The death of personal responsibility

More proof was provided in a recent report by ING-Direct (the ING DIRECT-Melbourne Institute Household Saving and Investment Report). It cited a further national decline in the number of households saving over the past three months, from 49 per cent to 46 per cent (“Household savings continue to decline” July 17, Sydney Morning Herald).

One of the main reasons? The report outlined that the proportion of households spending the majority of their income servicing their debts, including the home mortgage, also rose.

Of course, there’s also a technical and academic way to acknowledge this, and still place blame on the government. As some business commentators point out, when faced with lower interest rates, people have assumed more debt. As the Moody’s report explained, as a result of high debt levels, borrowers were much more sensitive to adverse movements in the cost of living and debt repayments. The mortgagor is therefore more susceptible to smaller changes in interest rates, as even a small change in interest rates will lead to rather large increases in debt repayments.

It’s a nice argument. It makes some sense, and explains much of the grumbling around the time the Reserve Bank of Australia meets each quarter to make its decision to change (or leave) the official cash rate.

But it doesn’t change the primary problem: people have taken on too much debt.

Certainly, the Howard Government rode out of the 2004 Election and back into government in Canberra on the back of the “Keeping Interest Rates Low” horse. But there was never a promise that interest rates would stay the same. Such a promise is impossible to make in any liberal market economy. The promise was simply to keep them lower than what a Labor government would be able to achieve given their manifesto commitments and past record of economic (mis)management. So to place blame on the Government because they “promised” to keep interest rates low is wrong.

Furthermore, the media has been focusing more recently on “housing affordability”. Just how much this has to do with the choice that individuals make to take on more debt seems to be weak. Even Ross Gittins concluded that house prices have risen so much in recent years “Partly because the average home keeps getting bigger and better” (“A housing illusion we buy every time”, July 11, 2007, Sydney Morning Herald). In other words, our tastes are too fancy for our budgets.

Why is it that borrowers are so eager to place the blame for their financial worries on someone else, even the very government which has provided the economic circumstances enabling them to borrow at such low rates in the first place?

We seem to have forgotten that it’s still the individual that decides where to live, which house to build or buy and therefore, how much debt is appropriate for the lifestyle that individual seeks to enjoy. The fact that so many Australians are in such high levels of debt is only their own fault.

Such commonsense seems to be beyond the media at the moment. And indeed, the average voter blaming the Howard Government for their financial woes.

To me this signals a trend of much greater concern with regard to a new feature of the Australian psyche: the death of personal responsibility. No longer, it seems, are we capable of working out our own finances. No longer are individuals able to accept responsibility for the level of debt they choose to incur. Instead anything that goes wrong with our lives, even with the purse strings, in spite of all evidence pointing to prime economic conditions, is the fault of the government, and in this case, the Howard Government.

Blame should be placed squarely with the left for the death of personal responsibility in Australia. It is the left that forwards a “rights rhetoric” on all fronts, instilling in Australians the strange idea that says that the comfort and rewards that are rightly the fruits of hard work, perseverance and endurance should be enjoyed by all Australians as a right.