EXACTLY no one was surprised to read recent Oxfam data that Australia’s wealthiest one per cent had increased their share of wealth in 2019.
Australia’s top one per cent, about 250,000 people, had captured more than double the wealth of the entire bottom 50 per cent, about 12.5 million people, the report stated.
The report hit as Pope Francis sent his message to the World Economic Forum on January 21, in which he urged economic leaders to remember their moral responsibilities.
The Pope insisted they put the human person at the centre of public policy.
“In seeking genuine progress, let us not forget that to trample upon the dignity of another person is in fact to weaken one’s own worth,” he said.
The Pope’s message flew in the face of generations of widening wealth division.
And while there are economists who believe some inequality was good for economic growth, and the International Monetary Fund found a Gini index (used for measuring inequality) value of 27 could be helpful; Australia was not in that “sweet” spot, instead sitting at an index value of 35.
Many Australians see wealth inequality as a consequence of the natural reality that a small number of people are more industrious or intelligent and earn disproportionately more than the rest.
High inequality was to be expected under this view.
Even if that were the case, the current data suggests that inequality left unchecked meant less for everyone.
This was because high inequality put downward pressure on upward mobility.
Children born into the bottom 50 per cent of households missed out on better educational opportunities and that usually meant they would earn lower wages and have decreased economic participation.
Distributional factors within wealth inequality existed too, with the brunt of the inequality faced globally by women.
This burden fell on women disproportionately because they were often the primary unpaid caregivers, which amounted to economic activity worth an estimated US$10.8 trillion annually.
The inequality issue in Australia fell more on property wealth.
For those with little wealth, about 32 per cent of Australians, renting was their only housing option.
Rising rental rates – now averaging about 20 per cent of income – and stagnated real wage growth meant less disposable income could go towards accumulating savings to build wealth – like a deposit on a mortgage – or building skills to increase employment outcomes.
Other issues like lower health outcomes for those without wealth and the temptation for middle-class people to take on unpayable debts were also consequences of high wealth inequality.
Those at the bottom struggled to escape.
Wealth inequality came with an added bite: wealth was itself a source of income.
Top earners stored excess income in wealth, and that wealth generated more income through dividends, interest payments and rents, and that income was stored in more wealth that made more income – and on and on.
There was no single economic policy that could correct the trends without causing widespread job losses or industry collapse; taxing the rich more and increasing the minimum wage were seen as myopic and dangerous options.
Instead, a raft of solutions needed to be found in a new moral trajectory for public policy.
The Pope pointed out everyone was a member of the “one human family”.
This, he said, was the basis of the moral obligation to care for one another and put the person first, rather than the “mere pursuit of power or profit, at the very centre of public policy”.