The yoke of inequality burdens us all

It was in 2012 that The Price of Inequality by Nobel Prize winner Joseh Stiglitz was published in America and the United Kingdom. In 2013 it was distributed worldwide by Penguin Books. This seminal work, tellingly subtitled How Today's Divided Society Endangers Our Future was widely acknowledged.

As Stiglitz recounts in the Preface to the Paperback Edition, “It was clear from its reception that it had struck a chord, not just in the US, but around the world, where there is mounting concern about the increase in inequality and the lack of opportunity, and how these twin trends are changing our economies, our democratic politics, and our societies.”

Has the situation improved since then?

No.

At the G7 meeting in August in the French resort town of Biarritz, the host, French President Emmanuel Macron, officially declared the summit would focus on social inequality; more contentious issues like trade and climate change had already been broached.

Are there any existential issues more critical than climate change, which threatens our planetary home, and inequality, which threatens to tear apart the very fabric of societies the world over?

This piece will place before you the mounting evidence, drawn from recently published articles in the mainstream media, that inequality is not easing, but is steadily worsening. You can draw your own conclusions.

Let’s start with Kate Griffiths and Danielle Woods of the Grattan Institute, writing in The Conversation in an article titled: For the first time in a long time, we’re setting up a generation to be worse off than the one before it. They begin:

We’ve become used to each new generation of Australians enjoying a better standard of living than the one that came before it. Until now. Today’s young Australians are in danger of falling behind.

A new Grattan Institute report: Generation gap: ensuring a fair go for younger Australians, reveals that younger generations are not making the same economic gains as their predecessors. Economic growth has been slow for a decade, Australia’s population is ageing, and climate change looms. The burden of these changes mainly falls on the young. The pressures have emerged partly because of economic and demographic changes, but also because of the policy choices we’ve made as a nation.

Older generations are richer than before; younger ones are not. For much of the past century, strong economic growth has produced growing wealth and incomes. Older Australians today have substantially greater wealth, income and expenditure compared with Australians of the same age decades earlier.
Australia’s Household, Income and Labour Dynamics Survey (HILDA) provides the details.

Under the heading: Income levels and income inequality it reads:
Mean and median household disposable incomes grew very strongly over the eight-year period from 2001 to 2009. Expressed at December 2017 prices, the mean increased by $19,773, or $2,472 per year; the median increased by $19,422 over the same period. Most of this growth in fact occurred between 2003 and 2009, when both the mean and median grew by approximately $3,000 per year. However, since 2009, growth in both the mean and median has been much weaker. Over the eight-year period from 2009 to 2017, the mean household income grew by only $3,156, or 3.5%, while the median in 2017 was $542 lower than in 2009 (having fallen between 2009 and 2011, risen in 2012, and remained broadly unchanged thereafter).
However, the Bureau of Statistics managed to confuse the issue by asserting: Inequality stable since 2013-2014, but failed to back its conclusion with data. Commenting on the Bureau’s assertion in ABC News, Stephen Long and Michael Janda noted that ”average (mean) household wealth has been climbing quickly whereas typical (median) household wealth has not, implying that the rich are getting richer much more quickly than Australians in the middle”.

Writing in an article in The Conversation: Inequality is growing, but it is also changing as Australia’s super rich evolve Salvatore Ferraro of RMIT University said:
Over the course of the 20th century, income equality has been U-shaped, a point noted by French economist Thomas Piketty and Australia’s Productivity Commission.

In Australia, the income share of the top 1 per cent peaked at 14% in 1950, then fell to a low of 5% in the early 1980s before climbing again to 9% by 2015. Wealth inequality has also followed a long term U-pattern, and in many countries wealth is even more concentrated than income. The Productivity Commission finds that in Australia, a person at in the top 10% of wealth distribution has 40 times as much wealth as a person in the bottom 10%. That person has four times as much income.
In another article in The Conversation titled Inequality in the OECD is at a record high – and society is suffering as a result Mike Brewer, professor of economics at the University of Essex, begins:
When high levels of inequality are pointed out, a common response is that the “politics of envy” are being deployed. I heard the phrase myself when I tweeted recently that the share of income going to the richest 0.01% of adults in the UK was almost at a record high, based on my new analysis of UK tax data. After taking a few months out to write a book on what we know about economic inequalities, I was struck by the enormous amount of research showing how harmful inequality is for people. It’s increasingly clear that high levels of inequality damage our health and well-being, harm social cohesion and levels of trust, and act as a brake on economic performance. And there is increasing evidence that inequalities dramatically tilt the playing field for future generations.
Indeed, there is an emerging field of inequality research: Health inequality, pioneered by Professor Sir Michal Marmot. He has shown in his reviews how profoundly health and disease are modulated by inequality in income and wealth, and how health inequality has worsened since his first review in 2010. Health and well being are powerfully determined by whether we are well-off or poor.

In another article in The Conversation: Don’t believe what they say about inequality. Some of us are worse off Professor Peter Whiteford at the Crawford School of Public Policy at ANU writes:
If you were going to reduce a 150-page Productivity Commission examination of trends in Australian inequality to a few words, it would be nice if they weren’t “ALP inequality claims sunk”, or “Progressive article of faith blown up” or “Labor inequality myths busted by commission”. The editorial in the Australian Financial Review of August 30 says questions about whether inequality is increasing are “abstract”, taught in universities as “an article of faith”, and a “political truncheon”.

The Productivity Commission report adds to a growing pile of high quality research on trends in income distribution in Australia, including a recent Australian Council of Social Service (ACOSS) and University of New South Wales study using data from the Australian Bureau of Statistics (ABS) that provides an in-depth analysis of income and wealth inequality in 2015-16 and an analysis of trends since 2000. The Productivity Commission survey takes the deliberately ambitious approach of assessing a wider range of outcomes than income, including indicators of household consumption and wealth, their components, and changes over time and in response to events such as transitions to work, divorce and retirement.

We often hear about Australia as a ‘miracle economy’ enjoying 27 years of economic growth. In fact, the Commission report shows real net national disposable income per person – a better measure of individual economic well-being than GDP – actually fell in six out of the last 27 years.
There are a number of telling graphs in this article that would reward your attention.

In his valedictory address on leaving the public service, as if to leave a telling message for the political class, outgoing secretary of the Prime Minister’s Department Martin Parkinson condemned ‘entrenched disadvantage’ in Australia:
Our history has bequeathed a degree of entrenched disadvantage that should be seen as a disgrace in any country, but particularly one as developed as Australia.

More than half of those in the bottom decile in 2000 were still in the lowest 20% 15 years later. Ideally, people should only be at the bottom of the income distribution spectrum temporarily due to life events, not whole families and communities sentenced to it for generations. If you want a single thing to blame for the disadvantage we see in Australia, particularly in our remote areas, look no further than an understandable lack of hope.
While neoliberal thinkers might regard inequality as the ‘normal’ state of affairs, of interest only to political tragics, recall the Occupy Wall Street movement that mobilized thousands of people in September 2011 in Zuccotti Park, New York. The issues that motivated this movement were social and economic inequality, greed, corruption and the undue influence of corporations on government, particularly from the financial services sector. Eventually forced out of Zuccotti Park, protesters turned their focus to occupying banks, corporate headquarters, board meetings, foreclosed homes, and college and university campuses. These ordinary people saw the devastating effects of inequality, and insisted on having their opposition to it heard.

Inequality pervades the social side of society too. Homelessness is perhaps the commonest form of social inequity, now affecting so many young people. Gender inequality is rife. LGBTQIA folk experience inequality in all its social forms. They fight for recognition and a fair go, form associations to marshal support, and use social media to counter the criticisms they suffer. Too often their voices are ignored.

Need I say any more? There is abundant evidence of extreme inequality the world over in wages, wealth, opportunity, housing, social status, gender recognition, health and well-being. it's a yoke on society that burdens us all. Sadly, it's likely to worsen, not improve.

Is the political class capable of reversing this downward trend? Do they really want to try? I really do wonder!

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Ad Astra

17/09/2019

Folks

You can listen to Joseph Stiglitz talking about inequality in the Featured Video up the page.

Ad Astra

17/09/2019

Folks

Why are the ABS and the Productivity Commission deliberately downplaying the verifiable fact that inequality is increasing? Is this at the direction of the government officials overseeing these instrumentalities? Do they feel the need to deny this uncomfor truth, which reflects so badly on their administration?

The statistics show the wealthiest households are getting a growing share of household wealth. The Productivity Commission is trying to tell us they are not. Read this telling piece in The Conversation: It’s not just the ABS. It’s also the Productivity Commission downplaying the growth in inequality: https://theconversation.com/its-not-just-the-abs-its-also-the-productivity-commission-downplaying-the-growth-in-inequality-104135?    

We have a dishonest government, and its mendaciousness is infecting the public service. Remind you of Nineteen Eighty-Four

Lawrence Winder

17/09/2019

Aren't we lucky yo have such a Xtian as prime miniature whose values are in such accord with the people?

Ad Astra

18/09/2019

Lawrence Winder

Indeed!

How many umbrellas are there if I start with two and take 2 away?