It can also function to regulate wages so that even the lowest-paid among the community’s breadwinners are adequately compensated for their labour: if people have no money to spend, then not only do tax receipts go down, depriving the government of funds from which the poor can be supported, but business also flags and the economy tanks. Equality turns out to be a matter of degree rather than an absolute good in itself.

Australia today, according to the Organisation of Economic Co-operation and Development, the OECD, is the fifth-best place in the world for workers, as measured by social mobility. But despite the prosperity stemming from a high degree of equity in the system, a current bugbear is the Baby Boomer generation, as the story mentioned at the start of this piece shows. Boomers are the bad guys du-jour, the group that the majority of the population loves to hate. They are, if they are white, the patriarchy who have benefited from favourable policies and so have quarantined for themselves the majority of the nation’s wealth. If you say this often enough it becomes true, regardless how much wealth each person aged over the age of 55 actually possesses. An entire class of people is demonised. They must, consequently, pay. 

The parallels with Germany in the 1930s come to mind here. It’s probably only a matter of time before the family home will be included among assets to be assessed for the purpose of calculating the pension. Already, the government has been clawing back money from older Australians, including in 2014 when, in a bipartisan move, the government changed the way that nursing home fees are calculated. Before this time, fees were calculated based on income alone. But assets are now included in Centrelink calculations of the fees people are asked to pay to stay in a nursing home (the government provides a subsidy depending on the individual’s ability to pay). So both sides of government are in on the game: older people will be asked to pay more and more older people will therefore be living in poverty as a result.

If you have worked, as I have, in the education sector, you will know that there is another measure of social health: equity. In the tertiary education sector equity of access to academia is a gauge of institutional health by which senior managers judge their own performance. The idea is not that all people are equal (because, clearly, this is a nonsense). The idea is that all people have equal access to the good things that are available in the society in question. In this case that thing is higher education. A passport to higher wages and to personal fulfillment. Making sure all people have the same level of access to higher education is a goal of university managers and they take this task seriously through the use of a range of measures that can help people coming from lower socioeconomic backgrounds and from linguistically diverse backgrounds to enrol in a course of study.

So the measure that we should use to gauge the health of our society is not whether people are equally remunerated, but whether they have the same opportunities to develop their skills and talents so that they can thrive. Seen this way, the task for Millennials envious of their Boomer parents is to try to build something as robust as that class of people has managed to construct over the years. They should also be cognisant of the fact that most Boomers, when they die, will, in any case, bequeath their wealth to their children, so we will see a massive transfer of wealth between generations as a result of mere mortality. 

In any case, Boomers are entitled to their wealth. Once you arrive at the age of 55 it is hard enough to keep your job. Just try getting a new job if you lose your job and you are aged 55 or above. The number of Australians over 55 who are on Newstart is increasing at an alarming rate. Millennials on the other hand might switch easily from position to position. They might change jobs every two years, as far as I know. But once you hit the big 5-0 you are considered by most employers to be a liability even though the things that you can contribute to a workplace are many and varied.

Boomers, for their part, are very aware of the community’s views about them. In the past year, for instance, I have read two novels by older Australian men that had a man as the protagonist who philanthropically provides a home for a woman fleeing a dysfunctional family. Neither novel was influenced by the other but both had this common plot element. This indicates to me that there is a type of survivor’s guilt among Boomer men who find themselves, in their later years, comfortably well-off and able to avoid relying on the government to supplement their income. Headlines like Bagshaw’s are neither needed nor warranted.