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David McWilliams: Inheritance makes inequality permanent and favours children of the rich

Political centre must offer something to those who cherish liberal values, openness, tolerance and decency

It is easy to dismiss last week’s referendum result as an inconsequential one-off, based on an unimportant issue, foisted on the people by an out-of-touch Government. But it is more than that. On the cultural side, parts of the electorate are concerned about immigration and, on the economic side, people are worried about the cost of living and housing while many educated young people are emigrating.

Given this mood, to be served up a pair of feeble amendments to remove anachronistic clauses in the Constitution, ones most of us haven’t even thought about, suggests a lack of political seriousness. And politics should be a serious business.

With a consensus of all political parties backing Yes, we can look at the result through the lens of “insiders versus outsiders”. Those on the inside, those with access to power and influence, aren’t listening, forcing those on the outside, who feel locked out of the system, to shout louder. The key word here is consensus. From Sinn Féin on the left to Fine Gael on the right (to paraphrase Lyndon Johnson’s dictum), those inside the tent were all in agreement pissing out, before those on the outside decided to piss inward.

Following the crashing defeat, the assumption was that Ireland is a broadly liberal country, moving in a certain direction with an accepted suite of liberal beliefs, spanning through a range of issues from LGBT rights to immigration. This might no longer be the case. What is clear is that this Government, or future ones, must look at adopting alternatives policies for a population that is restless. Despite having among the highest standards of living in Europe, our quality of life languishes. One of the best indicators of this is the emigration of ordinary young people, who yearn for opportunity and feel locked out of the system at home.

To re-establish trust, the political centre must offer something to those who cherish liberal values, openness, tolerance and decency, if only because these values are the bedrock of economic and social success. We’ve tried the closed-door, ourselves-alone approach to Irish development; it doesn’t work.

I will focus on one area which might seem unrelated to last weekend’s referendum, but is deeply entangled in this insider-outsider dilemma.

A big area of concern is inheritance because inheritance makes inequality permanent. This jaundices the economy and the society in favour of the children of the rich, the insiders, while excluding hundreds of thousands of others, the outsiders. As so much of Ireland’s wealth and therefore opportunity is tied up in housing, the children of the already wealthy are at a huge advantage. In American slang, these citizens are “nepobabies”, the beneficiaries of nepotism, and because they get a leg up – a stake in society – they prosper at the expense of the outsiders. These outsiders might not have a stake, but they have a vote, as we saw in the recent referendum.

A recent report on inheritance should terrify us. It contends that a large global transfer of wealth is set to make “affluent millennials the richest generation in history”. Such inherited wealth inequality is not consistent with democracy and it leads to the entrenchment of power. Families that pass down substantial assets over generations wield significant influence across various spheres from politics to business and media, stifling social mobility and limiting the ability of ordinary citizens to participate meaningfully in the democratic process. Democracy promotes the idea of meritocracy; inheritance and wealth take this away.

In Ireland, at the extreme end, wealth has become increasingly concentrated in the hands of those at the very top. Oxfam indicates that at a combined €15 billion, Ireland’s two richest people have more wealth than the 50 per cent of the population at the other end of spectrum, who have a combined wealth of €10.3 billion . To be in the top 1 per cent of people in Ireland, you will now need wealth of at least €4 million – less than the US ($5.8 million), but more than either France ($3.3 million) or the UK ($3 million). According to Oxfam, this wealthiest 1 per cent of Irish society now owns more than a quarter of the country’s wealth or €232 billion; the top 10 per cent of households hold more than half of the wealth in Ireland; and the top 30 per cent own close to 80 per cent of the country’s wealth.

If we have a society where one section is locked out and another is sitting reasonably pretty, we have a problem

On a day-to-day basis, inheritance completely distorts the property market. For example, the median price of a home in Ireland was €280,000 in 2021. CSO figures (2021) show that 45 per cent of first-time buyers aged 25-34 received financial assistance from their family in 2021. A survey conducted by Bank of Ireland found that around 32 per cent of first-time buyers received financial help from their parents in 2022.

This assistance often involves down payments or the cosigning of mortgages, enabling the children to overcome financial barriers. According to data from the Banking and Payments Federation (BPFI), 42 per cent of new home purchasers used a parental gift toward their deposit.

Although the link between the roar from the country last weekend and a parental dig-out for their children in the first time buyers’ market might not seem obvious, it goes some way to explain the vote. If we have a society where one section is locked out and another is sitting reasonably pretty, we have a problem. If those sitting pretty are doing so, not because of their own efforts, but because their parents or grandparents have given them a dig out, then one of the foundations of democracy, the idea that when you work hard you can improve yourself, is weakened.

If the Government prioritises what are seen by many voters as irrelevant legislative policies, like adjusting reasonably immaterial parts of a Constitution, at a time when housing and immigration are highest on the list of people’s concerns, anger will simmer.

And anger eventually spills over.

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