‘Good times, bad times‘, Inside Story, 5 July 2018
Looks at recent evidence of growing inequality in Australia, mostly driven by gains among the highest earners.
There is little doubt that inequality is worse now than it was in the early 1980s. As the IMF reported in its Fiscal Monitor for 2017, “Australia is among countries with the highest growth in income inequality in the world over the past thirty years.”
The Australian Bureau of Statistics’s latest analysis of inequality, released in June, reinforces the point. This is the ABS’s most comprehensive study yet, and not only takes account of the impact of income tax and social security benefits on households, but also factors in government-provided health, education and other community services, along with the GST and other indirect taxes. According to this broader measure, inequality is lower than we thought, but it has risen in recent decades.
The article looks at an important recent international publication and has some instructive graphs and tables. See also Ross Gittins in Fairfax, examining similar evidence, and the Honest History collection of resources 2014-17 on inequality and how it is trending.
See also this related article in The Conversation from Stephen Bell on the economic implications of rising inequality. Says Bell:
We have to recognise that economic growth inevitably involves economic transformation, based on innovation and technological change. Thus, contrary to the assumptions many economists make, it is highly probable that economic growth will impact on the distribution of incomes. This of itself can create future problems for the sustainability of that growth.
The bottom line, economically and politically, is that governments need to be prepared to promote demand as well as supply. Increasingly, we can no longer escape the distributional issues at hand. The winners will need to help the losers through more effective support and a degree of redistribution – especially if things get worse through ongoing wage stagnation and rising resistance to the perceived inequities of the present economic system.