IAN McAULEY. Reclaiming the ideas of economics: Aspiration

“Aspiration” used to mean something more noble than greed.  We need to claim it back.

Summarising his praise for the Coalition’s tax cuts, conservative columnist Tom Switzer wrote:

The passage of the federal government’s tax-cut legislation fulfils a major Coalition campaign promise, but more important is that it marks a return to the politics of growth and aspiration.

In itself Switzer’s reference to “aspiration” has no defined meaning: the word “aspire” simply means to strive or to be eager – eager to achieve an unspecified something. It is what the philosopher Claude Lévi-Strauss called an “empty signifier” – something to which anyone can attribute any meaning.

The Coalition has provided its own meaning of “aspiration”, and it’s about getting rich. Not the richness of accumulating learning, friendships, experiences and respect, but the specific accumulation of material and financial assets, by whatever means legally possible.

There is nothing wrong with aspiring to make oneself financially secure, but from a moral perspective the means by which one achieves that end do matter. Do we achieve it through our own effort, through entrepreneurship, through taking a chance, or do we achieve it through taking from others – through reaping where others have sown and tended?

The means most favoured by the Coalition in recent times has been property speculation, supported by permissive tax allowances on capital gains and negative gearing.

Where existing or already-planned properties are involved, this is not wealth-generating investment. No new assets come into being: it is simply a transfer of wealth, and those who pay are mainly the young who are condemned to perpetual rent or cripplingly high mortgages.

Another consequence is a high turnover in housing ownership and occupancy, to the detriment of social stability.  It’s hard for supportive neighbourhoods to develop when an increasing proportion of people may be forced to move any day because their landlord wants to make a capital gain or has found it too hard to service his or her debt.

Labor in its time has given incentives for people to become financially secure, but in ways that help create new wealth. Labor introduced dividend imputation, giving individual investors an opportunity to share in the nation’s prosperity through equity in wealth-creating companies. (But they never intended it to be a means to live a tax-free retirement on a high income). Labor also introduced capital-gains tax indexation, ensuring investors were not penalised for their patience. Above all there was Labor’s introduction of near-universal superannuation, which has given all working Australians a chance to share in real wealth-creation.

In the name of “aspiration” the Coalition has undermined those initiatives. Individual share ownership has given way to property ownership. This is not simply a shift in asset class: it’s a fundamental shift in our economy’s incentives and rewards. If small investors enthusiastically buy up BHP shares to the point that they become overpriced, they and other investors may suffer some loss, but they don’t deprive others of shelter or destroy communities.

The tax system has been used as a means to help people get rich at others’ expense, rather than to provide incentives for people to invest in wealth-creation.

To put it simply, what the Coalition means by “aspiration” is “greed”. Talking on Big Ideas, Saturday Paper editor, Erik Jensenmade it clear that Prime Minister Morrison not only shares that narrow view of “aspiration”, but also that he has embellished it with religious justification:

Scott Morrison … said ‘your aspiration’, and I use that word because he does, but the word I would prefer to use is greed, your greed is good, it is decent and it is humble, and if you work you deserve it, and that is essentially a Pentecostal dictum.

Morrison’s Australia is an Australia built on that cleave, between the worthy and the unworthy, and the worthy in Morrison’s Australia are already rich and they will seek only to become more rich.

This is a long way from what Labor, and most Australians whose ideas of wealth go beyond individuals’ assets, have traditionally meant by “aspiration”. In a reflection on Bob Hawke’s life published in The Monthly nMungo MacCallum wrote about “aspiration”:

When Scott Morrison praises aspiration he means personal gain, the accumulation of assets – what was once called avarice and greed.

When Hawke and Kelty used the term they meant rising above ourselves, setting worthwhile aims for the nation, even the world, listening to our better angels.

It’s too powerful a word to be owned by those who make it a euphemism for “greed”.

 

This is the second of a series of articles in Pearls and Irritations  on reclaiming the ideas of economics. The General introduction  was published on September 19.

Ian McAuley  is a retired lecturer in public finance at the University of Canberra and a Fellow of the Centre for Policy development.

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Ian McAuley is a retired lecturer in public finance at the University of Canberra and a Fellow of the Centre for Policy Development.

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