Since last September many stories have hit the press concerning how the global financial crisis will impact upon young Australians. The general theme seems to be that the spoilt brats are about to get dealt a cold, harsh lesson in life and not before time either.
Commentators such as Rebecca Huntley and Bernard Salt have drawn attention to the negative, hostile and even vindictive nature of some attitudes towards Generation Y, and the idea that the kids need a good recession to shake them up. Generation Y have even been labelled as a bunch of whingers who need to harden up. However, if one were to judge by the media commentary alone most of the whinging seems to consist of old people complaining about young people, which let’s face it is pretty much what old people do.
Recently, Lucinda Schmidt added her pop-sociological musings to this emerging metanarrative:
The oldest Gen Ys were barely teenagers during the last recession and all have grown up during the longest economic boom in Australia’s history. Combined with easy credit, indulgent parents, skills shortages and a falling birth rate, it’s no wonder this confident and tech-savvy generation is viewed as having had an armchair ride.
On the other side of the fence Hugh Mackay has become one of the few consistent proponents of Generation Y. He has argued that young Australian’s were directly impacted by their parents encounter with the last recession, and that the high rates of family breakdown, suicide and depression paint a different picture: “They haven’t had a dream run at all”. In Mackay’s opinion, Generation Y provides a terrific example “about how to get your priorities right, and about how to live in a kaleidoscopic world”. Sounds a bit “turn on, tune in, drop out” to me: do these Boomers ever stop thinking and talking about themselves?
One of Schmidt’s observations is that young Australians have grown used to “easy credit”, and there is no denying that this is true in the sense of credit being freely available. However the flipside of easy credit has been the predatory lending practices of our major banks and financial institutions. Young people have been aggressively targeted by banks and financial organisations with pre-approved credit cards.
Many young Australians would have faced a similar situation I faced upon leaving university. No income, no job, no assets and a bit of time on my hands. The first credit card that I received at a time when I had no income to speak of was pre-approved to $12,000! The Australian equivalent of the NINJA loan! Since that first credit card I have received an endless stream of unsolicited offers for pre-approved credit cards or credit limit extensions that continues to this day. As Dr Steven Keen noted recently on 60 Minutes, lenders will continue to target young people:
because they're still looking for the best possible margin and the competitive pressures in the market mean that if they don't provide an irresponsible bit of credit card lending to some Gen “Y”er, somebody else will do it and they want to get hold of the fees and get hold of the high margins they get on those loans. Only when the whole thing goes belly up will they suddenly turn the tap off.
Yes, young people who splurge on credit cards should probably know better, but what good does it serve blaming the victims. There are those among us who are gullible and vulnerable, but that doesn’t excuse the wealthy and powerful from targeting these individuals. It also serves to draw attention away from the root cause of our local debt crisis - namely, speculative investment in real estate. The attention given to youth indebtedness seems to involve massive bad faith on the part of older generations. While the debt laden economy they created unravels, they console themselves with the unkindly delusion that the generations that follow them are in some way worse than themselves.
Another fallacy trotted out by Schmidt, and most notably the SBS television series The Nest, has been the supposed reluctance of Generation Y to leave behind “indulgent parents”. Despite various attempts being made to describe this trend in behavioural or psychological terms, or the self-assuring delusion that kids love staying at home so much they don’t want to leave, the economic reality has been that kids have taken longer to move out because they can’t afford it. The reason they can’t afford to move out on their own has largely been due to the speculative real estate boom raising rents to unaffordable levels. Part of the solution has been for young people to live in shared accommodation, and it is this mutual supportiveness that will serve them well as times become tougher.
I wonder if baby boomers can for a moment compare the financial situation they faced when they were leaving home compared to today’s young Australians. As Mark Davis has pointed out, young Australians have been at the “bleeding edge” of user-pays economic reform in Australia over recent times. The Boomers didn’t have HECs or FEE-HELP loans to repay at between 4 per cent to 8 per cent of pre-tax income for those earning above $38,149 for HECS or $41,595 for FEE-HELP. The 9 per cent compulsory superannuation guarantee didn’t exist either. The “double-degree” was practically unheard of, and people entered the workforce at the age of 21 in the 1960s, rather than 27 by the year 2000.
Although Generation Y has been labelled the “want it now” generation, the reality is that financially at least, they are the deferred satisfaction generation. Baby boomers were in a position to independently direct their financials affairs, move out of home, and start a family much earlier than today’s youth. The myth of Gen Y being lazy, pampered beasts unwilling to move out of home denies the fundamental economic reality - today’s youth have less financial freedom to take charge of their own lives and have consequently taken longer to move out of home.
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