The idea that economic inequality is a problem — and an increasing one — demanding public policy remedies has taken root in Australian political and policy debates. But there is a sense in which these debates have leapfrogged the relevant facts.
The Productivity Commission has done a great service by applying its analytical skills to an elucidation of these facts. Among the Commission’s findings are that:
All up, the facts do not support the salience of inequality in Australia’s contemporary political debate.
So why has inequality taken hold as a political issue? The Commission does not venture onto this ground, but I would suggest three reasons:
Debate is one thing; actual policy is another. The danger is that a misguided emphasis on correcting inequality will lead to policies that damage economic well-being across the board. As the outgoing Commission chairman said, “Inequality is not a sound basis for the determination of public policy”.
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