Thursday, December 08, 2016

Australia's Inequality Grows

In Australia data also showed that profits, rents and interest payments have gradually taken more and more of the national income, eroding the share given to workers as wages. Despite gains in productivity (making more stuff with fewer people), wage earners are still getting a far smaller portion than they used to. According to one senior economist, this dwindling wage share helped fuel a household debt binge that triggered the Great Recession, and could now be creating the conditions for a property crash.

Professor Bill Mitchell, an economist at the University of Newcastle, blamed the “pernicious” trickle-down economics of Ronald Reagan, Margaret Thatcher and Labor’s Bob Hawke and Paul Keating. Wages decoupled from productivity growth in the 1980s because of liberalised trade, tax cuts for the rich, financial deregulation, privatisation of public assets, attacks on trade unions and other ‘free market’ policies, he told The New Daily. :
“The whole Hawke/Keating mantra was, if we suppress real wages growth and let productivity growth outstrip it, then the profit share will rise and business firms will pump that money back into capital investment and we’ll have more innovation, high productivity and we’ll all be better off. That didn’t happen. What happened was, the money was pumped into financial markets, which are essentially unproductive, but spawn massive speculative behaviour and this rise in the top-end of town.” He continued “That redistribution of national income away from wages to profits, where did it go? It went into the financial markets and it coincided with financial market deregulation, which led to the credit boom and record levels of household debt.”

Others point to structural shifts, such as technological automation, the shift from manufacturing to services, and increased globalisation. Whatever the explanation, workers are hurting.  There has been a deliberate ploy to undermine workers’ pay and rights by attacking unions so the rich can claim a bigger slice of the pie while the rest scramble for the crumbs. And it is still going on, with the continued attack on unions. Do things have to collapse around our ears before we do something? We are so apathetic. So long as we have capitalism we shall have "haves" and "have nots" . The ruthless "haves" will happily grind the faces of the "have nots" into the ground to further enhance their already better life-style and security. The franchise is at the moment universal. Poor and rich each have one vote. How long will this situation remain that the majority vote for the rich?

The reality may be worse, as the definition of ‘worker’ includes bank CEOs and other highly-paid executives, whose share of wages is rising. The ABS measure of national income, called ‘total factor income’, adds up worker wages, business profits, interest on capital and rental income to landlords. It then expresses as a percentage the share given to workers.