Younger Australians have done what society told us to do. We’ve worked hard, got an education, and found jobs. Yet, that has not been enough for teachers, nurses, mechanics and countless other workers to achieve financial security. The social contract, the idea that a job is enough to feed and house a family, has been lost.
A recent episode of the Diary of a CEO podcast highlighted a vital debate we need to have. It featured rockstar British economist Gary Stevenson and Daniel Priestley, an acclaimed Australian serial entrepreneur. The host, Steven Bartlett, asked both men what advice they would give to young people.
Many Millennials and Gen Zs have been left on the wrong side of the financial security divide.Credit: Thomas Wielecki
Priestley suggested that we focus on entrepreneurship, as the digital economy offers incredible opportunities to create wealth. Stevenson disagreed, arguing that this advice is harmful because, if you can’t get ahead, then it must be your fault. Instead, the economic problems we face are structural. Without reforming how our economy works, Stevenson argued, financial and business advice is like giving out stock tips on the Titanic.
The most common story we do hear is the one promoted by Priestley, about individual financial success. It’s pushed by social media finfluencers, tech bros, and self-help gurus who claim that the pathway to economic security is through speculative property investing, starting a dropshipping business, or investing in the latest cryptocurrency. Movements like “girlboss” and “quiet quitting” have sent the message that you have to save yourself in these tough economic times.
The key to the social contract working, in whatever form, is that people feel their efforts are rewarded and that they believe the contract is fair. The contract, then, is hanging by a thread.
The cultural dominance of individualism, however, perpetuates an economic system that is harming us. It means that avenues for collective action, such as union membership, political party involvement, and volunteering, are in decline. Policy debates pit winners against losers without considering what’s best for everyone, and the government and its tax and transfer system are cast as a “burden”.
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In contrast, the postwar version of the social contract promoted the idea that, in return for contributing through work, care, and paying taxes, individuals had rights to essentials such as healthcare, housing, and employment security. You could find a stable job paying enough to feed and house your family, retire with a pension, and be assured that your children would have it better.
A second version of the social contract was adopted in the 1980s and 1990s. It presented a more individualistic vision aimed at removing the “shackles” of taxation and regulation. Tax rates on the wealthy were reduced, public services privatised and superannuation introduced to prioritise individual responsibility and private wealth accumulation.