As a nation, we have, for what seems like the longest time, wrestled with issues like truth, justice, and equality as central and sustainable edifices of an egalitarian society, let alone as a planet.
An egalitarian society, lest we forget, actively strives to sustain equality of welfare and equal opportunity as a first priority.
In simple dictionary terms: egalitarianism is the “belief that everyone should be treated the same or equally and all should have the same rights”.
Placing things in context
To place things in context, I refer to an essay by the prominent Australian psychologist, social researcher, and author Hugh Mackay, written in 1997:
“… the dream of egalitarianism came into full flower when it looked as if we could all be prosperous. Now, 30 years later, it is a very different scene that confronts us. The rosy expectations of the 50s s and 60s have been dashed by the bleakness of the 90s. Things are tighter, tougher and less certain. The dream of egalitarianism is turning sour, especially for those who are being denied equal access to Australia’s employment opportunities.”
If you weren’t around, Australia slipped into recession in the September quarter of 1990, which lasted until the September quarter of 1991. Hence the frequent reference to nearly 30 years of unbroken economic growth post that, until COVID-19 struck.
Recessions aside, to provide a picture of inequality at the time, Mackay furthermore pointed to a study published in the mid-90s:
“Recent research published by Monash University tells us that 32 per cent of Australian adults are now primarily dependent on welfare payments for their income. The top 30 per cent of households control almost 60 per cent of household income; the bottom 30 per cent control a mere 10 per cent of household income.”
Life’s a lottery, and pretty much rigged from birth
Not much has changed in light of our 30 years of prosperity. The inequality born out of the 90s continues to grow. A 2018 study by Oxfam found that the top 1 per cent of Australians now owned more wealth than the bottom 70 per cent combined.
As Glyn Davis, chief executive officer of the Paul Ramsey Foundation, which works to end intergenerational poverty, wrote in his most illuminating 2021 book On Life’s Lottery: “Birth is a throw of the dice. The consequences can last a lifetime.”
And for a rich country, compared to the 34 wealthiest countries in the OECD, poverty in Australia remains mired at about average—the 16th highest.
But the most poignant point Davis makes is the myth of Australia as a fair and equal society—the success of the few hides an indelible truth.
Behind the facade of egalitarianism and meritocracy, much of our life is decided at birth. That is, where you end up in life is a lottery of where you were born and to whom you were born.
Entrenched inter-generational poverty is handed down from parent to child in the same way the riches of the wealthy are. People born into poverty are likely to experience poverty as an adult. And women, twice that of men. The fact is, only a small percentage of those born into poverty will ever reach the top quintile of financial success.
A report by the Australian Council of Social Service and the University of New South Wales), titled Poverty in Australia 2020, showed that 3.24 million people (13.6 per cent) are living below the poverty line of 50 per cent of median income, including 774,000 children (17.7 per cent) and 424,800 young people (13.9 per cent).
These numbers are likely to balloon post the pandemic. And be further exacerbated by the compounding effects of crises like intensifying pandemics and climatic change.
Drawing the poverty line
Politicians like to debate poverty lines by drawing their own unsubstantiated ones. I mean, politicians have the authority and parliamentary privilege to draw their own lines without providing any inkling of how they arrived there.
The ACOSS poverty line is calculated at $457 a week for a single adult living alone. The Melbourne Institute of Applied Economic and Social Research places the poverty line for the June Quarter 2020 at $455.07 for a single person with no dependents (inclusive of housing).
From this, we can conclude that the poverty line for a single adult (inclusive of housing) is close to $900 a fortnight. Add-ons like the energy supplement (about $7 a week for a single person, whereas the average electricity bill for a single person living alone in QLD is around $25.50 per week) and rent tends to provide politicians with another way to obfuscate the issue and deflect. That is, everyone has to pay electricity and rent, either directly or indirectly.
This contrasts with the JobSeeker payment of $620.80 a fortnight for a single person with no dependents as of 1 April 2021. About 31 per cent “below the actual poverty line”, and of course, you must meet the “income and assets test” in case you managed to squirrel some away for a rainy day.
We also know that being of working age and unemployed represents the greatest risk of falling into poverty. Still, according to ACOSS, this is a “direct result” of Australia’s historically low rate of unemployment payments.
Mindful that we have never achieved “official” full employment. In truth, it is deemed undesirable by our politico-elites and business leaders because it would dramatically increase the bargaining power of workers.
The economics of dishonesty
Theoretically, from a purely economic perspective, our current government believes that setting JobSeeker well below the poverty line will provide an incentive for the unemployed to get a job.
In truth, it believes this is the only way to fill those jobs that most people hate. You know, the low-paid, insecure, monotonous, and mind-numbing jobs.
So, it’s either a relatively quick and brutal path to poverty or a slow-burn soul-destroying one. Either way, the disincentive often amounts to a long-term proposition that is passed down through generations, as Davis points out.
Most economists will tell you this particular strategy is about as economically honest and sound as trickle-down economics—it just doesn’t stack up whichever way you stack it—and should be called out for what it is: “inegalitarian and unfair”.
Likewise, as Nobel-prize winning economist, Paul Krugman writes in his critical 2020 account of the sad state of US politico-economic affairs, Arguing With Zombies: “you should tell readers not just that extravagant claims about the power of tax cuts are false, but that those making such claims are knowingly being dishonest”.
This applies to tax cuts for Australia’s rich, which the Morrison government is intent on implementing. Their claims regarding the benefits for society as a whole are dishonest, and so, Scott Morrison and Josh Frydenberg should explain why they’re being dishonest about pushing these claims.
Perhaps the answer lies in a Harvard Business Review article by Joan C Williams and Ro Khanna, in which they cite an unspoken core capitalism belief: “to make the rich work harder, pay them more; to make the poor work harder, pay them less”.
Underpinned by the fact that, worldwide in recent decades, salaries for executives have risen to hundreds of times the average worker’s wage. While as we know, the average worker’s wage has barely moved.
Australia’s pay ratio for our top executives is around 280 times the average worker. Our highest-paid CEO in 2019 was Andrew Barkla (from IDP Education), who took home more than 420 times the national average salary.
How big can the gap between the rich and the poor grow before our world implodes?
If you thought that the rich weren’t the major sponsors of climate change, think again. The handful of people monopolising global wealth are also largely responsible for the world’s climate carnage.
Suffice to say, wealthier households have considerably more disposable income to spend on energy-intensive activities such as luxury tourism and shopping.
A 2020 Oxfam report found that between 1990 and 2015, the richest 10 per cent of the world’s population were responsible for an astonishing 52 per cent of carbon emissions added to the atmosphere.
A study by Oswald et al. (2020) confirmed as much, estimating that households of the global top 10 per cent of income earners use about 45 per cent of all energy for land transport and about 75 per cent of all energy for air transport.
Compared to the poorest 50 per cent that use slightly more than 10 per cent for land transport and less than 5 per cent for air transport.
Similarly, a study by Ivanova and Wood (2020) of the carbon footprints of EU households found that the top 1 per cent emitted 22 times the EU’s per capita carbon emission reduction target.
Only 5 per cent were living within the target. And the top 10 per cent with the highest carbon footprint per capita accounted for 27 per cent of the EU carbon footprint, which was higher than the bottom 50 per cent of the population.
And if the global population lived like Australians do, each year, the resources of 4.1 Earths would be needed for the natural environment to regenerate (Australia is the planet’s second biggest offender behind the US, which requires five Earths).
What is clear is that wealth and the energy privilege it affords is neither socially just nor ecologically sustainable.
While hundreds of millions of people fell into poverty and many others lost their lives, the pandemic profits of our billionaires skyrocketed
Globally, the COVID-19 pandemic significantly increased the inequality gap.
According to the latest Oxfam report, The Inequality Virus, worldwide, billionaires’ wealth increased by a massive $3.9 trillion between 18 March and 31 December 2020.
And the world’s 10 richest billionaires saw their wealth increase collectively by a whopping $540 billion over the same period. While it is estimated that the total number of people living in poverty increased by between 200 million and 500 million through 2020.
In Australia, our 31 billionaires saw their fortunes increase by about $85 billion since the WHO declared COVID-19 a pandemic. And while their fortunes skyrocketed, many ordinary people lost their jobs and fell into poverty and might never return to their pre-crisis levels.
Women were disproportionately represented in those sectors that were hardest hit by the pandemic. Oxfam reported that globally, “If women were represented at the same rate as men in those sectors, 112 million women would no longer be at high risk of losing their incomes or jobs.”
And if income was a prime indicator of equality, which it is, around 88 per cent of the world’s billionaires are male.
Is it time for a global wealth tax?
The most utopian solution to inequality in terms of the distribution of wealth is advocated by the well-known French economist Thomas Piketty.
In his 2014 book Capital in the Twenty-first Century, he argued for a global wealth tax starting from 1 per cent and incrementally topping out at around 2 per cent. Studies do show that a wealth tax would reduce long-run inequality.
The New Yorker’s Idrees Kahloon estimated that Piketty’s global wealth tax would cost Jeff Bezos, the founder and CEO of the e-commerce behemoth Amazon, a tax bill for about $109 billion in the initial year. Naturally, he can afford it.
But Piketty didn’t stop there. In an interview with the French magazine L’Obs about his latest book, Capital and Ideology (2019), he called for a graduated wealth tax of 5 per cent on those worth €2 million (about AU$3.1 million) or more, and up to 90 per cent on those worth more than €2 billion (about AU$3.1 billion).
Needless to say, Piketty’s goal is to tax billionaires out of existence—they certainly don’t need tax cuts as an incentive to get richer!
In an egalitarian society, we only have to establish that a need exists
The pillars that sustain an egalitarian society are equal opportunity and fairness, irrespective of where you were born and to whom you were born.
Both underpin our belief in “equality” as the foremost precedent, whether in the face of manifest discrimination or cumulative disadvantage across domains and generations, that we constantly fail to address legally, morally, and empathetically—and which stifle opportunities from birth.
And life might be a lottery, as Davis points out. But as Mackay put it: “In an egalitarian society, we have only to establish that a need exists to have defined an entitlement. In an egalitarian society, we must take each other’s needs on trust.”
And to be sure, in a post-pandemic world with spiralling inequality and a climate change crisis, it’s not hard to establish a need.
Dr Stephen Dark has a PhD in Climate Change Policy and Science, and has lectured at Bond University in the Faculty of Society & Design teaching Sustainable Development and Sustainability Economics. He is a member of the Urban Development Institute of Australia and the author of the book Contemplating Climate Change: Mental Models and Human Reasoning.