Like a zombie rising from the journalistic grave, one of the most infuriating terms in Australian public discourse is back: the “mum and dad investors”.
COVID-19 policy debates are increasingly framed in terms of their supposed impact on this fabled cohort. Journalists seeking “balance” offer a sympathetic lens on both ordinary workers and consumers, and the supposedly common procreators who own the businesses that laid them off and charge the rents they can no longer afford.
Yet, aside from being descriptively useless (isn’t Twiggy Forrest also a dad, and Gina Rinehart a mum?), the term is largely employed to lump the upper-middle class in with the rest of us by distancing them from the uber-rich.
The invocation of parenthood emphasises the supposed ordinariness and benign motives of B-league capital owners, who thus must be included in our collective concern.
No matter how big their swimming pools, we should not equate investors’ lost returns with the genuine destitution of many Australian workers. And they should thus remain a lower priority in the COVID-19 response.
The interests of investors often run counter to the national interest, especially in a pandemic. As we face our biggest economic crisis since World War II, we should ignore subtle appeals to special treatment, and be prepared to compromise their interests if necessary.
A fair share?
Exhibit A: Bernard Keane recently noted “baby boomer investors demanding that even though the economy has been halted to protect them, they still want banks to pay dividends, no matter how reckless that would be”.
RMIT business academics Andrew Linden and Warren Staples have outlined precisely why it’s a bad idea — many of our major companies have surprisingly little cash on hand because they give too much of their profits back to shareholders, to encourage them to buy even more shares. There is thus little left over to boost wages or reinvest, or to save for a rainy pandemic.
With cash from daily operations razed by social distancing, many companies must now choose between paying their workers and ensuring they stay afloat, or paying out dividends to investors whose bloated returns left them cash-strapped to begin with.
Legally, board members barely have a choice. This is why both Britain and New Zealand have stopped their banks paying dividends, and Australia is reluctantly edging that way.
Nine, however, informs us this would be “a cruel prospect for retirees”, many of whom rely on returns from investments.
I empathise with all those who will lose income due to this nasty virus. But we have an imperfect solution for that problem, which does not threaten our biggest employers with bankruptcy and their workforce with mass layoffs. It’s called the dole.
It’s where those of us who can’t afford stocks go when life isn’t fair.
‘Come mothers and fathers throughout the land‘
The outsized sympathy given to housing investors in the rental debate similarly derails policy discussion. The “two sides” are afforded equal weight on TV shows like The Project, and renters are implored to remember their landlord is also doing it tough.
The implication is to water down new government regulations and pressure renters to negotiation meekly.
Renters should ignore this framing and push hard.
Some landlords may also be impacted by the COVID-19 fallout, but they generally have more options. Australian banks have offered (albeit imperfect) mortgage relief. State governments are releasing funding schemes that help both parties. The investor has a stake in, or full ownership of, a valuable asset they can put to use. And if all else fails, they can line up at Centrelink with those of us who cannot shunt the risks we accepted onto others.
I hold no inherent disdain for investors. If life gives you lemons, sell them and dive the profits into whatever government-abetted Ponzi-scheme you like. If I had enough lemons, I would do it too.
I am simply saying that those who have amassed enough savings to buy an investment property or a large stock portfolio don’t need our sympathy, and they certainly should not be poking holes in the stimulus bucket.
Whether governments continue their decades-long coddling of the upper-middle class or reasonably compromise their generous arrangements to help labour will have intergenerational consequences.
The media will never give us a corny sympathy badge, but the “son and daughter workers” of younger generations will have their working lives disproportionately impacted by this crisis, especially if their current or potential employers go bust or their sharehouse is emptied.
Please, “mums and dads”, think of your children. Consider investing in our future.