It doesn't seem yet to have dawned on Tony Abbott that he was elected
because he wasn't Julia Gillard or Kevin Rudd, not because voters
thought it was time we made a lurch to the Right.
The man who imagines
he has a "mandate" to mistreat the children of boat people, ensure free
speech for bigots, give top appointments to big business mates and
reintroduce knights and dames, represented himself as a harmless
populist before the election.
The other thing he doesn't seem to
have realised is that just as he has us moving to reduce our commitment
to action against climate change and to make the budget much less fair,
the rest of the advanced economies are moving the opposite way.
President
Obama is taking steps to overcome Congress's refusal to act on global
warming, the Chinese get more concerned about it as each month passes
and the International Monetary Fund is chastising us for our apostasy.
And
while we use our budget to widen the gap between rich and poor, people
in other countries are realising the need to narrow it.
Wayne
Swan, former Labor treasurer, noted in a speech on Monday that
"centre-right political leaders across the globe are acknowledging the
obvious truth that capitalism is facing an existential challenge ...
only last week ratings agency Standard and Poor's emphasised yet again
that high inequality is a drag on growth".
In Australia, however,
an increasing "vocal minority has decided to oppose any reform, no
matter how necessary and no matter how obvious in its benefits to the
whole nation, if they perceive it is in their short-term interests to do
so".
"This is a recipe for unnecessary political division and
widening social inequality, and unfortunately permanent reform failure,"
he says.
Australians had done much better than the Americans at
matching strong economic growth with social equity but, according to
Swan, "we're witnessing the Americanisation of the Right in this
country. Obsessed with defending the advantages of the wealthiest in our
society".
In his efforts to defend rather than correct his first
budget's unfairness, Joe Hockey seems to be doing just that. Meanwhile,
the messages from international authorities are very different.
In
a recent paper on policy challenges for the next 50 years, the
Organisation for Economic Co-operation and Development warned the
growing importance of skill-biased technological progress and the rising
demand for skills, will continue to widen the gap between high and low
wages.
Unless this was corrected by greater redistribution of
income, other OECD countries would end up facing almost the same level
of inequality as seen in the US today. "Rising inequalities may backlash
on growth, notably if they reduce economic opportunities available to
low-income talented individuals," it warns.
Christine Lagarde,
managing director of the International Monetary Fund, noted in a speech
that the 85 richest people in the world control as much wealth as the
poorest half of the global population - 3.5 billion people.
"With
facts like these, it is no wonder that rising inequality has risen to
the top of the agenda - not only among groups normally focused on social
justice, but also increasingly among politicians, central bankers and
business leaders," she said.
"Many would argue, however, that we
should ultimately care about equality of opportunity, not equality of
outcome." As it happens, Hockey has defended his budget's unfairness
with just that argument.
"The problem is that opportunities are
not equal. Money will always buy better-quality education and health
care, for example. But due to current levels of inequality, too many
people in too many countries have only the most basic access to these
services, if at all. The evidence also shows that social mobility is
more stunted in less equal societies."
Disparity also brings
division. "The principles of solidarity and reciprocity that bind
societies together are more likely to erode in excessively unequal
societies. History also teaches us that democracy begins to fray at the
edges once political battles separate the haves against the have-nots."
Pope Francis put this in stark terms when he called increasing inequality "the root of social evil".
"It
is therefore not surprising that IMF research - which looked at 173
countries over the past 50 years - found that more unequal countries
tend to have lower and less durable economic growth," Legarde said.
Get
that? Until now, the conventional wisdom among economists has been that
efforts to reduce inequality come at the expense of economic growth.
Now a pillar of economic orthodoxy, the IMF, has found it works the
other way round: rising inequality seems to lead to slower growth.
Lagarde
said other IMF research had found that, in general, budgetary policies
had a good record of reducing social disparities. Social security
benefits and income taxes "have been able to reduce inequality by about a
third, on average, among the advanced economies".
What can we do?
"Some potentially beneficial options can include making income tax
systems more progressive without being excessive; making greater use of
property taxes; expanding access to education and health; and relying
more on active labour market programs and in-work social benefits."
Perhaps
in his efforts to get a modified version of his budget passed by the
Senate, Hockey could bring in the IMF as consultants.
