Keynes and the Australian Housing Market

Baby boomers and millennials complaining about each other is trendier than avocado on toast. But the bigger picture shows that the questions we all face are no longer of whether food, a home and a job are achievable, but what shape and size it all comes in.

The hard won and well enjoyed era of the Australian good life is ending. For millennials, there are no quarter-acre blocks and Hills Hoists; just studio slums in the high six-figures or a lifetime of renting. Should we be worried that, rather than this being a phase, all future generations will be faced with this apparent decrease in freedom and standard of living?

Two things happened in the sixteenth century to throw humanity in a drastic change of direction; technological advancement, and the accumulation of capital. The internet revolution is a prime example of the accelerating pace of technological advancement. The accumulation of capital also remains all-important as nations push GDP ever higher, and baby boomers hold on to investment properties with iron fists.

Up until relatively recently our only priority – our great economic problem - had been survival. To get food, find shelter, stay healthy, avoid conflict (to ultimately avoid death), and somehow also procreate. These base needs have become secondary to a different kind of insatiable need; a desire to be better-off, relative to others.

Perhaps we should look to those who were born with both kinds of needs satisfied. The very wealthiest, who are not only fed and housed, but to a higher standard than everyone else. With nothing left to achieve but maintenance, can they sit back and enjoy themselves?

We might look to the upper-class women who, when able to hire somebody else do the cooking, cleaning and raising babies, find themselves with nothing to do. When these women have nervous breakdowns, it is because they are no longer faced with humanity’s great economic problem and can’t figure out what to do next. One must tread carefully here lest one’s argument be taken as suggesting they have nervous breakdowns because they can’t cook nor clean and that is all they are good for. But I digress.

We should all be wary of leisure. Judging by the wealthy, it can be disappointing. But more and more of us are approaching the end of the economic problem, and entering an era of perpetual leisure. Precisely when we get there depends on four things: population control, the avoidance of wars, our trust in science, and the continuing accumulation of wealth.

If we judge quality of life on lifespan - assuming the worst things in life are the ones that kill you –, which is increasing, this leads us to expect population will increase with it, but hopefully not infinitesimally. Those who have satisfied their absolute needs and sit content with their relative needs tend to under-procreate, and as I have already mentioned, this group is growing.

While some accumulate wealth, there will always be others struggling for survival, and they will either die or demand it. Therefore, we will be preoccupied with providing it in this impending “leisure-time”, either by will of force. Maybe that’s what women have been up to while the machines wash their clothes and the nannies rear their children.

People who struggle to have their basic needs met will always exist to an increasingly miniscule degree. But an infinite number of increasingly smaller fractions will sum to 1. The world’s population will eventually have their absolute needs satisfied.

Until then, greed is useful. Accumulation of wealth is sensible rather than avaricious. Boomers are right to cling tight to their assets, and millennials even more so for chasing their own. Perhaps it is their grandchildren who will have the struggle only of deciding what to do with one’s free time.