Dangerous Generations?

Unforgiving Critic: At the core of Shamubeel Eaqub’s proposals is a puritanical belief that citizens have no entitlement, morally, to an income they haven’t saved for. And that NZ Superannuation – currently paid for out of the steady growth of the New Zealand economy – is a violation of intergenerational equity. OnTV3’s The Nation, he railed against the fact that “very wealthy people” continue to receive NZ Superannuation. 

ON SATURDAY (1/4/23) SHAMUBEEL EAQUB came out swinging against the Baby Boom Generation on TV3’s The Nation. The Gen-X economist was adamant that the New Zealanders born between 1946 and 1965 had guaranteed themselves a universal retirement income, which they were now enjoying, regardless of the economic impact on subsequent generations. Outraged that the Boomers, not having saved for their retirement, continue to live on “welfare”, Eaqub made it clear that he regarded NZ Superannuation as a form of intergenerational theft. It was unaffordable, unsustainable, and it had to stop.

Asked what he would recommend by way of addressing the vexed issue of retirement income, Eaqub proposed raising the age of eligibility for NZ Superannuation to 70 years-of-age, and subjecting every applicant to a means test. Writing on the same subject for Stuff back in 2018, Eaqub further suggested making Kiwisaver compulsory and dramatically increasing the contributions from employers and employees. He was also of the view that his proposed means-testing regime would need to: “test assets and would be a natural complement to a tax regime that taxes capital as well as income and spending.”

As the National Party were quick to point out in relation to Grant Robertson’s proposed social insurance scheme (now on hold by order of Chris Hipkins) the sharp increase in deductions from workers’ pay packets required to make Kiwisaver a viable alternative for NZ Superannuation will be experienced by most employees as just another tax. It is unclear from his Stuff article whether Eaqub’s proposed Capital Gains Tax will be applied to the family home. If that is the plan, however, then the impact on asset-rich/cash-poor retirees could be catastrophic.

At the core of Eaqub’s proposals is a puritanical belief that citizens have no entitlement, morally, to an income they haven’t saved for. And that NZ Superannuation – currently paid for out of the steady growth of the New Zealand economy – is a violation of intergenerational equity. On The Nation, he railed against the fact that “very wealthy people” continue to receive NZ Superannuation. In a world run by Shamubeel Eaqub, this outrage would, presumably, cease. “Very wealthy” people’s entitlement to “Super” would be means-tested into nothingness.

Radical stuff! But also a plan guaranteed to provoke an extreme political backlash if implemented. Indeed, so vociferous would the reaction to Eaqub’s proposals be that it is difficult to see them being introduced in any other circumstances than those arising out of a full-scale intergenerational war.

If that is what Eaqub wants, if his plan really amounts to nothing more than the meting out of what he and his generation consider a well-deserved generational punishment, then they will have singled themselves out as a very dangerous generation.

When, however, Eaqub’s argument is pulled apart, older New Zealanders may feel entirely justified in arriving at such a grim judgement. Take, for example, Eaqub’s claim that the universality of NZ Superannuation “makes the system simple to administer, but expensive.”

Expensive compared to what? The cost, of New Zealand’s universal basic income for the over-65s, measured as a percentage of GDP, is predicted to top-out at between 7-8 percent. But, that is the cost of the German pension scheme right now! What’s more, as New Zealand moves beyond its Peak-Boomer moment, and the generation dies out (as all generations do) then the cost of NZ Superannuation will fall.

It is at this point that the reckless quality of Eaqub’s argument becomes most apparent. As the Baby Boomers disappear into the historical shadows, the Generation Xers will start to view their retirement with a mixture of trepidation and horror. In their determination to punish the privileged and selfish Boomers, Gen-X politicians, inspired by the likes of Eaqub, will have replaced the generous universal pension of yesteryear with a means-tested grant that kicks-in only after they reach their seventieth birthday. Moreover, the Kiwisaver “nest-egg”, for which they have been required to defer so much personal and familial gratification throughout their working lives, will offer them a weekly payment barely equivalent to the purchasing power of their parents’ and grandparents’ Super!

To make matters worse, it turns out that Eaqub’s fingering of the Baby Boom Generation as the villains of his puritanical economic narrative for The Nation is just plain wrong.

More than 30 years ago, an academic by the name of David Thomson, wrote a book called Selfish Generations?: The Ageing Of New Zealand’s Welfare State. Born in 1953, Thomson is a fully-paid-up member of the Baby Boom Generation. Did that mean that his book was a sinister blueprint for the dispossession of the Boomers’ own children? Did it heck as like! In a fashion echoed uncannily by Eaqub, Thomson railed against his parents’ generation:

In New Zealand the big winners in this have been the ‘welfare generation’ – those born between about 1920 and 1945. Throughout their lives they will make contributions which cover only a fraction of their benefits. For their successors the reverse is true.

Eaqub’s fatal weakness is that, like so many economists, he is not particularly well-versed in his country’s recent history. Clearly, he has no idea that it was Baby Boomer politicians who did their best to rein-in the cost of retirement income support. Between 1990 and 2000, these efforts transformed the Super issue into an electorally devastating political football which ended up scoring own-goals against both major parties. It was, Eaqub seems not to grasp, Boomer politicians who made sure the retirement age rose from 60 to 65. Boomers, too, who set up the Superannuation Fund to ease the nation through its Peak Boomer period.

Eaqub is not, of course, alone in his generational ferocity. There are plenty of other Gen-X commentators who are happy to join in the Oedipal dance. If these characters spent as much time blaming the neoliberal order (put in place by individuals born far too early to be branded Baby Boomers) as they do to bad-mouthing their parent’s generation, then something considerably more positive than gratuitous age-baiting might ensue.

A more fruitful place to seek for inspiration than Eaqub’s arid blame-game is on the streets of Paris and many other French cities and towns. It is there that young Frenchmen and women are fighting running battles with riot police to protect the French retirement age of 62, and the state pensions that come with it. They do not begrudge their parents’ good fortune. On the contrary, they are fighting tooth-and-nail to ensure that it remains their good fortune as well.

Those Gen-Xers who thrilled to The Nation’s intergenerational blame-fest, should turn their attention, instead, to just how much Shamubeel Eaqub’s ruthless prescription on pensions, and that of France’s technocratic and neoliberal president, Emmanuel Macron (b.1977) have in common.

This essay was originally posted on the Interest.co.nz website on Monday, 3 April 2023.

Defending The Boomers: A Response To Chloe King.

Guilty As Charged? The Baby Boom generation is often accused of hogging the all the benefits of the Great Post-War Boom. But this is to suggest that they were somehow complicit in choosing their own birthdays. Boomers may have enjoyed the benefits of, but they did not create, the social-democratic society which raised them - nor did they destroy it.

 

THE BABY-BOOM GENERATION (49-68 year-olds) currently numbers just under a quarter of New Zealand’s population. Even so, there is a pervasive notion that the generation of New Zealanders born between the end of World War II and the mid-1960s exercises a decisive influence over just about every aspect of contemporary life. Younger New Zealanders, in particular, seem convinced that the difficulties they are experiencing in relation to education, employment and housing are entirely attributable to the selfishness and indifference of the “Boomers”.

 

It’s easy to see how the Baby Boomers have ended up in the frame for these crimes against youth. The simple passage of time means that even the youngest of the Boomers are fast approaching their fiftieth birthday. Since the people making most of the important decisions in any society tend to be aged between 40 and 60, who else could possibly be to blame? The Boomers are the ones with the experience; the ones who have patiently climbed their way to the summit of the big institutional hierarchies; the ones who find themselves bearing more and more of the responsibility for what goes on.

 

Which is exactly as it should be - given that the promotion of the old over the young is a feature of every human society. When the Boomers themselves were in their 20s and 30s the big decisions of the day were being made by the men and women who had lived through the Great Depression and World War II. In New Zealand this cohort was known as “the RSA generation” and we Boomers railed against it every bit as ferociously as Chloe King rails against our own. If Generation Y thinks John Key is a bad bugger, I shudder to think what it would make of Rob Muldoon!

 

On this issue, it’s a little difficult to grasp the purpose of Ms King’s polemic. Is she really, as the voice of Generation Y, suggesting that society should deny itself the benefit of the older people’s experience? That, somehow, everything would be better if the businesspersons, doctors, lawyers, teachers, electricians, plumbers and brain surgeons with 20-30 years’ experience were suddenly dismissed from their positions and replaced with people only a few years out of high school?

 

Gen-Y could, I suppose, point to Alexander the Great, who conquered the known world (or, at least, that part of it known to the Macedonians) by the age of 33. Or, to Britain’s youngest ever Prime Minister, William Pitt the Younger, who, at the age of 24, led his country to war against the revolutionary French Republic. But, if they did, it would then be up to the Boomers to direct these opponents of gerontocracy to the example of Mao Zedong’s “Great Proletarian Cultural Revolution”.

 

Between 1966 and 1969 Mao’s youthful “Red Guards” were instructed to root out the “Four Olds” – Old Customs, Old Culture, Old Habits and Old Ideas – along with, naturally, the Old Party Comrades who, by allowing these antiquated practices to flourish, threatened to strangle the Revolution, restore the bourgeoisie to power, and (most serious of all) undermine “The Great Helmsman’s” position as China’s supreme leader.

 

Following Mao’s death in 1976, his ruthless purge of competence and experience throughout Chinese society was described by the Communist Party, with considerable understatement, as “being responsible for the most severe setback and the heaviest losses suffered by the party, the country and the people since the founding of the People’s Republic”.

 

The other great avenue for attacking the Baby Boomers is the one that leads from the Golden Age of free tertiary education, full-employment and subsidised housing to this cruel and leaden age of student debt, precarious (or non-existent) jobs and the remorseless dismantling of what the National Party once proudly described as New Zealand’s “property-owning democracy”.

 

But to criticise the Boomers for enjoying the fruits of the Great Post-War Boom suggests that they were somehow complicit in choosing their own birthdays. Boomers may have enjoyed the benefits of, but they did not create, the social-democratic society which raised them. That was their parents’ extraordinary achievement, and any Boomer who isn’t truly grateful for what he or she received bloody well ought to be!

 

Nor is it the case that the Baby Boomers were principally responsible for destroying the social-democratic society from which they had derived so many advantages.

 

The principal architects of the neoliberal “revolution” of 1984-1993 were not Baby Boomers at all, but members of the generation which preceded it. Roger Douglas was born in 1937. Michael Bassett in 1938. Bill Birch entered this world in 1934. Jim Bolger, a year later, in 1935. Not even David Lange could lay claim to being a Baby Boomer. He was born in Otahuhu in 1942. Okaaay. But, what about the three high priests of the neoliberal faith, Graham Scott (Treasury) Don Brash (Reserve Bank) and Roger Kerr (Business Roundtable)? Nope. All three neoliberal ideologues were born during – not after – World War II.

 

Yes, of course, there was a host of Baby Boomers who were only too happy to sign-on to the Magical “Free-Market” Mystery Tour of the 1980s and 90s. Richard Prebble, David Caygill, Mike Moore, Ruth Richardson and Jenny Shipley were all post-war babies. So was Labour’s most successful post-war Prime Minister, Helen Clark. (Even if her Deputy-Prime Minister, Jim Anderton, and her Finance Minister, Michael Cullen, were not.)

 

By 1999, however, the “reforms” of the 1984-93 neoliberal revolution were so deeply entrenched, and so fiercely defended, that a revolution of equal intensity and duration would have been required to root them out.

 

Shouldn’t the kids of the 50s and 60s have launched such a revolt? Risking all to restore the New Zealand of drab conformity, racist amnesia and smug misogyny that, as teenagers and young adults, they had devoted so much energy to shaking-up and tearing-down?

 

Some of them did try – sort of. Jim Anderton’s NewLabour Party and, after it, the Alliance, attempted to secure the best of both worlds: the full-employment, compulsory unionism, free education, public healthcare and affordable housing of Mickey Savage’s legacy, plus the radical emancipatory agendas of the new social movements for nuclear disarmament, ecological awareness, feminism and indigenous rights.

 

And, if neoliberalism had been confined to New Zealand alone, they just might have succeeded. But, the neoliberal revolution, along with the ruthless advance of globalisation it facilitated, was already an international phenomenon. Margaret Thatcher (b. 1925) and Ronald Reagan (b. 1911) may have led the charge, but behind them were arrayed financial and corporate resources beyond the power of any single generation to overcome.

 

Besides, by the 1990s most Boomers had more pressing concerns. There were jobs to keep, mortgages to pay and, eventually, children to raise.

 

No one who has yet to hold their own child in their arms can fully comprehend how all-embracing is the priority of its welfare. When we are young it is possible, in a sense, to stand upon the banks of history and watch it flow by. But parenthood sweeps us up and into the rushing waters of historical time and only the very strong, or the very lucky, are able to resist the currents that bear their families forward.

 

What all parents try to do, however, even in the grip of these currents, is steer the craft that bears their children safely to shore. To give them the same brief respite that they enjoyed. To let them, if only for a little while, stand alone and unscathed by the relentless onrush of time.

 

Having found their feet, however, the younger generation’s task is not to bemoan the fact that their parents’ boat has sailed away without them; it is to set about building a boat of their own.

 

This essay was posted simultaneously on The Daily Blog and Bowalley Road blogsites on Tuesday, 18 November 2014.

Baby Boomers Beware

Disputed Destination: New Zealand's world-beating, state-provided universal superannuation scheme offers unprincipled politicians and rapacious financial institutions a tempting target. The Baby Boom Generation (1946-1965) is fast becoming the preferred scapegoat of these "reformers".

THERE’S NOTHING NEW about Welfare Reform, it’s as old as the ideas advanced in its justification. Managing the poor and vulnerable is just one of those perennial problems with which governments of every stripe have to contend.

Mostly, politicians restrict themselves to tinkering, but every so often a government comes along which engages in the sort of ruthless, root-and-branch reform that leaves deep scars upon the body politic. Fortunately, the bitter historical memories handed down by its victims serve as a prophylactic against similar “reforms” for generations. But, eventually, popular memory fades, and when it does the threat of root-and-branch reform returns. And tragedy follows it.

New Zealand may soon be facing just such a threat and, curiously, it’s as likely to come from the Left as the Right. If that sounds improbable, then perhaps we should all remind ourselves that it was the supposedly left-leaning Labour Party which unleashed the “New Right” economic reforms of the late-1980s. And that it was no less a “liberal” than Bill Clinton who campaigned on a promise to “end welfare as we have come to know it” and who, in 1996, affixed his Presidential signature to the Personal Responsibility and Work Opportunity Reconciliation Act.

President Bill Clinton signs the Personal Responsibility and Work Opportunity Reconciliation Act, putting an end to "welfare as we have come to know it", August 22 1996.

But why would Labour do such a thing? How could attacking the poor and vulnerable possibly assist its reclamation of the Treasury benches?

Part of the answer lies in the “communitarian” beliefs evinced by followers of Labour’s “Third Way”. It’s a philosophy which asserts that too much emphasis has been placed on “rights” and not enough on “responsibilities” in the formulation of public policy. Society, they say, has a duty to see that one group of citizens’ rights are not upheld at their neighbours’ expense.

The implications of communitarianism for solo mums, the unemployed, the sick and the disabled are readily imagined. Indeed, they’d do well to remember that David Parker, Labour’s finance spokesperson, is a strong believer in communitarian principles.

The other reason Labour might opt for root-and-branch welfare reform involves the same reasoning that went into the National Party’s own root-and-branch solutions to the “problem” of “welfare dependency”: poor people don’t vote. Eight hundred thousand New Zealanders failed to cast a vote in the last election. Most of them were young, many of them were poor, and practically all of them didn’t give a stuff about politics.

Motivating such voters requires immense effort, and National has opted instead to appease its more conservative supporters by transforming the young and the poor (Maori and Pasifika especially) into handy targets.

Labour’s challenge is to find some way of mobilising the young without at the same time making itself a political hostage to the needs of the poor. One of the easier ways to do this might be to provide younger voters with a hate figure: a stereotype capable of igniting both their indignation and their fear. Fortunately for Labour, such a stereotype already exists: the Selfish Baby Boomer.

By encouraging Generations X and Y to blame the Baby Boomers for everything from the price of real estate to the rising cost of tertiary education, and enlisting their support for a “root-and-branch” reform of New Zealand’s “irresponsibly generous and fiscally unsustainable” system of universal superannuation, Labour could off-set its declining levels of support among older voters. By attributing New Zealand’s indebtedness to the “intergenerational theft” of Baby Boomers, this stripped-down, communitarian Labour Party could, at least in younger voters’ minds, transform “austerity” from a political swear-word into a righteous electoral virtue. In combination with the Greens’ bracing mantra of ecological restraint, they could be on to a winner.

In 1834 the newly enfranchised English middle-class shrugged-off its responsibilities to the poor and vulnerable by passing a new Poor Law. Its hated symbol, the workhouse, was immortalised by Charles Dickens in Oliver Twist. The new Poor Law’s sponsor was not some Tory reactionary, but the liberal Whig, Lord Melbourne.

The Workhouse: The New Poor Law of 1834 brought these dreaded institutions into existence. They were explicitly required to offer conditions harsh enough to dissuade all but the most desperate (overwhelmingly, as the above photograph reveals, the elderly) from seeking sustenance within their walls. The legislation was the work not of Tory reactionaries, but of liberal Whigs.

Baby Boomers, be on your guard.

This essay was originally published in The Dominion Post, The Otago Daily Times, The Waikato Times, The Taranaki Daily News, The Timaru Herald and The Greymouth Star of Friday, 22 June 2012.

Intergenerational Theft? - What The F**k! Guest Post by Jill Ovens

High Flyers? Students belonging to Generations X and Y accuse the Baby Boom generation of committing "intergenerational theft", but, as Jill Ovens points out in this guest posting, these students might benefit from a course in New Zealand's recent social history. For many of their parents, particularly those born into the working class, life in the 1970s and 80s was not as easy as they're being encouraged to believe.

THERE IS A LOT of idealised commentary on what it was like to be a university student in the 1970s compared with the lot of today’s students. This is leading young affluent university students to accuse “baby boomers” of stealing from the next generation.

It is a concept of affluent students because the kids of working-class parents don’t generally get to university. Those few who do make it know how much their parents struggled, working two or three jobs, night and day, to get them through school.

Working-class kids didn’t get to university in the 1970s either, unless they had a scholarship. University Entrance paid 9/10 of your fees, but that still meant a bill of $90.00 (the equivalent of two-and-a-half week's pay, or more than $1,000 in today’s terms). There were student allowances in the form of bursaries, but if your parents lived in a university town, you couldn’t get a boarding allowance.

There were no fast food restaurants to provide jobs throughout the year, so you had to earn enough to live on during the varsity holidays. That was okay for the guys as there were well paying jobs in the freezing works and car factories. For women students, it was very different.

Equal pay didn’t come in till 1972. That meant that if we did the same job, men and women were to be paid the same. But we weren’t given the opportunities to do the same jobs. They didn’t let women into McKechnie Brothers, the aluminium extrusion foundry where my boyfriend worked in the holidays (except in the canteen).

I packed peanuts at Eta Foods, screwed lids on Vick’s jars, sorted indescribably filthy linen in Christchurch Hospital laundry, and I earned $15.00 a week cleaning people’s houses for Nurse Maud, a district nursing association. But I could never earn enough to go flatting, so I spent my whole varsity life living with my parents.

When we graduated, the opportunities were very limited. I didn’t want to be a teacher, and the Bank of New Zealand said I’d make a good teller because I was good at maths. I turned them down.

We got paid a lot less than our male friends, and despite women’s liberation, there was a cultural expectation that we would soon produce babies (at least three of them).

We bought houses in huge Neil Housing subdivisions way out in Massey, Manuwera and Glenfield where there were no trees, no amenities (certainly no gym!), and no public transport.

I washed the nappies in a wringer washing machine and hung them on the clothes line. We ran an old VW between the two of us so I was stuck at home. The couch was Mum and dad’s hand-me-down and the bed was bought at a second-hand store.

There was no paid parental leave and limited childcare, so we women graduates had a big gap in our careers that made it difficult to come back into the job market. We had no superannuation as Muldoon scrapped the Kirk scheme.

If we got divorced, as many of us did, any equity we had in our house was divided up. And when our kids came out of high school in the 1990s, there were no jobs, so they stayed home for years, along with their girlfriends and eventually their kids.

Because our kids can’t afford to buy houses, we bought houses for them to live in using the equity from our house, and now all our money is tied up in mortgages. At the same time, we’re supporting our parents in their old age.

That’s how life is and always has been, for most of us. Our parents worked to give us a decent start in life, and we worked hard so our kids could have a fair go. We’re looking after our parents in their old age. We hope we’ll be looked after in our old age.

What about this is “intergenerational theft”?

This posting is exclusive to the Bowalley Road blogsite.