If you put last week’s Brexit shock alongside the even more shocking prospect of a Donald Trump presidency, an epoch-defining shift in political attitudes is emerging.
Voters seem quite prepared to make themselves poorer.
Not all voters of course. But a staggering number of Americans and Brits are putting agendas of self-determination and self-identity ahead of material wealth.
From the “older, whiter English and Welsh provincial working-class voters”, as columnist Niall Ferguson called the Brexit supporters, right up to the influential economics writer Ambrose Evans-Pritchard, many ‘Leave’ voters knew they were voting for a drop in living standards.
Evans-Pritchard favoured “years of hard labour” over the status quo. One can only hope he’ll pitch in.
Likewise in America, where economists are warning of the dreadful economic consequences of the Donald Trump version of international relations, immigration, his $10 trillion in tax cuts and so on.
And yet many Trump supporters, like Brexit supporters, are poor and disempowered. They will vote to make themselves poorer in return for a perceived sense of empowerment.
Will Australians follow suit?
As we head towards our own election on July 2, the big question is whether the same groundswell of anger will be seen here.
Polling is showing a growing number of voters favouring independent candidates rather than the two major parties. Voter disgust is, no doubt, exacerbated by the competing threats made by the major parties.
For months now we’ve been told that the Coalition’s superannuation changes will damage our retirement income, or that Labor’s negative gearing changes will reduce the value of our homes.
We’ve heard from Prime Minister Turnbull how the Coalition’s company tax cut will stimulate “jobs and growth” and from Bill Shorten how it will blow a hole in the budget in order to boost returns for foreign investors.
And we’ve heard from the Coalition how leaner health and education services will free up money for backing ‘innovation’, and from Labor how cuts to those services will harm future growth.
The growth problem
During 70 years of the ‘post-war economic order’ voters in all modern democracies have learned to follow headline economic indicators.
Gross domestic product is up 3 per cent! Hurrah. Unemployment is just 5.7 per cent! Yay! Productivity grew 1.1 per cent! Oh joy!
And yet the subordination of other issues to the almighty economy has not sat well with those who feel no control over their lives.
Retirement savers who watched their wealth decimated during the global financial crisis, should know that ultra-loose monetary policy is inflating credit bubbles that virtually ensures the same calamity will be seen again.
Young Australians are encouraged to ‘get ahead’ by borrowing historically large sums of money to buy housing, that they’re told, will ‘build wealth’. What that really means is the next generation will take on even larger debts to push asset prices higher still.
Via mechanisms such as these, the voter is given ‘growth’ that for all its material benefits feels like an ever-heavier millstone around their neck.
Other issues, particularly migration, weigh more heavily in the UK and US, but what voters seems to be saying is : “I want to be wealthy, but not that way.”
Will we vote against wealth?
Turning to the Australian election, what issues could tempt voters to vote against their own wealth?
It won’t be on the Abbott-era issues of ‘boats’, ‘axe the tax’ and ‘debt and deficit’. But it may be something closer to home, literally – the price of housing.
To bring housing affordability under control, prices either have to fall or they have to grow at a rate lower that wage inflation.
Any other outcome is transferring wealth from each successive generation of home-buyers to older Australia, and to the overseas investors who lend money to our banks.
House-price falls, or slower growth, are currently being cast by the Coalition as a hit to national wealth. And technically they are.
But this is a prime example of where many young Australians and their parents are realising that ‘we want growth, but not like that’.
I have argued for some years that changes to negative gearing and capital gains tax concessions, such as Labor is now proposing, are fundamental to returning fairness to the tax system.
They are also essential to prevent ever-worsening mortgage-stress among each year’s crop of first home buyers.
And while those reforms will dent ‘growth’ in terms of the personal wealth of home owners, they actually carry a future growth dividend by reallocating capital towards businesses that produce the goods and services Australians need, rather than simply repricing the national housing stock at ever-higher levels.
Voters around the world are showing they prize control of their own lives more than absolute economic growth.
In Australia, a growing part of the population want control over that most basic element of a good life – a decent home of their own.
That’s why on July 2 some politicians may be shocked and dismayed at Australians voting “against their best interest”.
In a democracy, it’s the voter who ultimately has to decide what ‘best interest’ really means.