COVID-19 has consumed the public’s attention for almost six months, but the economic crisis caused by devastating lockdowns has started to shed light on a nefarious threat to the Australian way of life.
Across a number of measures, from home ownership to employment, young Australians have seen a decline to their economic and social wellbeing in recent decades. These declines have been compounded by the government-imposed lockdowns introduced in response to the coronavirus, which have disproportionately impacted young Australians.
As we look towards the economic recovery, there is a risk that a generation of young people will be the propertyless serfs of our feudal future.
This threat has been gaining traction for decades and addressing it must be a priority of policymakers. There are several deep economic, social, and moral issues posed by the emergence of a class of propertyless serfs. From a moral perspective, there is a growing number of Australians who have been excluded from the way of life that has made this country so great, namely access to the dignity of work, reward for effort, homeownership, and the ability to start and run a business. From a practical economic perspective, a gaping hole in employment opportunities, upwards mobility, and wealth creation will emerge from the simple fact that it is near impossible for the small businesses of the future to be started when their potential owners do not own any assets.
Asset ownership is central to the Australian way of life and to the economic prosperity and stable democracy that Australians have traditionally enjoyed. Business ownership provides an egalitarian ladder to economic prosperity; regardless of education or wealth, Australians can start a small café or become a carpenter. Additionally, small businesses provide owners and employees with a tangible stake in the economy and their local community, which in turn lead to an interest in seeing that community and economy governed in a sensible, democratic manner. The same is true of homeownership, which in addition to providing a place to live and financial security throughout life and into retirement provides a sense of community and place.
Australia has historically been a nation of homeowners. Homeownership underpins the Australian way of life by providing a stake in our system of capitalist, liberal democracy. By giving people a tangible interest in that system, homeownership provides stability and prosperity. As former prime minister Robert Menzies explained in his ‘Forgotten People’ speech, “the home is the foundation of sanity and sobriety; it is the indispensable condition of continuity; its health determines the health of society as a whole.”
Similarly, Sir Albert Arthur Dunstan, the 33rd premier of Victoria, explained in 1943 that homeownership is a “symbol of achievement, purpose, industry and thrift”, and that the homeowner “has a stake in the country, and that he has something worth working for, living for, fighting for”.
However, while a full 54% of Australians born in 1947-51 were homeowners by between the ages of 25 and 29 years old, today only 37% of those born between 1987 and 1991 became homeowners upon reaching the same age bracket.
And within the portion of households that own a household, a concerning divide is emerging. In 2013-14, 67% of households owned the home they lived in. This was comprised of 53% who owned only the house they lived in, and 13% who owned multiple houses. By 2017-18, these figures were 50% and 16%, respectively, meaning that while the portion of households that owns one house is declining, the portion that owns multiple houses is increasing.
This is a dangerous trend which gets to the heart of how the structure of the Australian economy has changed over the past 40 years or so. While mainstream Australians of old could afford to buy a house, start a family, and start a business, the chances that young Australians today will ever have these opportunities are growing slim.
The political class that has overseen this structural shift must pay attention. A generation of propertyless serfs who do not own anything will not support a system based on property rights and ownership. This can be understood as a lack of ‘skin in the game’, to use Nassim Nicholas Taleb’s thesis: young Australians are being denied the opportunity to develop some ‘skin’ in the ‘game’ of our robust, capitalist liberal democracy.
This poses a serious moral issue in that we are at risk of having a generation of disenfranchised renters that undermine the health of society. Additionally, it risks entrenching intergenerational wealth inequality and creating a structurally inegalitarian economy, as this generation will have no equity to draw on when starting the businesses of the future. Small business ownership is another institution central to the Australian way of life which provides a means for upwards mobility.
Some may argue that businesses of the future will be less capital-intensive and that a generation of renters will still be able to establish businesses and move up the income and wealth ladders. Following the thesis set out by Jonathan Haskel and Stian Westlake in Capitalism without Capital, they may argue that the costs of establishing a technology start-up are often miniscule, requiring only the ingenuity of the founder and a laptop.
While appealing, this will not be the case. Australia rode the sheep’s back and now rides in the bed of a Caterpillar 797F. It will always be essential that entrepreneurial Australians can draw on a stock of assets to start a new business, and if recent history is anything to go by, capital intensive businesses in the resources industry, along with those that support it, will be essential.
Besides, the alternative is a return to the feudalism of the past where only an entrenched oligarchy has the means to start businesses. Ensuring widespread asset ownership is essential to preventing the reordering of Australian society along the highly structured order of the feudal pyramid, where there is no room for a prosperous middle class, but plenty for destitute serfs.
A generation of Australians are at risk of never obtaining this stake in their country, of never obtaining this culmination of achievement, purpose, industry and thrift. Without the home to live, to work and to fight for, what will this generation of serfs have?