According to the Prime Minister "[t]he challenge for the G20 this year  will be to make concrete decisions and take real steps that will improve people's lives through stronger growth, more jobs and better infrastructure."
I definitely share the sentiment that economic growth, increased employment opportunities and better infrastructure are important to improving people's lives. However it seems that the Prime Minister, who is coincidentally the chair of the G20 in 2014, has fallen into an age old economic trap. His sentiments demonstrate the belief that simply growing the economy will improve people's lives. This myth has been debunked.
Whilst growing the economy will increase the wealth in the economy and also the demand for labour, it does not follow that people's lives will ipso facto be improved. If we are serious about improving people's lives then we must be prepared to not only grow the pie (the economy) but we also have to be prepared to change the way we cut it (distribute wealth). For if we simply grow the pie, experience tends to show that the wealthy simply cut themselves a bigger slice.
The direction that Australia has sought to guide the G20 towards has both moral and economic implications.
Firstly as Australians we value equality or more commonly a fair go. We place much emphasis on being the land of the fair go, where everybody should have the opportunity to live their lives with dignity, not fearing hunger or deprivation of the necessities. Implicit in this value, is the desire that wealth should be spread equally (but not perfectly) across the community. This acts as a means of enabling a life of dignity. In Australia one of the mechanisms utilised to spread wealth is through income taxation and support payments for those on low incomes. Our system is far from perfect, however, is it such that we do not want to share it with the world?
The desire of Australia, as chair of the G20, to focus the attention of the world's leading economies on economic growth rather than economic growth and wealth distribution seems to be out of sync with what we value as Australians.
Secondly, from an economic perspective, the decision to make economic growth the leading objective of the G20 flies in the face of the growing body of evidence that shows income inequality can significantly weaken economies. The International Monetary Fund (IMF), not an organisation usually associated with preaching the need for greater income equality as simply come recently to say as much. Its chief, Christine Lagarde put it simply, saying that "a severely skewed income distribution harms the pace and sustainability of growth over the longer term".In a report that followed the IMF recommended that raising property taxes, taxing the rich more and raising the eligibility age to receive publically funded retirement benefits all have to be considered so as to shrink income inequality and in turn promote economic growth.
Unfortunately it appears equality does not feature too high on the agenda of the G20 with Australia at the helm. This is despite the growing international awareness that we can no longer simply seek to grow our economy and expect the lives of all to improve. Those who are economically less powerful will remain as such without structural change that seeks to address the imbalances that exist in the global economy. Such change requires leadership, a leadership that is prepared to challenge the leading economies to expand their focus to include income equality. It is a leadership that unfortunately Australia has not be able to provide to the G20.
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