In Australia, as in other countries where neoliberal policies have been in vogue, the political will to tackle the processes creating greater economic inequalities has been conspicuously lacking in recent years. Governments have implicitly formulated their policy priorities on the assumption that economic inequalities facilitate productivity and economic growth.
There are good reasons to challenge this assumption. Extreme inequalities in income and wealth may actually undermine economic efficiency because they create more conflict and require more resources to be allocated to controlling its effects.
Moreover, major economic inequalities contribute to an array of broader social, environmental and political problems - undermining public health, political legitimacy and environmental responsibility. They also impede the development of a more generally contented society. If people’s perception of their happiness is judged according to what they have relative to others, then substantial economic inequality is a recipe for widespread social discontent.
Individuals sometimes respond by opting out of the endless pursuit of greater material wealth and seeking more balance in their personal lives between work and income, leisure and personal fulfilment. Individual responses do not substantially change the distributional inequalities though. More effective action, including redistribution through taxes and public expenditures, must come from governments.
Employment, incomes and tax policies need not only to guarantee a decent wage for the less well off, but also to limit the remuneration of the already affluent. But public policy initiatives themselves take place in a broader social context. Their successful adoption will depend on a fundamental values shift in our society.
The changing patterns of economic inequality in Australia over the last couple of decades have some clear general features. There has been a redistribution of income shares from labour to capital. Some groups, such as business executives, have been particularly big winners, rewarding themselves with prodigious remuneration packages. The income inequalities have flowed into yet greater disparities in the distribution of wealth.
Moreover, since those at the top of the distribution hold more of their wealth in income generating forms, such as shares and property, the inequalities are perpetuated over time. The total wealth owned by those on the BRW’s rich 200 list has nearly quadrupled over the last decade, with the entry price being raised to a cool $196 million by 2006.
Meanwhile, at the other end of the scale, poverty has continued to grow in relative terms. Those most affected - including the unemployed, Indigenous Australians, people with disabilities and the working poor - are marginalised and left behind. Spatial inequalities are also becoming more entrenched, as housing costs in the most desirable areas lock out all but the most affluent elites, while many rural and regional areas battle with processes of economic decline.
These trends are not easily reversed. The power and economic resources of the winners are not usually directed at resolving the difficulties of the losers. Moreover, neoliberal think tanks have relentlessly disseminated propaganda that is conducive to inequality and hostile to welfare. However, despite those efforts and their frequent embrace by the mainstream media, the evidence about current Australian attitudes to economic inequality is far from discouraging.
A pervasive feature of Australian social surveys is widespread support for egalitarian ideals. Evidence from the latest Australian Survey of Social Attitudes (AuSSA) showed that almost 82 per cent of Australians consider the gap between high and low incomes to be too large. The concern with excessive income disparities is, predictably, greatest among those at the bottom of the scale, but even among the highest-income earners, a majority think that economic inequality has gone too far.
It remains a puzzle why, according to survey evidence from the same source, there is stronger support for a more equal income distribution than for government policy to actively pursue that goal. One wonders who, if not government, is expected to be the agent of redistribution. Maybe people think companies should pay their top executives less and pay their nonmanagerial workers more, but the question of how this might be encouraged or enforced remains unresolved.
Evidently, a preference for greater equality but a distrust of government’s capacity to produce it leaves us somewhat in limbo when it comes to the politics of creating a more egalitarian society. The widespread disquiet about the current extent of economic inequality is evidently not matched by any consensus on what to do about it.
NOTE: The issues raised in this paper are explored more fully in a forthcoming book by the authors, titled Who Gets What? Analysing Economic Inequality in Australia and to be published by Cambridge University Press in June 2007.
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