The patrimonial society comes to Australia

Forbes just released its annual list of the ten richest Australians. Of the top eight, four inherited their wealth. The other four range in age from 75 to 85, suggesting that new heirs are likely to be joining the rich list before too long.

This pattern isn’t yet representative of the Australian wealth distribution as a whole, but it is becoming more so. Piketty’s patrimonial society is not far away.

There are a lot of things we can do to promote a more equal distribution of opportunity and outcomes, but a return to taxes on inheritance (preferably levied on the recipient rather than the estate) would be a good start.

80 thoughts on “The patrimonial society comes to Australia

  1. While taxing wealth after it has damaged society is not the solution, it is a desirable moderating reform.

    However I would hope this was targeted at wealth that was obtained from exploitation of workers and not wealth that was earned by individuals own labour.

    This is most relevant in the case of family businesses where the wealth nominally owned by a deceased person may in fact be the wealth earned by surviving partner and children.

    So provided a inheritance tax was not a blunt tax over a single threshold irrespective of the political economy involved, then maybe more than Costello’s 5 billion could be raised.

    I see no need to allow exemptions for gifts to charities.

  2. J.Q.,

    Can you point me to what you regard as your “manifesto work” or comprehensive statement of your full political-economic position. I think it’s a reasonable request. It would certainly assist me to understand and place in context individual pieces of your policy advocacy.

    Alternatively, you can just point me to a label. Your blog strap-line suggests you are an advocate of social democracy. A simple definition of social democracy is that it “refers to support for political democracy, regulation of the capitalist economy, and a welfare state”.

    However, if you did the latter, I would be left wondering why you regard social democracy as the “best of all possible” economies. You might be right. You might be wrong. But I would be left wondering about your deeper reasons for the adoption of that position. Your “manifesto work” or comprehensive explanatory work would enlighten me about your reasons. It might or might not convince me overall but it could certainly enlighten me about possibilities and benefits in social democracy I am either overlooking or dismissing out of hand. It might also offer convincing reasons why socialism cannot work.

    My ideas on many matters are in considerable flux at the moment. I am not as undeviating and fundamental as I might appear to be.[1] I tend to appear dogmatic when I argue my position(s) as best I can. In fact, I am always seeking dialogue and refutations which I do take seriously if I find them cogent and convincing.

    fn 1. I was reading an old article (circa 1930s) in which a British Socialist boasted that his group or party had “never deviated” on a particular point of doctrine. He was indeed essentially referring to what is properly called doctrine. I thought, “Nothing scares me more than people who never deviate.” A certain amount of flux and uncertainty in one’s position and feelings is necessary in confronting – or cooperating with – complex, ambiguous reality. Fuzzy logic considerations alone would suggest that a level of flexibility (ability to deviate, re-think, re-cast, admit personal error and so on) is adaptive.

  3. @Ernestine Gross

    «He agreed it is private banks and the government who are interested because they generate net debt. Only if GDP grows is there a chance of being repaid (even if we ignore the pile of debt in the form of derivatives), nevermind who in the process goes bankrupt and who doesn’t.»

    I hope that here «the government» means in understood to mean “the middle classes”, because even more so than the wholesale speculators («private banks») they are the main generators of net debt, to be paid later by someone else with «growth».

    One major example that has come up recently is the suburban and exurban sprawl, where the middle classes want low density housing with high cost urban infrastructure, but don’t want to pay the high taxes that result from sharing a lot of infrastructure among a few properties, and therefore have financed the building cost with debt, and don’t pay for the maintenance costs, because “growth” will solve it all.

    http://www.newgeography.com/content/004788-voting-with-your-feet-aaron-renn-s-new-donut

    The same applies to pensions, where the middle classes are massively undersaving and hoping that a strongly patrimonial society with capital “growth” of 8-12% a year will sort it all out.

    The sociologist C Crouch has called the resulting policy “privatised keynesianism”, common in anglo-american political systems. It is the situation where the property-speculating middle classes vote themselves the ability to borrow ever larger amounts of net debt, and an implicit government guarantee on it.

    An USA commentator summed it up as:

    «Rather than workable solutions, my party is offering low taxes for the currently rich and high spending for the currently old, to be followed by who-knows-what and who-the-hell-cares. This isn’t conservatism; it’s a going-out-of-business sale for the baby-boom generation.»

    So the main drivers of the (nominal) “growth” are in effect *the voters*.
    And “growth” in effect is an euphemism for “upwards redistribution”.

    So it is a big political problem to persuade the middle classes to cut significantly their standard of living, which is presently fueled by growing private and government debt, and wishful thinking is not going to make it happen.

  4. @John Turner

    «the subject of this thread I.e the advent of a patrimonial society in Australia seems somewhat surreal»

    Well, it has happened over the past 30 years, in Oz, the UK, etc: the property speculating middle classes have created a patrimonial society, where those who own property in classy Sydney etc. suburbs have seen r > g (and significantly so) for decades, and their heirs are just waiting for their turn as lords of the suburban micro-manor and the stream of rents and tax-free effort-free capital gains.

    Most voters in Australia, the UK, etc. want property price growth to be significantly higher than wage growth for example, and they got their wish for decades. There is nothing surreal about that, it has happened and continues to happen.

    Can you imagine the crucial property owning middle classes voting for a government with policies that result in wage growth higher than property price growth?

    And if not them, who else is going to be have the votes to return a parliamentary majority?

  5. Blissex, perhaps the middle class would come to the table if the obscenely wealthy were able to show real leadership with regards to fair wealth distribution and sustainable economic growth.

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