Could we have a more egalitarian society?

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.

Other survey evidence indicates that public concern about inequality has increased over time. Comparing the responses from the 2003 AuSSA to earlier surveys of attitudes to income inequality shows that opposition to substantial income inequality in Australia seems to have become more widespread.

The evidence indicates a significant increase between 1994 and 2003 in the number of respondents who thought that income differences were too large. The wording of the survey questions in 2003 was a little different from that in earlier surveys, which inhibits a strong conclusion on this issue. However, it seems plausible to posit that the experience of economic inequalities over the last decade is reflected in growing disquiet about the outcome.

The latest AuSSA shows a slight decrease since 2003 in the number of people who think that income inequality is too large, but future surveys will reveal whether this marks a change in direction or just a temporary dip in the trend towards greater concern.

So can we realistically anticipate stronger support for policies to reduce economic inequalities?

There is some evidence that a process of change is already steadily under way. Clive Hamilton’s investigations into the growing discontent with affluenza and the incidence of downshifting, for example, lend some support to this view.

Phil Raskall, another veteran analyst of economic inequalities in Australian society, argues that there is growing interest in change, with many Australians sharing a concern that “far too much emphasis is being put on improving the economy and too little on creating a better society”.

Even Michael Keating - one of the five economists whose proposal for a lower minimum wage and tax credits got a lot of media attention a few years ago - has come out strongly advocating higher taxes to deal with inequality and provide “the public expenditure necessary to sustain our civilised society”.

While the opinion polls indicate a widespread preference for increased social spending, and even a willingness to pay the taxes necessary to fund it, politicians continue to prioritise tax cuts and to shy away from redistributive policies. This was particularly evident during the 2004 federal election campaign, in which both the Labor and Liberal Parties emphasised the Australian public’s tax burden, and vied with each other with their promises of tax cuts to “reward hard work”.

As federal treasurer for over a decade, Peter Costello has been particularly focused on emphasising tax cuts rather than more progressive redistribution: the Labor Party faces the challenge now to offer a clearly differentiated alternative.

In summary, there is an evident tension between widespread public disquiet about the extent of economic inequality and the reluctance of our political leaders to embrace policies that could generate more egalitarian outcomes.

While there are significant attitudinal barriers to the redress of economic inequality in Australia, they are not shared by a significant proportion of the population. The more basic problem lies in the way Australian attitudes are interpreted or represented at the political level. Changing that requires a social and political movement with a different vision for Australian society and the political will among the nation’s leadership to embrace these concerns.

Policies for a more egalitarian society need to be part of a broader program of economic, social and environmental management. This means creating growth and more equitable distribution of employment opportunities through appropriate fiscal, monetary, industry and trade policies. It also means ensuring an adequately financed program of government expenditures on public housing, social security, health and education. These are the preconditions for greater equality of access to economic opportunities. A genuinely progressive tax system is needed to generate the necessary revenues. Environmental and energy polices that ensure the sustainability of the natural environment are also necessary, combating the tendency for environmental goods to become accessible only to those with the ability to pay.

Intergenerational equity in access to environmental assets is a key tenet of the case for ecological sustainability - so that future generations are not denied access to environmental assets by the rapacious activities of the present generation.

The inherent connection between the objective of ecological sustainability and egalitarian concerns about social justice comes through strongly in this sort of thinking about new directions for public policy. Making progress in these policy areas is not simple, of course. As with all progressive political, economic and social change, there is a need for critique, vision, strategy and organisation. We need a critique of the prevailing situation, vision about the characteristics of a better society, a strategy for getting from here to there, and political organisation to bring about the transition.

These are difficult requirements, but not impossibly difficult. The growing support for the Green Party, for example, reflects the concerns about issues of social justice and economic efficiency - interpreted as using our economic resources effectively to serve social goals - as well as concerns about environmental quality.

There are other significant pressure points, too. The trade union movement periodically shows its capacity to embrace industrial and social reforms as well as protection of the immediate interest of current union members - but it could do more. Under the leadership of Greg Combet and Sharan Burrow, the ACTU has shown that it can effectively represent the interests of the workforce in general, especially when faced with a threat such as that posed by WorkChoices.

Meanwhile, a broad array of non-governmental organisations is actively pursuing alternative political agendas, challenging the dominant neoliberal orthodoxy and the associated obsessions with material acquisitiveness and economic growth.

It is not surprising that so many people’s primary concern has been with getting a bigger personal slice of the national income and wealth - through capital gains and other unearned incomes, if possible - rather than creating better overall social outcomes. The social costs of this process are now evident.

More people can be expected to question the point of further affluence for the already affluent. It is increasingly apparent that it is neither fulfilling nor sustainable. Egalitarian ideals and policy practices are crucial in these circumstances.