Inequality and the top 1% in Australia

With the “Occupy X” rallies gathering momentum and attention, inequality is suddenly a prominent political issue. It’s pretty clear what people in the US are angry about – their unemployment rate is high, growth prospects are low, inequality is high and rising. Business Insider has a good summary of America’s economic and social problems, in chart form.

It’s important to bear in mind that Australia is not the US. Inequality here is lower than in the US, social mobility is much higher; the unemployment rate is much lower. Whereas real median wages in the US have stagnated for decades, we’ve seen fairly solid real income growth across the income distribution. I think  that Australians who are concerned about rising inequality should be aware of the facts, so as to avoid making overblown and unsubstantiated claims. It’s easy to dismiss people’s arguments if they’re based on a misunderstanding of the facts.

Below, I set out some facts about income inequality (as distinct from wealth inequality, which is quite a bit higher than income inequality in Australia and elsewhere).

Quick links: What is ‘left neo-liberalism’, and is it politically viable?

A debate has broken out across various left-leaning policy blogs about the virtues of a technocratic view of politics versus one that revolves around mobilising organised interests. It’s a fascinating discussion about the means and ends of progressive politics. I don’t have much to add to it, but I thought it might be worth linking to some of the key contributions for anyone who has missed the whole back-and-forth.

What do progressives care about?

I would describe myself as politically progressive. I want all the usual things that my fellow progressives so vocally agitate for: humane treatment of refugees, strong environmental protections, equality (including marriage rights) for all, reconciliation with indigenous people.

But I don’t only care about those things. In my view, to be politically progressive is to care about substantive equality of opportunity, dignity in work, quality public health and education systems that are available to everyone.

It’s becoming increasingly clear to me that these are lower-order priorities for many of my fellow progressives than issues like gay marriage. Today, my twitter feed has been full of people (understandably) railing against the conservatism and disappointing timidity of this election campaign. But, apart from a few unionists I follow, no one has mentioned the big announcement this morning that all workers who earn less than $108 000 per year will have all their entitlements protected by law in the event that their employer goes bankrupt.

This is big news. The Howard Government created an ad-hoc program that they stitched together to prevent a bit of political embarrassment when a company went bust owing its workers thousands of dollars, and a certain Stan (brother of John) Howard was on the board. The scheme was never legislated, meaning it could be revoked or modified by ministerial decree, and workers’ payments were capped. The ALP this morning pledge to create a scheme that is uncapped for almost all employees, and is enshrined in law.

This is the sort of thing that I would have thought progressives would celebrate loudly. Unions have called for a scheme like this for years. Instead: near silence.

It’s widely acknowledged that the ALP’s support base is split between a few different groups. In caricature, they’re the inner city ‘elites’ and the outer-suburban working class. Perhaps the indifference among twitterers towards this policy and others like it show that the gap between the two groups is really larger than I had previously allowed myself to believe.