An inheritance tax is one of the best ways to address the housing crisis

Our median wealth is about $250,000 per head, more than twice as much as the USA. Good for us, I suppose - except that if you try and spend that supposed Australian wealth, the advantage evaporates.

The median Australian (half the country being richer and half poorer) could, if they realised all their assets, buy 26 per cent of the median Australian house. The median American could buy an almost identical 28 per cent of the median American house.

Australia has fallen into the situation where our national GDP productivity advantage lies not so much in mining, manufacturing, or Mad Max movies as in bidding each other up out in the street in front of the property.

Nobody wanted this. There were no royal commission reports back in the 1970s saying that to ensure our continued prosperity Australia needed to start inflating residential property prices right away. No political party ran for office on a manifesto promise to raise house prices four and a half times. No economists analysing our economic weaknesses pointed to cheap housing as a factor holding the nation back. Nobody back then imagined that it was cheap housing.

For at least the past 20 years, in fact, people have been complaining vigorously the ramping up of property values means young people are being locked out of home ownership and families are having fewer children, among other disadvantages. And yet, here we are.

The problem isn't only that it's very hard to afford a house. One of the other consequences of having a house value explosion is it makes every second householder a millionaire; and that does rather water down the radical impulse. American author John Steinbeck has been quoted as saying: "Socialism never took root in America because the poor see themselves not as an exploited proletariat, but as temporarily embarrassed millionaires." If the poor - well, the average, at least - are actually millionaires, then whatever the bubble, whatever the actual power relationships, whatever the actual inequalities in society, radicalism becomes exponentially more difficult.

Part of the problem is the average Australian doesn't really intuit the difference between millionaires and billionaires, not having ever expected to be either. There is, I assure you, a material difference. One-million seconds is 12 days. One-billion seconds is 31 years. The average Australian is 168cm tall, and good-looking with it; if that height under the hair was $1 million, then a billionaire would be twice as tall as the world's tallest building (the Burj Kalifa, in billionaire-friendly Dubai) and Gina Rinehart would be 30 times that, or the distance from Melbourne to Mornington.

For these reasons, it's hard to get Australians to unite behind an inheritance tax. Nothing could be fairer than saying that a portion of unearned income - to which the recipient had made no contribution, but to which the community's public resources certainly had - should be clawed back at a time when its owner had no remaining opinions on the transaction. Australia got along perfectly well when it did have estate taxation - growth was higher than it is now, and there were no riots in the streets or even major protest campaigns - but Joh Bjelke-Petersen decided abolishing it would attract older people to Queensland. All the other states panicked, and estate duties were gone by 1979.

The typical Australian is prepared to listen to exhortations to tax the rich strictly provided that it's understood they're not one of them. The distortion of Australian values represented by Sydney property prices makes it very difficult indeed (a) to draw a line that wouldn't catch a lot of family homes or (b) to manage an inheritance tax that didn't include them. Every turn of the ratchet makes the situation worse.

Despite the difficulties, not everybody has given up on the issue. Our current (and brilliant) productivity commissioner, Danielle Wood, has proposed Australia have a sensible conversation on the topic (while conceding it's "political dynamite"). She has also pointed out Australia's $45 billion a year in superannuation tax breaks have most of the same disadvantages, and may be slightly easier to wind back.

The core problem, though, is most Australians would rather think of themselves as rich, even when the net effect on their lives of their new status hasn't changed at all. As Gilbert and Sullivan sang: "When everyone is somebody, then no one's anybody." At the time, that was comic opera; now, it's the national consensus.