Would you bet against inequality?

Andrew Leigh, Battlers & Billionaires: The updated story of Inequality in Australia, Black Inc, ISBN 981760645243

This disarming and informative book on inequality is welcome. It brings up to date a book published eleven years ago. Leigh is currently the Assistant Minister for almost all things economic in the Federal Parliament, a position that recognises his academic expertise. As a writer he is also an exemplary teacher – modest, methodical in explaining complex ideas through simple examples, and presenting, not forcing, an argument. For those like me, who do words but not numbers, he carefully explains the questions that statistics are designed to answer and illustrates his argument by clear graphs. 

The opening chapters explore the history of inequality in Australia from the arrival of the First Fleet until today, demonstrating that change in relative wealth and in support for a more equal society is possible. He then surveys the causes and consequences of inequality, the level of possibility to move from relative poverty to wealth, public opinion about inequality, and concludes with suggestions how inequality might be reduced. He shows that after a high level of inequality before Federation, the gap between the wealthy and poor narrowed until the 1970s. Since then, it has massively widened. His graphs also represent rising inequality over the ten years from the first edition of the book.

Most readers will be particularly interested in the causes of inequality, why it matters, and how it might be reduced. The core of his argument is that the most significant forces in creating inequality have been advances in technology and globalisation. The mitigating factors that have encouraged equality are unions, progressive taxation, and education which allows children from poor families to find better paid work. Over the last fifty years these factors have diminished. The reach and power of unions have declined, the taxation system has been less progressive, and the education system has failed people from less well-off homes. 

He argues that inequality matters because it threatens the sense of fairness that is central to our well-being, because inequality prevents the less well off from moving to relative affluence, weakens democracy, and erodes understanding of and commitment to the common good. Without fairness, economies ultimately weaken.

These considerations guide the remedies proposed by Leigh to save Australia’s reputation as an egalitarian society. He first demands policies that will promote economic growth. Without them there will be few resources for creating a more just society. He also emphasises the need to improve education, particularly for people from disadvantaged backgrounds, and the importance of stable families. He advocates targeting welfare spending to benefit the people in most need, the strengthening the role of unions, a more progressive tax system, and improving monitoring of the effectiveness of policies, regulating the power of monopolies, recognising the connection between inequality and social isolation, and celebrating the egalitarian Australian tradition.  Finally, he insists on the duty to support people with disadvantage, and to make high-quality education available to students from deprived backgrounds.

Battlers and Billionaires offers an excellent survey of inequality, of its importance, and of the measures needed to address it. The best tribute to it will lie in the conversations it provokes. In that spirit I offer three reflections.

'I agree with Leigh in the need to celebrate the Australian egalitarian tradition of mateship and of mutual support at a time of declining participation in local communities. This decline, however, is the natural outcome of economic and social settings that prioritise individual choice over the claims of community. Individual choice is by definition competitive. Winners enjoy the spoils and losers endure the toil. The division of society between those with and those without property and the increase of wealth by the propertied, are its natural results.'

First, the case for reducing inequality needs to be built on a stronger base than on what people feel about inequality. It must be grounded on a cogent, strongly expressed and coherent ethical understanding of a good human life and its necessary conditions. These convictions and the policies that flow from them must then be defended in the face of opposition. The problem with relying on majority public opinion is that it is vulnerable to political campaigns based on misinformation and prejudice. The majority quickly fades away. As a result, governments that have proposed changes based on public opinion postpone them to the next election, at the inevitable cost of disillusionment and paralysis that makes them even more timid.  To commend policies designed to promote equality against the opposition of well-resourced corporations and individuals who benefit from inequality requires strong ethical convictions and a strong backbone.

Second, I would emphasise more strongly than Leigh the power ideas have and will play in creating and defending gross inequality. He rightly argues that developments of technology have contributed to inequality but puts little weight on the extent to which technology has been captured by ideology. It is hardly coincidental that the growth of inequality gathered strength in the 1970’s precisely when neoliberal economic theory captured Western governments and the economists both in universities and in government. The identification of human well-being with economic growth and the priority given to individual choice over the common good underlay the flattening of taxation, the neutering of unions, the neglect of the already marginalised, and the erosion of practices of community. It has allowed big tech companies to see off any attempt to regulate them or to break them up. That ideology may have now lost its intellectual appeal, but governments continue to resist the call to regulate big tech, big business and wealthy individuals in the name of economic ideology. 

Third, I agree with Leigh in the need to celebrate the Australian egalitarian tradition of mateship and of mutual support at a time of declining participation in local communities. This decline, however, is the natural outcome of economic and social settings that prioritise individual choice over the claims of community. Individual choice is by definition competitive. Winners enjoy the spoils and losers endure the toil. The division of society between those with and those without property and the increase of wealth by the propertied, are its natural results. In such a world to celebrate egalitarianism an exercise in nostalgia. The anxiety and debt that mark the lives of so many people isolate people and weaken the foundations on which mateship is built.

These three considerations all question whether the chosen government bit and bridle of incremental change will be sufficient to rein in galloping inequality. But the smart money may well be on the runaway horse and not the jockey.     

Andrew Hamilton is consulting editor of Eureka Street, and writer at Jesuit Social Services.