inequity and growth

Does Tackling Inequality Reduce Growth?

Australia is going through strange times right now. The mainstream media and the government are involved in the full time spin of convincing the population that the ‘age of entitlements’ is over. As we are learning, this is correct except if you are deemed to be worthy by the government. This in particular applies to their friends in business. Amongst the business end of town, at least for those in the pockets of government (or is it the other way around), the age of entitlements is well and truly about to be enhanced.

I have made reference elsewhere to the excellent little book by Andrew Leigh, Battlers and Billionaires. Andrew makes the point well that the gap between the battlers and billionaires has widened over the recent decades.

Our present government has as one of its mantras that everything needs to be done to improve productivity. They run the unscientific line (without any evidence) that in order to improve productivity, the country is required to make more structural change. Structural change in this case is that the workers need to give up working conditions, in particular they need to take pay cuts, in order that the country prospers. This they have no interest in the fact that inequity is increasing and therefore the health and welfare of the citizens is most likely to suffer as a consequence of their ideologically driven policy decisions.

It is indeed to refreshing to see articles as now appearing that question the spin that if the country were to attend to the growing inequities, then the growth and productivity of the country would suffer. There is good article in the New Yorker that cautiously embraces the notion that we should not assume that there is a big tradeoff between redistribution and growth: the best available macro-data do not support that conclusion.

click here for the article.

and by coincidence, there’s an interesting post in the Guardian on inequity and growth by their economic person, Greg Jericho. Greg finishes his article with the words: Joe Hockey has been quite vocal on increasing growth. We wait to see whether he acknowledges that some of his policies might also increase inequality.

Click here for that article.


Paul Costigan, 2 March 2014

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