In a recent Rum Rebellion article, I wrote that the young had been hit hard by the government shutdown. In response a dear reader wrote in to say, quite rightly, that the self-funded retiree had also been hit hard.
Perhaps more so…
You see, unlike the young who have lost their jobs (if only for a short time) self-funded retirees have had their already diminished incomes from interest rate repression smashed even more.
The difference is that the young have received compensation for their loss of income. The self-funded retiree, living off the income stream of assets they have accumulated over their working lives, hasn’t.
As I’m in the middle of all this (a Gen-Xer) I have a middle ground perspective.
Yes, it’s rough what has happened to self-funded retirees. You have saved for your own retirement and now, when a crisis hits, you are being asked to subsidise the young via loss of rental income and even lower interest rates.
I would also point out that while you haven’t directly received government handouts, you have certainly been prime beneficiaries of the massive asset price inflation that has swept global asset markets over the last 40 years.
It’s not my intention to start a generational biffo into who’s doing it tougher or benefitting more or less.
I bring it up because of how our dear reader finished the letter:
‘We are screwed. The socialists have won.
‘With about 30% of all Oz workers employed by govt and now about another 20% on the govts teat we are scarily close to a communist state.
‘Got the message. Don’t work hard. Don’t take risks or innovate. Don’t save. Don’t help build the country’s wealth and definitely do raise feral kids that can’t look after themselves, so they will need the teat forever.’
But maybe not. There is a deep truth in there as well.
Freedom is fought for
Societies based on freedom, like Australia, don’t just magically appear that way. These freedoms are fought for. Sometimes the fight is violent, although in Australia’s case it was mostly peaceful.
The quid pro quo for this freedom — or one of them — is the acceptance of personal responsibility for your actions. That is, you can do what you want, as long as you accept the consequences if you break the law or step out of line in some other way. Your freedom rests on you accepting the responsibility to use it in a way that doesn’t violate the freedom of others.
The thing is, the more that government intrudes upon our lives, the less freedom you have, and by association, the less of a thing personal responsibility becomes. Over time, people don’t see themselves as being responsible for their actions or their circumstances.
There is always someone or something to blame, and the government should always be there to help out.
On this topic, in the bookThe Land of Dreams: How Australians Won Their Freedom, David Kemp sums up the views of little-known English libertarian Herbert Spencer:
‘The unprincipled use of the state would thus lead to a destruction of the character of its citizens. The ‘grown-up babies’ of the nanny state that Spencer saw coming would have neither the character nor the morality to run the institutions of representative government that were in prospect.
‘Protected from all the vicissitudes of life, never having to face the consequences of their own actions and decisions, believing that others were responsible for their lives, the state would actually prevent the development of the moral understanding that was essential to the achievement of the Benthamite or utilitarian objective of the ‘greatest happiness of the greatest number.’
Relying on the government, rather than yourself, is not the way for a country to build wealth.
A government’s core role should be to protect people from violence and theft, and to uphold the law that gives people freedom.
We must never forget that government doesn’t produce anything. It only takes. And it mostly takes from those who are productive and gives to those who are unproductive.
In limited situations, this is fine. I think most people in wealthy and civilised societies are happy to help the poor, sick and disadvantaged.
But when we have a generation of people growing up thinking the government is there to help everyone, that’s when we’re on a downhill path to socialism.
The vast majority of people who ask the government for more and more don’t realise it can only afford the handouts because it’s drawing on credit accumulated in the past.
And that past was built on a different economic and social model. One where freedom and personal responsibility went hand in hand.
The tricky thing about today’s situation is that most people’s problems aren’t of their own making. The government made the decision to shut the economy down.
Which sort of proves my point. In the past, that would never have happened. The government would have seen it as a vast overreach of its powers.
Not these days though. To do nothing would seem irresponsible. Heartless. But cutting off people’s livelihoods and handing out borrowed money instead is fine.
Freedom doesn’t come cheaply, my friends.
If you want the government to look after you, you also want the government to take away many of your rights.
PS: Financial markets veteran, Greg Canavan reveals the critical factors that affect the rise or fall of the Aussie dollar. Understanding where it’s headed will allow you to adjust your investment strategy early for optimal performance. Click here to download your free copy of ‘Will the Aussie Dollar Enjoy a Post-Pandemic Resurgence?’ to discover where the Aussie dollar is likely headed towards the end of 2020.