Cost-of-living Crisis Is A Social Crisis Too

This article was originally published in Australian Financial Review on or about 16 November 2023 and was written by the author in their capacity as a contributor for that publication. 

It has been republished on the IPA website with permission. The views expressed are those of the author alone.

An economically pessimistic society finds it a lot harder to repair and renew itself in other ways.

What happened last week in Melbourne is proof of the truth of the findings of the latest Mapping Social Cohesion report from the Scanlon Foundation released a few days ago.

The survey of nearly 7500 people concluded Australia’s social environment was “precarious and uncertain” and social cohesion was at its lowest level since it was first measured in 2007.

On Friday night a week ago Central Shule Chabad synagogue in the Melbourne suburb of Caulfield was evacuated and its Shabbat service abandoned after a pro-Palestinian demonstration was held in a park across the road. That protest followed the scenes from the forecourt of the Sydney Opera House that have now gained worldwide attention.

Benji van der Plaat, 21, told The Age newspaper in Melbourne, “I’m Jewish, but currently I am scared to show it just because I don’t know who is on the street. I have always felt like I was safe in Australia, but now I don’t really feel safe anywhere.”

“Un-Australian” is the way many Australians would describe the events on the country’s streets over the last month, but at the same time the Scanlon Foundation report shows a growing proportion of Australians are not sure what it means to be Australian.

In 2007, 96 per cent said that to either a great or moderate extent they had “a sense of belonging in Australia”. Now that figure is 86 per cent, the lowest on record. Since 2018 the proportion of Australians who to a great extent take “pride in the Australian way of life and culture” has fallen from 43 per cent to 33 per cent.

Bigger government does not produce a population having more hope in the future.

A key conclusion from the report is that increasing financial pressure on individuals and families strains the nation’s social fabric. It doesn’t say it in so many words, but the cost of living crisis isn’t just a financial crisis – it’s a moral crisis too.

Nearly 20 years ago, Harvard professor Benjamin Friedman made this point in a book that was much discussed at the time, but which sadly was soon forgotten, The Moral Consequences of Economic Growth. A pessimistic society lacks the intention and the means to repair and renew itself.

As Friedman wrote: “The value of a rising standard of living lies not just in the concrete improvements it brings to how individuals live, but in how it shapes the social, political and, ultimately, the moral character of a people.

“Economic growth – meaning a rising standard of living for the clear majority of citizens – more often than not fosters greater opportunity, tolerance of diversity, social mobility, commitment to fairness, and dedication to democracy.

“Ever since the Enlightenment, Western thinking has regarded each of these tendencies positively, and in explicitly moral terms … But when living standards stagnate or decline, most societies make little if any progress towards these goals, and in all too many instances they plainly regress.”

From the wealth of information in the Scanlon Foundation report, two findings stand out. They go to the heart of Friedman’s thesis.

Only 36 per cent of Australians who said they were poor or financially struggling have a great sense of belonging in Australia. That is unsustainable and has significant long-term consequences.

The second finding is probably an even bigger concern.

In 2013, 82 per cent of respondents agreed with the statement, “Australia is a land of economic opportunity where, in the long run, hard work brings a better life.” Today, that figure has fallen to 63 per cent.

And for one age group that number is even more bleak. The age group least likely to agree with that statement is the one that once had aspirations to marry, have children and own their own home. Just 51 per cent of Australians between 25 and 34 believe that statement to be true.

To put these numbers into some perspective over the 10 years that faith in Australia as a land of economic opportunity has been in freefall, the size of the federal government grew by 10 per cent. Based on these findings, bigger government does not produce a population having more hope in the future.