Transcript Why does inequality matter?

Why does
inequality
matter?
The effects of a
corrosive force
The rich and the rest
400000
350000
300000
Annual
income
in $
250000
Bottom 10%
Middle
200000
Top 10%
Top 1%
150000
100000
50000
0
1984
1986
1988
1990
1992
1994
1996
1998
2001
2004
2007
2009
2010
2011
World famous … for inequality
Hardly an egalitarian country
• Once among the most equal rich countries
• From the mid-80s to the mid-2000s, rich
world’s biggest rise in rich-poor gap
• Now in the bottom third of the OECD
• For wealth, the top 1% own three times as
much as the bottom half put together
• Maori and Pacific peoples have twice the
Pakeha poverty rate, and greater inequality
Inequality: the corrosive force
As people live apart, they think apart
• Lives (right from the outset) become
increasingly segregated
• Democracy suffers
• Trust declines
• Community involvement falls away
• Bonds and ties are eroded
Corroding health and wellbeing
More equal societies are better for most
Corroding politics
Money well spent for the 1%
“Actual policy outcomes strongly reflect the
preferences of the most affluent but bear
virtually no relationship to the preferences
of poor or middle-class Americans. The vast
discrepancy … stands in sharp contrast to the ideal
of political equality that Americans hold dear….
representational biases of this magnitude call into
question the very democratic character of our
society” – Martin Gilens
Corroding opportunity
Want the US dream? Go to Denmark
Corroding the economy
Not ‘necessary’, despite the claims
• Over the long term, more equal societies have
better growth rates and are more productive
• So inequality at current levels is not
defensible economically
• In fact it’s damaging to the economy
• Especially to opportunity, and in the longterm
Cause 1: Inequality for workers
Where did all the money go?
Average hourly wages since 1990
30.00
25.00
20.00
15.00
10.00
5.00
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0.00
1989
• Bargaining
power falls at
the low end
• Financial
power rises at
the top end
• The balance
shifts
35.00
Cause 2: Inequality for all
Tax, welfare and employment changes
• Huge rise in number of unemployed
• Benefits have been cut sharply
• Flat rate GST has been increased (while top tax
rates have been cut)
• Overall the welfare system does much less to
support people who are unemployed than it did
in the 1980s
Further information…
In the book and on inequality.org.nz
So what can be done?
Some ideas for unions to consider
• We need to think about ‘predistribution’ and
where inequality originates
• The things that shape the rewards for those
contributions
• Within existing firms: the Living Wage, pay
ratios, worker voice
• Changing firms: worker co-operatives