Intergenerational fairness goes beyond economic competition


2010 Intergenerational Report infographic from The Conversation.

Intergenerational goings on are stirring public consciousness recently. On Thursday the Intergenerational Report is published.

Some commentators have been describing government deficits as ‘generational theft’. And in a thoughtful speech, federal Coalition member Kelly O’Dwyer argued that budgetary fairness extends beyond the redistribution of benefits. It also includes fairness to our descendants (intergenerational equity) and consideration of the hidden winners and losers in any budget.

Intergenerational equity needs to be set within a broader context than that of economic competition between individuals. Generally, it means accepting that the way in which we live in the world today should not impoverish future generations. Or positively, that the way we order our human relationships today, including the relationships that comprise the economy, should benefit future generations as well as our own.

This view assumes that human beings are not simply instruments of economic growth, but that the economy serves the good of all human beings. In all economic transactions we need to keep in mind both our own good and the good of society as a whole. The test of commitment to the common good will be our care for the needs of the most disadvantaged. So fairness is not simply about relationships between competing individuals and groups but about the ordering of society so that it serves the good of all.

The economy should not be seen as a series of unrelated transactions between individuals but as an organic framework of relationships between interdependent persons. It needs to be ordered so that it ensures fairness in the future as well as the present.

In accomplishing this task, a Government’s main challenge is to promote a mature ethical vision in its citizens, and especially among the powerful and wealthy, that looks to the common good, especially to those affected by its activities, as well as to individual and company benefit. Wealth does have a community dividend. That ethical framework should also guide such government regulation of the economy as is necessary to meet the challenges of the future.

Governments are also responsible for ensuring the building of infrastructure in communications, transport, education and health necessary for the flourishing and development of future generations. This inevitably means taking on debt which will be passed on to the next generation. The benefits conferred on the beneficiaries, of course, will far outweigh the burden of repayment. The claim that borrowing is intergenerational theft may be justified when levelled against debt frivolously incurred, but when generalised, the charge is a craven denial of our responsibility to future generations.

If we are concerned with intergenerational equity, we must reflect on the specific challenges that our descendants could reasonably expect us to address. One will certainly be the increasing concentration of wealth in the hands of the very few. This gives a public signal that individual privilege is valued over the good of the whole community, is a threat to public revenue, and inevitably concentrates political power outside of democratic processes. To ensure intergenerational equity, we must find equitable ways of taxing wealth as well as income.

Future generations will also want us to have addressed climate change. Nothing threatens their flourishing as much as the predicted change in weather patterns over the next century. And given the growing consensus among the responsible that human activity contributes to it, and so may mitigate it, it needs to be addressed seriously by governments and societies. To fail to do so inadequately will betray coming generations.

They will also want us to recognise the interdependence of societies and economies. The future flourishing of people in one nation is affected by what is done in other nations, whether by companies working internationally to avoid tax, by wars and military adventures, by the movement of peoples from danger and hunger. So concern for future generations means engaging with other nations for the common good of all. To look after narrow national interests ultimately impoverishes everyone.

This is the large framework within which the legitimate questions about winners and losers can be addressed. In Australia today, attention to intergenerational equity can indeed broaden the understanding of fairness, by including action on climate, action on the narrowing wealth and international cooperation. It will not be helped by seeing society as the playground of competing individuals, but needs a robust understanding of the common good and a commitment to the flourishing of each person within the flourishing of all.

Andrew HamiltonAndrew Hamilton is consulting editor of Eureka Street.

Image: 2010 Intergenerational Report infographic from The Conversation.



Topic tags: Andrew Hamilton, economy, social welfare, intergenerational report, Treasury, Joe Hockey, wealth, redistrib



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Existing comments

we forget, push more people into paid work, and the volunteer base is likely to continue to reduce, as is the time to informally support each other (cup of tea culture may prevent abuse as problems shared)... and the issues around busy parents unable to spend time talking with both young and older children ( and all the added benefits - note the deficits we see with children and speech)
Barbara | 05 March 2015

A wonderful exposition of the effects on future generations of economic policies and climate change. But nothing yet about another major source of strife among people that has bedevilled us for aeons and looks likely to be bequeathed to future generations:- namely the divisive and aggressive roles at work and even fostered by sects and religions, each presenting their beliefs, at least implicitly, as the one and only way to serve God, and that consequently ‘others’ are at best mistaken, or perhaps perverse. When Ecumenism was proposed among Christian divisions a Scottish Church spokesman said, ‘It doesn’t seem fair. It doesn’t seem just. It doesn’t seem right. But it is God’s Will, so we must do it’. The same is the case for increased cooperation and understanding among the members of different sects and religions of the world. At least for the sake of future generations
Robert Liddy | 05 March 2015

Another fine essay giving us so much to think about Andrew, thank you. While, as you have pointed out, some commentators have described budget deficits as ‘intergenerational theft’, I would suggest that the most vicious intergenerational theft of all is that of rising house prices. This state of affairs, to put it bluntly, is simply parents stealing from their own children, grandparents from their own grandchildren. The size of a mortgage necessary for a young married couple to acquire a home today borders on the criminal. It is difficult to see how such mortgages will ever be repaid in one lifetime and its servicing is the chief reason one income is now insufficient for a family. The result, of course, is that where once the home might have been a place where family life was cultivated and children nurtured, socialized and introduced to the universe, now parents’ responsibilities have been handed to child care workers and a house is an albatross around the necks of exhausted young husbands and wives. Such marriages are so in name only. Right at the heart of this problem is the fact that, while the value of a house itself decreases over time (as it ought) land values skyrocket. So, if we really are concerned with intergenerational equity, if we really do want to foster a mature ethical vision in citizens, let’s nationalize land and take unearned land values out of the wallets of us seniors. After all, the land we stand on should be no more private property than the air we breathe. While the suggestion might be heresy in some quarters, rather than predicted changes to weather patterns over the next century stifling the flourishing of the next generation, nothing diminishes the character of life quite like a crippling personal debt.
Paul | 05 March 2015

Unfortunately this thoughtful framing is unlikely to be used by Joe Hockey today. Instead he will use the report to support a narrow, neoliberal ideological agenda. There will be no mention of the intergenerational impacts of climate change, for example. He will use the launch of the report to try to justify further cuts to services for marginalised people and the inequities in his badly flawed budget. The longer term impacts of a more unequal society and in particular, the narrowing of opportunities for many young people will be ignored. Investing in our society now- in health and education- is the smart response, but we won't be hearing that.
Kate J | 05 March 2015

Thank you, Andrew, for putting before us some ethical guidelines within which might direct our thoughts as we read and absorb the Inter-generational Report released today. Unfortunately in my case I have a prejudice that the current government may have had a hand in massaging the Report to suit its own socio-economic agenda. I'm hoping that my prejudice will be exposed as being without foundation and I shall promptly admit it if this proves to be so. Hope springs eternal in the human breast....
Uncle Pat | 05 March 2015

Report should be mandatory reading for political leaders who must start to develop clear strategies & work together constructively!
Bernie Peoples | 05 March 2015

Thanks, Andy, for a very thoughtful analysis of the criteria by which we might assess the intergenerational report. It will be interesting to see how two Jesuit ‘old boys’ (the PM and the Treasurer) measure up to the standards of a respected Jesuit thinker. The comments on the new simplistic slogan 'intergenerational theft' are particularly timely; it would be better applied to a failure to act on climate change, a failure which will at the least deprive future generations of the quality of life we enjoy today.
Peter Johnstone | 05 March 2015

Perhaps we have not set our priorities correctly in worrying about economic needs and wants. "It is the pagans of this world who set their hearts on all these things. Your Father knows you need them. No; set your hearts on his kingdom, and these other things will be given to you as well.' Luke 12:29-32
Robert Liddy | 05 March 2015

Two of the factors that will effect intergenerational wealth and poverty at both the national and international level are multinational companies and the use of tax havens. This is something which needs to be factored into this discussion. It definitely comes within the ambit of social and economic morality. The hard thing at the moment is that it is a very difficult area to coordinate effective legislation and action on. Unless it is properly addressed the world will be a much more inequitable place.
Edward Fido | 05 March 2015

An excellent article Andrew, thank you. May I add to your comment -" .. reflect[ing] on the specific challenges that our descendants could reasonably expect us to address." We need to begin by addressing past &present inequality & wrongs imposed on Australian's First Nations' Peoples (FNP)-A&TSI -since colonisation. Thousands were murdered, dispossessed/ raped/denied their languages, culture, children and lands. A&TSI lands were never ceeded nor any treaty/ies signed with the hundreds of sovereign Tribes/Nations' . Lands taken=stolen,and still being taken control of today! Then, 'normalisation' policies/ assimilation 2015 is wrong!
Present day legislated discrimination is causing much inequality, trauma & damage as reflected in skyrocketing Indigenous incarceration, suicide & self-harm, addictions and lateral violence. Inequality and racism is impacting on psyche and heart -soul-of our Nation. It impacts adversely on Australia's FNPs today. Then threats of further dispossession are real.
Between 100-150 remote WA Aboriginal communities will be closed. NATSICC, Bishop Saunders and Pope Francis are concerned, read, Getting back to the point..As Rev. Peter Adam said in 2009, "We would need to be prepared to give costly recompense, lest it trivialise what has happened. We would then need to adopt a national recompense policy, in the form of a treaty, implemented locally, according to the wishes of each indigenous tribe." ( in his seminar "Australia-Australia Whose Land. A Call for recompense." )
George | 05 March 2015

Andrew. Your thougtful comments raised the thorny concept of taxation of religious groups assests and their profits. This is an issue given the power and wealth of religious leaders. Look at the top of the range real estate, blue chip investments owned and enjoyed by such institutions and their members. The religious also travel and stay at amazing places owned and controlled by their religions, in the name of spiritual development.
Their actions, dress, and wealth seem far removed from the vows of poverty many of them profess.
Perhaps the nation is better served if Religious groups paid tax and contributed positively in a financial way to the community?
Governments then have access to much needed resources to fund child and aged care. Look at the under utilization of Buildings and Resorts owned by these organisations and written off against the Australian taxpayer.
In Brisbane when the decision was made by the Brisbane City Council to make such organisations pay water rates there was a sudden interest in conserving such a precious resource. Leaking taps and overflowing cisterns were suddenly able to be fixed. Religious groups have always pleaded 'special status' but perhaps it's time to consider the community's needs.
Laurie Sheehan | 05 March 2015

The "common good and a commitment to the flourishing of each person"; indeed. The factors in our society most undermining these are only indirectly economic, but in fact are tobacco smoking and excess calorie consumption. Both are causing havoc to societal health and well being, and are pushed for profit of corporations and share holders. Cigarette smoking may be on the way out slowly, but the tidal wave of morbid obesity is going to put huge pressure on health care spending, industrial productivity and Australia`s wealth. Both are huge social and moral dilemmas as well as personal tragedies; and completely avoidable.
Eugene | 05 March 2015

Thanks for an excellent piece, and for many valuable comments. Would that our political leaders would indulge in this sort of thinking and discussion. Those who deplore 'intergenerational theft' often have a narrow and self-serving agenda. Among other considerations, wisely targeted government debt can benefit future generations, as Andrew notes. It was good to see reference to climate change; other matters worthy of attention include the natural environment and the finite resources which are being depleted and degraded. The impact of present profligacy on future generations is usually missing from the political discourse.
Myrna | 05 March 2015

I'm sorry to say my worst fears were confirmed. The Inter-Generational Report proved to be more political than prophetic - unless one defines prophesy as preaching to the converted, in this case the conservatives, no matter what anti-ALP beliefs they hold.
Uncle Pat | 08 March 2015


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