Two ideas have been thrown around a lot lately that could do with some clearer analysis: inequality and entitlement.
Entitlement means different things to different people. Many of us are baffled that it can mean cuts to some welfare, such as family payments, but mean extensions to other welfare, such as paid parental leave. It seems to depend on whether one thinks of entitlements as benefits deserved intrinsically or as earned.
One can only explain paid parental leave as an entitlement in the same way some people are entitled to platinum Amex while others carry green.
A basic interpretation of entitlement through the Australian lens of the fair go may be that it means ending handouts for those who ought to lend a hand. Interpreted that way, ending the age of entitlement would go some way towards resolving the debate about inequality.
Thomas Piketty’s Capital in the Twenty-First Century arrived just as the Australian debate was warming up. It’s so hot right now that the Sydney Town Hall talk by economist Joseph Stiglitz, author of The Price of Inequality, sold out within hours.
The most interesting recent arrival in the inequality argument was not, however, the Frenchman or the American but a former Liberal Party leader. John Hewson is best remembered for his Fightback! plan, which called for what many would describe as “neo-Liberal’’ reforms.
Launching a new report this month — Advance Australia Fair? What to do about inequality in Australia — Hewson noted that, over the past decade, the richest 10 per cent have enjoyed almost half of the total growth in national incomes and that the richest 1 per cent received 22 per cent of the gains. As my colleague from the Centre for Independent Studies Matt Taylor has written elsewhere, the poor also gained from this period of growth.
The poorest 20 per cent gained a 27 per cent increase in income between 1984 and 2010. Incomes in the next quintile, from 20 per cent to 40 per cent, rose by 31 per cent. But while the rising tide lifted all the boats, some were in tinnies while others were in schooners.
The arrival of a bona fide right-winger such as Hewson into the inequality wars suggests two things: that inequality might not just be a convenient campaigning meme for the Left and that it might be of as much concern to those who believe in the individual as to those who believe in the collective.
If a wealthy minority was simply the price of progress for all, then none of this would matter. If the rich were getting rich by shepherding capital to productive purposes and innovating solutions to human needs, we could all sleep well with inequality.
But, as The American Conservative journal’s Noah Milman wrote recently, glibly dismissing inequality as the price of growth becomes difficult during times of slow growth, such as we’ve had since the global financial crisis. He also argues that inequality should be a non-partisan issue, as “few people are completely unconcerned about inequality and few people are completely unconcerned about stalling economic growth.”
For the Left, it’s obvious why inequality is a problem: it’s a priori a bad thing.
For the Right, it’s more complicated. Inequality of opportunity matters. Bill Gates once noted that “you wouldn’t select a winning Olympic team from the children of former Olympians’’ and yet that’s what we do as a society if we don’t allow each generation to challenge the social and economic incumbents.
What’s urgently needed is a cure for youth unemployment. The estimated 27 per cent of young people not working face a terrible risk of long-term joblessness and poverty.
It isn’t clear why the young have not benefited from the recovery but posited factors include changes to apprenticeships and traineeships; rising youth wages; the high cost of housing in employment centres and the professionalisation of once entry-level jobs. The growing insistence on formal qualifications locks out the inexperienced, unskilled worker.
It’s easy to say the young lack ambition or are job snobs. It’s harder to uncover the barriers to entry and systematically pull them down. But this is what is needed. The government needs to bring our best minds together to get a handle on the causes and deal with them before the youth unemployed become the long-term unemployed. Getting the young into jobs can help us ensure the one form of equality all Australians expect: a fair go.
Cassandra Wilkinson works at The Centre for Independent Studies.