Opinion
We’ve worked hard, got an education, found jobs. But it’s not enough
Thomas Walker
Money contributorYounger Australians have done what society told us to do. We’ve worked hard, got an education and found jobs. Yet that has not been enough for teachers, nurses, mechanics and countless other workers to achieve financial security. The social contract – the idea that a job is enough to feed and house a family – has been lost.
A recent episode of the Diary of a CEO podcast highlighted a vital debate we need to have. It featured rock star British economist Gary Stevenson and Daniel Priestley, an acclaimed Australian serial entrepreneur. The host, Steven Bartlett, asked both men what advice they would give to young people.
Many Millennials and Gen Zs have been left on the wrong side of the financial security divide.Credit: Thomas Wielecki
Priestley suggested that we focus on entrepreneurship as the digital economy offers incredible opportunities to create wealth. Stevenson disagreed, arguing that this advice is harmful because, if you can’t get ahead, then it must be your fault. Instead, the economic problems we face are structural. Without reforming how our economy works, Stevenson argued, financial and business advice is like giving out stock tips on the Titanic.
The most common story we hear is the one promoted by Priestley about individual financial success. It’s pushed by social media fin-fluencers, tech bros, and self-help gurus who claim that the pathway to economic security is through speculative property investing, starting a dropshipping business or investing in the latest cryptocurrency. Movements such as “girlboss” and “quiet quitting” have sent the message that you have to save yourself in these tough economic times.
The key to the social contract working, in whatever form, is that people feel their efforts are rewarded.
The cultural dominance of individualism, however, perpetuates an economic system that is harming us. It means that avenues for collective action, such as union membership, political party involvement and volunteering are in decline. Policy debates pit winners against losers without considering what’s best for everyone, and the government and its tax and transfer system are cast as a “burden”.
In contrast, the postwar version of the social contract promoted the idea that, in return for contributing through work, care and paying taxes, individuals had rights to essentials such as healthcare, housing and employment security. You could find a stable job paying enough to feed and house your family, retire with a pension and be assured that your children would have it better.
A second version of the social contract was adopted in the 1980s and 1990s. It presented a more individualistic vision aimed at removing the “shackles” of taxation and regulation. Tax rates on the wealthy were reduced, public services privatised and superannuation introduced to prioritise individual responsibility and private wealth accumulation.
This led to property speculation overtaking earning a wage as the pathway to financial security, and asset prices skyrocketed. This has left many Millennials and Gen Zs on the wrong side of a divide. We are being asked to work harder, pay record rents and higher taxes, take on super-sized mortgages and student loan debts, and forego essential services to protect wealth holders and property prices, assured by our leaders that the bounty will trickle down to us.
The key to the social contract working, in whatever form, is that people feel their efforts are rewarded and that they believe the contract is fair. The contract, then, is hanging by a thread.
The cultural dominance of individualism led to property speculation overtaking earning a wage as the pathway to financial security.Credit: Louise Kennerley
We face a choice with big financial implications. Do we hope to be one of the winners in a broken system? Or can we restore the social contract? Not necessarily a return to the past, but something new for us. A contract that rewards work and takes into account the climate crisis, AI disruption, how we care for our children and elderly parents, and rebuilds trust in government.
A new social contract will require building community and power, and as we become the nation’s new leaders, we should take the opportunity to demand something different.
Some of this can be done online, and many have stepped into this space, including Think Forward, Tash Invests, Hannah Ferguson, Jack Toohey, Milly Rose Bannister and Punters Politics. We saw at the last election how political leaders needed to engage with online communities. The story we tell our leaders about how we want to live our lives is essential.
We can also undertake political efforts, such as joining a political party, advocacy group or union. Or we can explore options that completely bypass government, such as creating or supporting co-operatives, mutual aid networks and community land trusts.
No one is saying that we shouldn’t save and invest, but real economic security will only happen when work is enough, and where we don’t need to speculate on crypto in the hope of providing for the ones we love. That’s why we need to build a new social contract. If we can do that, it might be the best financial decision we’ll ever make.
Thomas Walker is the CEO of Think Forward, an economics think tank run by younger Australians which has just launched a new campaign, urging Parliament to “tax wealth, not work”.
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