sir prince duke alevine wrote on Feb 18
th, 2014 at 10:06pm:
Hi Karnal. I agree that the most important factor is to see real wages growth across all wage groups, and I also agree that in comparison to the world, our level of inequality does not compare. But I again will point out that we can't simply use this measure to justify our overall inequality across the groups. Comparing Australia to a country like India, for instance, is like comparing Oranges with Apples. Yes, comparing us to the USA tells us that we are miles ahead in this field. But if we compare ourselves to the Scandinavian countries? We are miles behind. And we must always look at how we can improve, as opposed to how we are doing in comparison to someone worse.
So in saying that, the way forward as I see it, is to work on government policy that further equalises the share of wealth across where the majority of the population is. Decrease the low income group and bring them into the middle class. And ensure real wages growth in the middle class occurs more so than in the upper class.
The upper class will exist, and by all means I have no animosity for people trying earn as much as they can - if that makes them truly happy, then whatever. But society is like a uni course or high school course; it should work on a standardised bell curve. Hence government policy should be on that, as opposed to currently being all about increasing the wealth of the rich, and blaming the poor for their own predicaments.
You raise some good points, Alevine, but at the risk of giving Mistie an orgasm, I wonder whether equality on its own can be the benchmark for a successful society. For the French, there were three: liberty, equality
and fraternity. Our tradition, of course, has prioritized liberty. Fraternity seems to be a long forgotten social value, but ultimately, these are all abstracts.
Capitalism measures success by per capita GDP. While there are a number of valid criticisms of this form of measurement, it is a good indicator of a range of factors. It’s a good predictive tool. It can tell you a lot about the direction of a society, it’s demography, its urban growth, deforestation and energy use. While these don’t tell you much about the
quality of a society, they tell you a lot about its quantities, which are important.
Abstracts like liberty, equality, fraternity, etc, are only useful if they can be applied in practice. Under socialism, for example, Cuba had excellent health care and literacy rates, but it was dirt poor. People might have had a fair degree of equality, but no liberty. And they starved.
The cash crop economy of Ethiopia starved too, but while famines there have killed millions, people in the cities get their hands on food. In one sense, this is the essence of a free market economy, albeit a failed economy by any form of measurement.
Equality is important, but it shouldn't be prioritized over increasing wealth and raising living standards. In capitalism, equality is impossible. Those on high incomes will always have a higher pool of wealth/capital through their compound interest alone.
However, if you tax this excessively, this investment does not lead to wages growth for those on low incomes. Capitalism always involves a balancing act between capital and labour, and if other countries offer lower wages and levels of taxation, capital will migrate.
This, of course, is happening in manufacturing jobs as we speak. It's due to the high Australian dollar, which has nothing to do with government. This is the result of a "two-tier" economy and the demand for Australian dollars to pay for mining resources. Mining exports go up, manufacturing exports come down. Global capitalism is full of such contradictions and negative feedback loops.