With Millennials screwed the world over, it’s time for a global revolt

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By Leith van Onselen

This site has frequently railed against the unfair treatment leveled at Australia’s Millennial generation.

This inequity is most apparent in the housing market, where today’s younger generations are being forced to pay far more than their parents to live in smaller and poorly located accommodation. But it extends beyond housing and includes a whole bunch of things like:

  • Importing large numbers of foreign workers in a bid to increase competition for jobs and lower overall pay and labour standards, as well as keep upward pressure on house prices, all under the cloak of “skills shortages”.
  • Related to the point above, the refusal by Australian businesses to take on new graduates and train local workers, as well as the increasing propensity for businesses to take on unpaid interns.
  • Failing to properly enforce Australia’s foreign ownership laws as they pertain to real estate, as well as deliberately failing to implement anti-money laundering rules on real estate gate keepers, despite promising the global regulator that Australia would do so in 2003.
  • Biased tax laws (e.g. negative gearing and the CGT discount) that encourages investor speculation and crowd-out first home buyers.
  • Failing to apply adequate means testing of the Aged Pension, despite it being the biggest and fastest single cost to the Budget and the wealth of those aged over 60 skyrocketing over the past decade at the same time as the wealth of younger Australians has declined.
  • Failing to adequately unwind overly generous superannuation concessions that overwhelmingly benefit the old and wealthy.

There are other points that I will have missed, but you get the picture.

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These inequities are by no means isolated to Australia, however. We have also seen similar issues at play in New Zealand and other Anglosphere nations, whose Millennials are also been shafted.

Indeed, yesterday Credit Suisse released its 2017 Global Wealth Report, which contained a whole chapter on the mistreatment of the world’s Millennial generation:

The Millennials have had an unlucky start to adult life, hit early on by the repercussions of the global financial crisis, alongside mounting student debt, tighter credit and rising income inequality…

The Millennials’ challenges seem to have been most evident in North America, but the ripples have extended to Europe and elsewhere. They contrast with the good fortune experienced by the baby boomers, born in large numbers between 1945 and 1964, whose wealth was boosted by a range of factors including large windfalls due to property and share price increases.

The millennial cohort is smaller as a percentage of the total adult population than the baby boomers were at the same age. Normally it is good to belong to a smaller cohort: there is less congestion in school and less competition with peers for jobs and homes…

Cohort analysis seems to have been turned on its head: the big cohort is now the lucky one…

Millennials are doing less well than their parents at the same age, with respect to incomes, home ownership and other dimensions of well-being…

Student loans have been an increasingly important component of debt in a number of countries. The trend is particularly striking in the United States… The rise in student debt is partly due to higher fees. But it also reflects the fact that Millennials are more educated than preceding cohorts… But for most university-educated Millennials, the outcome may be job opportunities and wages no better than those of their parents, achieved by a dint of more costly education…

Millennials have been affected by the general rise in income inequality in advanced economies over recent decades… Mobility has also gone down. Similar trends have been seen in other “anglo” countries (with some notable differences, of course). The net result is that past expectations no longer apply…

The Millennials have not been a lucky cohort so far. They faced the rigors of the financial crisis and the high unemployment that followed in many countries, and have also been widely hammered by high and rising house prices, rising student debt and increasing inequality. Their pension outlook is also worse than that of preceding cohorts…

As a result, the Millennials are not only likely to experience greater challenges in building their wealth over time, but also greater wealth inequality than previous generations.

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I’ve said it before and I will say it again: Parliaments world-wide desperately need to be occupied by a dedicated youth political party to apply a lightning rod and to educate and mobilise their ravaged young.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.