Why Stiglitz is selling us a lemon

We have suffered shortages of labour as massive private sector investments (mostly in mining and construction) created new jobs. If we have a problem, it is that excessive real wage growth has driven unemployment and underemployment. It also turns out that despite the strength of our skilled workforce, only a very small portion of recent gains in labour productivity stemmed from improved skills and education.

In a blow to the 'occupy' crowd who see academics like Stiglitz as their spiritual leaders, real wages in Australia have risen almost as much for the lowest earners as the high earners - an extraordinary achievement.

Stiglitz's most famous academic work focused on markets where sellers know more than buyers – the 'lemons' problem, named after clapped out cars flogged to unsuspecting buyers by unscrupulous used car salespeople. He knows salespeople with a good reputation can solve this problem by providing a kind of quality guarantee.

Stiglitz is selling an idea to Australians on the back of his Nobel laureate reputation. But the idea that redistribution will be at the heart of our future success and prosperity is a lemon.

A skilled and motivated workforce and strong demand for these workers in highly productive industries can deliver Australia's future prosperity in an egalitarian way - just as it has for two centuries. We don't need a massive redistribution campaign – we need to nurture and sustain our proven economic model.