Piketty and the Australian exception

by John Quiggin on December 22, 2015

Note I wrote two pieces in response to Piketty’s Capital and managed to get confused as to which one was meant for this seminar. Here’s the piece I sent in originally, and which is referred to in Piketty’s forthcoming response. The crucial point is that, thanks to a combination of strong employment growth and redistributive taxation and welfare policies Australia has, to a substantial extent, avoided the sharp increase in inequality seen in other English-speaking countries. The conclusion

Australia’s experience belies the claim that any attempt to offset the growth of inequality must cripple economic growth. On the contrary, the evidence suggests that there is plenty of scope for progressive changes to tax policy that would partly or wholly offset the trends towards greater inequality documented by Piketty.

Over the past forty years, leading developed economies, most notably the United States have experienced an upsurge in inequality of income and wealth. Most of the benefits of economic growth have accrued to those in the top 1 per cent of the income distribution. Meanwhile, living standards for those in the bottom half of the income distribution have stagnated or even declined.

Piketty’s work, published in reports and academic journals, has documented these trends. His book, Capital, not only brought the issues to the attention of a broader public, but presented an analysis suggesting that worse is to come. Piketty argues that we are in the process of returning to a ‘patrimonial’ society, in which income from inherited wealth is the predominant source of inequality.

Piketty’s work has previously focused mainly on the United States, but the research presented in Capital points to similar trends in the United Kingdom. Although inequality has grown much less in France, the third country on which he has detailed data, Piketty argues that the same trend will emerge unless there is a substantial change in political conditions.

To the extent that there is a general trend of the kind described by Piketty, we would expect it to emerge first in the English speaking world, where the shift to market liberalism and financialised capitalism was earlier and more complete. And, indeed, a sharp increase in inequality may be observed in other English speaking countries including Canada and New Zealand

Australia, on the other hand, looks like a counterexample. On most measures of inequality Australia looks more like France than like the rest of the English speaking world. Although Australia’s have experienced an increase in inequality on most measures, the general picture is one of broadly distributed improvements in living standards, as illustrated by Peter Whiteford’s contribution to a recent seminar on Piketty published by the Australian Economic Review (AER). As Whiteford notes:

Income growth was highest for the richest 20 per cent of the population, at close to 60 per cent in real terms, but even for the poorest 20 per cent, real incomes grew by more than 40 per cent between 1996 and 2007.

Other measures such as the Gini coefficient and the ratio of median to mean income tell a similar story. Inequality has increased over the period since the 1980s, but only modestly and with frequent reversals.

Turning to the top 1 per cent of the income distribution, evidence from tax data, presented by Roger Wilkins in the AER volume suggests that the share of income accruing to this group has risen, but not to the same extent as in other English speaking countries This is consistent with the observations of Piketty himself, who notes:

‪the upper centile’s [top 1 per cent] share is nearly 20 percent in the United States, compared with 14–15 percent in Britain and Canada and barely 9–10 percent in Australia

Much of the credit for this comparatively benign outcome must go to the Labor government that held office from 1983 to 1997 and implemented a relatively progressive version of the market liberal reform agenda. Labor managed a reform of the Australian tax and welfare system that shielded low income Australians from the worst effects of the market liberal revolution that swept the English speaking world in the 1970s and 1980s.

In most countries, policies of financial deregulation, privatisation and microeconomic reform were accompanied by regressive changes to the tax and welfare systems. By contrast, Labor introduced broadly progressive tax reforms including a capital gains tax and a crackdown on tax avoidance.

Rather than treating welfare payments and tax policy as separate, the restructuring sought to integrate the two, taking account of the combined impact of means tests and tax policies to optimise the balance between efficiency and redistribution.

These changes weren’t sufficient to prevent growing inequality of income and wealth, and some of them were eroded over time. Nevertheless, in broad terms, a redistributive tax–welfare system was maintained under the succeeding conservative government, even as it was being eroded in other English-speaking countries.

Labor returned to office in 2007, just in time to make its next big contribution: the fiscal stimulus that allowed Australia to avoid the recession generated by the Global Financial Crisis in nearly every other country. In combination with previous successful pieces of macroeconomic management, such as the Reserve Bank’s handling of the Asian Financial Crisis in the 1990s, the result has been an economic expansion lasting nearly 25 years, unparalleled in Australia’s economic history, and scarcely equalled anywhere in the world. The strength of the labour market has encouraged a broad spread of prosperity not seen elsewhere.

Together these factors explain why Australia has avoided the drastic increases in inequality seen in other English speaking countries. On the other hand, although Australia’s a long way from the plutocracy that already characterises the United States, there is no room for complacency.

Australia’s relatively equal distribution of income and wealth depends on a history of strong employment growth and a redistributive tax–welfare system. Neither can be taken for granted. The end of the mining boom has inevitably resulted in slower growth which bears hardest on those at the bottom of the income distribution. And, as elsewhere, the political pressure to take burdens from the rich and shift them to the poor is never-ending.

Moreover, Australia has not proved itself immune to the political dynamic, noted by Piketty, by which increasing personal wealth allows the wealthy to dominate politics, then enact policies that protect their own wealth. The archetypal example is Silvio Berlusconi in Italy but the situation in the United States is arguably worse. The majority of members of the US Congress are millionaires, with not much difference between Democrats and Republicans.

Given the pattern of highly unequal incomes, and social immobility observed in the US today, we can expect inheritance to play a much bigger role in explaining inequality for the generations now entering adulthood than for the current recipients of high incomes and owners of large fortunes. Inherited advantages in the patrimonial society predicted by Piketty will include direct transfers of wealth as well as the effects of increasingly unequal access to education, early job opportunities and home ownership.

The move towards a patrimonial society already happening in the US is evident at the very top of the Australian income distribution. As in the US, the claim that the rich are mostly self-made is already dubious, and will soon be clearly false. Of the top 10 people on the Business Review Weekly (BRW) rich list, four inherited their wealth, including the top three. Two more are in their 80s, part of the talented generation of Jewish refugees who came to Australia and prospered in the years after World War II. When these two pass on, the rich list will be dominated by heirs, not founders.

The same point is even clearer with the BRW list of rich families. As recently as 20 years ago, all but one of these clans were still headed by the entrepreneurs who had made the family fortune in the first place. Now, all but one of the families are rich by inheritance.

So, Australians have no room for complacency. In an economy dominated by capital, and in the absence of estate taxation, there is little to stop the current drift towards a more unequal society from continuing and even accelerating.

On the other hand, Australia’s relative success in using the tax and welfare systems to spread the benefits of economic growth provides grounds for optimism elsewhere in the world. Australia’s experience belies the claim that any attempt to offset the growth of inequality must cripple economic growth. On the contrary, the evidence suggests that there is plenty of scope for progressive changes to tax policy that would partly or wholly offset the trends towards greater inequality documented by Piketty.

{ 36 comments }

1

Ronan(rf) 12.22.15 at 9:01 am

Im on my phone so can’t dig out any references at the minute, but my understanding is that Ireland has a lower level of post tax and transfer income inequality and the most redistributive tax system in the OECD (moving it from most unequal pre transfers to below OECD average post). Afaik a good bit of this can be accounted for due to the disproportionate amount of pre transfer zero income households in Ireland, and the recession (both through destroying incomes and wealth at the top and increases in taxes) but afaict that would cut a little against Australian exceptionalism (Also that it’s happened in a country with, again afaik, high levels of financialisation and integration into the global economy, but weaker left right political cleavages, and so a less meaningful right wing backlash over the past number of decades. All that might assume that a brand of politically amoral glad handling pseudo technocracy is more preferable than cleare cut distributional and ideological political divisions ) . Second thing would be Ireland’s welfare system which (again afaik) is the mist generous in the world in terms of dole payments. So, as someone here said before , you have a ready made experiment on something (vaguely) approaching a UBI, and a decent example of a bottom up stimulus during a deep recession.
Anyway , as I’m not an economist /political scientist etc I’ll stand corrected on any of that

2

hix 12.22.15 at 9:05 am

“As in the US,>>> he <<< claim that the rich are mostly self-made is already dubious, and will soon be clearly false."

Minor type error

3

hix 12.22.15 at 9:35 am

“These changes weren’t sufficient to prevent growing inequality of income and wealth, and some of them were eroded over tim)”

Another one. Clearly ive spent too much time proofreading recently. Reminds me point out that it was as always a pleasure to read this in terms of clarity/sentence structure.

4

engels 12.22.15 at 9:37 am

I didn’t know that about Oz. Another reason to emigrate (in case the London winter solitude wasn’t enough)

5

MisterMr 12.22.15 at 10:00 am

“Australia, on the other hand, looks like a counterexample.[…]
Income growth was highest for the richest 20 per cent of the population, at close to 60 per cent in real terms, but even for the poorest 20 per cent, real incomes grew by more than 40 per cent between 1996 and 2007.”

So basically in the whole world team left lost to team right 10 to 1, but in Australia team left only lost 4 to 6. How is this a counterexample?

As a leftist, I would expect inequality to fall, not to rise (but more slowly, heh). Just to be clear I don’t want inequality to fall at the level of the 70s, I want inequality to fall much more because the 70s were already way too unequal for my tastes.

In facts, one of the most disturbing implications of Piketty’s work is that inequality only fell through the bolsheviks, WW2 and possibly (but this is very dubious) fascism. The anti-inequality record of the postwar leftish-keynesian governments is at best at the same level of Mussolini’s, a rather low bar.
[Just to be clear I’m not in the least pro-fascist, I just want to point out how lowsy the anti-inequality record of the left is]

With this record, it’s quite obvius why many “low-middle class” people vote for Le Pen or Trump, and not for the left. Maybe they aren’t that wrong in the end (not because Le Pen or Trump are ok, but because the left is quite useless).

In short: we need falling inequality, and we need it soon, and we need it to fall a lot and durably. Anything less is a defeat.

6

James Wimberley 12.22.15 at 12:07 pm

More typos than usual. Please proofread, it’s a sound piece.

What is the situation in Israel, a country that is similar culturally to Australia in its marked lack of deference?

7

PlutoniumKun 12.22.15 at 12:24 pm

@1, Ronan,

The Irish situation is a bit complicated – the Irish tax system is only highly progressive if you look at direct taxes only. The situation with the dole is a bit disruptive too as in Ireland the social welfare system is quite crude relative to other countries – a relatively generous dole, but fewer other supports. The good folks at progressive-economy.ie have plenty of research on this, e.g.:

http://www.progressive-economy.ie/2015/12/troubling-levels-of-inequality-within.html

But I think its true to say that the very clientelist nature of Irish products is relatively benign in this sense – even right wing politicians tend to be reluctant to cut too deeply into social protections so ironically Ireland managed a fairly redistributive society without ever having a government controlled by a left wing party.

8

Rakesh Bhandari 12.22.15 at 3:36 pm

The OP refers to the mining boom which has involved huge exports. Scarce natural resources can have built into their price “rent” in one of its many meanings (we have rents of a rentier society, rents from imperfect competition and perhaps in this case Ricardian differential rent which is the extra income from reduced costs at the richest mine).
Anecdotally I have heard Australian mines (along with Brazilian ones) tend to enjoy the biggest economies of scale in the world, say in the case of iron ore.
So I am wondering whether “extra income” or “rent” (broadly defined) played any role in Australia’s growth and the ability to ameliorate inequality.
At the same time, Piketty refers to the foreign ownership of assets. Again anecdotally I have heard that ownership of mining companies and real estate is often foreign. How much of profits flow abroad?

9

Rakesh Bhandari 12.22.15 at 6:08 pm

10

Rakesh Bhandari 12.22.15 at 6:22 pm

I really recommend DeLong’s piece, linked above. It provides what we needed from the beginning of this symposium–an accurate summary of what Piketty is arguing and an assessment of some of the most important criticisms.

11

Rakesh Bhandari 12.22.15 at 6:49 pm

If Australia as an agro-mineral export powerhouse does not fit Piketty’s analysis, there is still what he has to say about oil-exporting countries and how the rents they accumulate are concentrated and invested. Do note Piketty’s provocative argument that the Saudi portfolio heavy with low yield US T-bills cannot be made sense of except as part of a security deal. Piketty recently restated the analysis in the book to make sense of the rise of ISIL, which provoked an interesting debate about the determinants of terrorism.

12

Ronan(rf) 12.22.15 at 7:36 pm

PlutoniumKun – Thanks for the link, it’s pretty helpful. Ive been trying to get my head around how the the taxes and transfer system works,but the more Ive read the more confused I get.
On first glance:

http://www.newyorker.com/wp-content/uploads/2013/11/cassidy_03.jpg

It does seem to do a good job at redistribution (though I think a lot of that is explained, as I mentioned above and as did your link, that there are so many zero or close to zero pre tax incomes in Ireland that it makes it look more effective than it is)

You’re probably right re the welfare system, though from what I can tell (and this might be overly simplistic as I dont have a particularly sophisticated grasp of rival welfare regimes) the Irish case does seem to work relatively close to how people want a UBI to, (1) relatively large cash payment, (2) iirc not means tested (perhaps there are more caveats on that now, particularly for people under 25?) (3) appears to have less stigma attached (this is speculation on my part) than in other countries, perhaps because it consumes so many people across classes in its workings, (or the remnants of an agricultural rather than industrial mindset towards work* )
So the questions of how it works, how it doesnt, what role it played in stimulating the economy, how it remained politically viable during a deep recession etc might help answer some of the questions people have over a potential UBI.

And as your link gets at re the fact that Ireland has had such cyclically high rates of unemployment and relatively weak laws on job protection, if the future for the economies in the developed world (which I think it is) is going to be based around these low wage and transient jobs economies, then you have to make it up in redistributive capacity (rather than waiting for a return of the company town et al), which I think we could evolve towards some level of competence in. At least as much as Australia. And then in these economies like Ireland’s that never fully industrialised, I think there must be some institutional and political culture holdover that makes transitioning to a post industrial economy easier (societally,politically, or just as a practical economic matter)
However, Im not really going to stand over all of that. It might well be mostly nonsense.

* or there’s probably a more plausible political economy answer that doesnt involve me speculating on post agricutural cognitive dispositions.

13

Rakesh Bhandari 12.22.15 at 8:16 pm

If Australian growth rates fall in a sustained way due to reduced Chinese demand for agro-mineral commodities, then will Australia still be an exception to Piketty’s theory? After all, his theory depends on a fall in g.

14

John Quiggin 12.22.15 at 8:41 pm

Thanks to hix and others for picking up typos. I’ve edited a bit, happy to accept more corrections.

15

Cassander 12.22.15 at 8:58 pm

@JQ

>Meanwhile, living standards for those in the bottom half of the income distribution have stagnated or even declined.

I try to give you the benefit of the doubt, but it’s hard when your keep repeating lies. We’ve been over this before. There’s not a single objective measure of living standards that had not increased massively, for everyone, over the period you mention. In Australia and the US, people live in bigger, better houses. They drive more cars, have more medical care, more education, more of everything you can measure besides VCRs.

This myth of stagnant living standards is based on cpi adjustments that everyone knows tend to understate inflation. Now, if you want to claim that those things don’t matter because of the rising cost of singe other basket of goods, five, then show me evidence. If wages were being squeezed, then we’d see some group, somewhere surviving on less of something than they used to have. Can you show a single category of good where that’s the case? Because if not, I’d really appreciate if you’d stop bleating such absurd pieties

privatisation and microeconomic reform were accompanied by regressive changes to the tax and welfare systems. By contrast, Labor introduced broadly progressive tax reforms including a capital gains tax and a crackdown on tax avoidance.

We’ve been over this as well. Tax rates on the rich are, at most, flat in the us, and tax rates on the poor are way, way down.

16

Layman 12.22.15 at 9:08 pm

Rakesh Bhandari @ 9, thanks for posting that link. DeLong’s article is indeed excellent.

17

PlutoniumKun 12.22.15 at 9:11 pm

@12., it is a tricky thing to analyse, but of course a key factor in Irish socio-political-economics is that Ireland is still essentially a rural country in many ways. I’ve read several analyses of where Ireland stands in terms of inequality and they’ve been very contradictory – and I personally don’t have the quantitive skills (or the time) to work out who is telling the truth.

On the issue of the dole, I think its very true to say that it has much less of a stigma in Ireland than elsewhere. Anecdotally, I think also many people on the dole in Ireland would be on other forms of social security (such as disability benefits) in other countries. Although it can work both ways – I remember a relative of mine who lived in Scotland telling me that she loved living in a Council house there because ‘it doesn’t carry the same stigma as in Ireland.’.

Incidentally, tied to the current Piketty discussion, when I was ready Piketty last year it did occur to me that many of his points about an emphasis on income over capital applied with particular force to Ireland. The obsession with land in Ireland means I think a lot of wealth is ‘hidden’ in untaxed ways. For example, a number of people I know who are on quite modest incomes but live in very expensive homes gifted to them by parents, or farmer who boost their agri incomes by selling land plots for houses. I’ve always suspected that there is a lot of hidden, uncounted wealth in Ireland relative to other developed countries, and its very concentrated in certain strata of society.

18

tony lynch 12.22.15 at 10:45 pm

Australia just doesn’t seem to hold their attention. Maybe that’s part of your point JQ.

19

Ronan(rf) 12.23.15 at 12:57 am

Personally , I took the main point to be about Australia’s tax and welfare system rather than Australia per se. Reading the op back and in light of further comments I’m not sure to what extent my comparison stacks up, all things considered, although if anyone has any reading reccomendations comparing tax and welfare systems across the OECD id be interested.

20

Rakesh Bhandari 12.23.15 at 1:20 am

Yes, I am skeptical of the claim that Australia’s liberal tax and welfare system has that much to do with lower measured inequality.

First, if profits are siphoned off due to foreign ownership of assets, then it would not be much of a surprise if the Australian top 1% does not command as much relative income as, say, in the US. The top one percent’s income could possibly be much greater if they were able to appropriate the outflowing profits. To what extent is Australia’s real estate, mines and agricultural land foreign-owned? This is a Piketty-like question, though we never did talk about his analysis of the role that the foreign ownership of assets has played in history, especially in the colonial and post-colonial context.

Second, the better conditions at the bottom of the society may have more to do with Australia’s growth being pulled up by China’s growth and if this weakens so will the conditions of Australia’s less well-off, no matter how liberal the tax and welfare system.

The OP recognizes this: “Australia’s relatively equal distribution of income and wealth depends on a history of strong employment growth and a redistributive tax–welfare system. Neither can be taken for granted. The end of the mining boom has inevitably resulted in slower growth which bears hardest on those at the bottom of the income distribution. “

So we may well see tested in the coming years the extent to which Australia’s tax and payment system can counteract the accentuation in inequality from the projected reduction in Australia’s growth rate resulting from China slow down. If it does not do such a good job–and we see rising inequality as the exceptional growth period dies out–then this would not be much of a counter-example to Piketty’s theory.

Also we would have to know whether the pre-tax distribution was already more equal in Australia, but I don’t see the data above.

So skeptical about what Australia is showing in terms of Piketty’s theses.

21

Peter T 12.23.15 at 4:55 am

Part of it comes back to politics. Australia has a relatively strong, although declining, union movement (the PM during the period JQ highlights was a former head of the peak union body). It also has compulsory voting, a transferable ballot and an approximation to proportional representation in the Senate. So the lower levels of society tend to be somewhat better represented than in the UK and the US.

The point about profits flowing to offshore owners, so diminishing onshore inequality, is a good one.

22

bad Jim 12.23.15 at 5:59 am

Mightn’t there be a cultural component? I seem to recall, from several decades ago, remarks from the members of Men at Work who hailed, I think, from Melbourne, saying that flaunting their new-found wealth would have been unthinkable. People would laugh at them.

The radical increase in executive compensation in the US is not a universal phenomenon, and may perhaps best described in cultural terms. Why is something generally deprecated in one place celebrated in another? Chief executives, unlike rock stars, don’t actually earn their incomes; outright failures slink away with enormous fortunes.

There clearly isn’t an economic explanation for national variations in “C-level” pay, and though there may be an economic solution (confiscatory taxes), there’s work to be done at the cultural level. We have to go back to cocking a snoot at people with yachts and Gulfstreams.

23

John Quiggin 12.23.15 at 6:00 am

I shouldn’t respond to Cassander, but the points he raises are common enough that they need a response.

The most obvious evidence of declining living standards is the reduction in life expectancy for significant groups in the US population

http://www.nytimes.com/2012/09/21/us/life-expectancy-for-less-educated-whites-in-us-is-shrinking.html?action=click&contentCollection=Health&module=RelatedCoverage&region=Marginalia&pgtype=article

The problems with the CPI were largely fixed by the Boskin Commission in the 1990s, but household incomes and real wages in the bottom half of the distribution have remained pretty much stagnant.

https://en.wikipedia.org/wiki/Household_income_in_the_United_States#/media/File:US_Real_Household_Median_Income_thru_2014.png

24

Snarki, child of Loki 12.23.15 at 5:13 pm

@Peter T: yeah, I was going to add the point about Aus ‘mandatory voting’ too. It’s as if Dems in the US had ~100% turnout in every election. I think that would change things.

25

Ronan(rf) 12.23.15 at 6:25 pm

I would have asked the same question as badjim, particularly as Ive become a bit of a cultural determinist recently. My impression spending time in and among the populations of the new world is that there is (at least rhetorically) a bit of a cultural of egalitarianism and ‘dont get too big for yout bootsism’ (which I think differs in significant ways from begrudgery)
However, I dont know if that’s a real or meaningful cultural norm, or if it could translate in a practical manner into less inequality.Any ideas ?

26

cassander 12.24.15 at 6:21 am

@JQ

>The most obvious evidence of declining living standards is the reduction in life expectancy for significant groups in the US population

A problem for which none of the plausible explanations given has anything to do with poverty. And no, larger insured populations isn’t a plausible reason, because insurance rates aren’t meaningfully down.

>but household incomes and real wages in the bottom half of the distribution have remained pretty much stagnant,

One, that chart shows wages rising, not stagnating. Two, it’s a chart of median wages, not wages in the lower half. the two are not unrelated, but it doesn’t support your claim. Three, you didn’t answer my question, if costs for things like healthcare are going up, and wages aren’t, what are people consuming less of? Or do you not have an answer besides condescension for those who bother to bring facts into the debate?

27

John Quiggin 12.24.15 at 6:23 am

Ronan @25 I think it’s probably a relevant factor in Oz. But NZ also had a broadly egalitarian ethic for a long time, which (AFAICT) collapsed completely in the face of radical market liberal reform. Whether or not that assessment is correct, NZ had rapid growth in inequality

28

John Quiggin 12.24.15 at 6:27 am

Google produces this article How New Zealand’s rich-poor divide killed its egalitarian paradise which broadly confirms my suggestions above.

29

ZM 12.24.15 at 12:11 pm

The economist Ross Garnaut gave a talk on this topic I went to and he said when New Zealand was more egalitarian it was when Karl Popper was working there and it was the inspiration for some of his work, maybe the Open Society

30

Ronan(rf) 12.24.15 at 7:41 pm

David Hackett Fischer (who wrote Albion’s Seed) wrote a comparative take on the US and New Zealand, which I havent got around to yet, which approaches the comparison (afaict) from his (perhaps overly determined) ‘culture and values’ perspective, ie that the US values liberty whereas in New Zealand they value fairness, although (from what I can tell) he moves towards a more institutionalist argument for why this happened rather than arguing that it can be traced to residual ‘folk’ traditions from the early colonisers, as he’s known to do.
I was a little surprised by the poverty when I lived in New Zealand. (Perhaps particularly (if not solely) among the Maoris and ‘Islanders’.) Not necesarily because it was overly extravagent, but Id always assumed New Zealand was closer to the Nordic countries than the ‘Anglo’ ones.

31

Layman 12.24.15 at 9:49 pm

@ cassander, you cretin, I’m sure you’ll find what you’re looking for here:

http://www.epi.org/publication/charting-wage-stagnation/

You’re welcome.

32

cassander 12.25.15 at 1:49 am

@Layman

I asked a simple question, what good are people buying less of? once again, you substitute insults for argument, and show me some irrelevant charts that don’t even pretend to answer that quesiton. Now, when people ask me a question I can’t answer, I try to respond with humility rather than repeating myself. Apparently you have a different philosophy.

33

tony lynch 12.25.15 at 7:44 am

Even cassander it seems, is more interesting than Australia. I take this hard.

34

Ronan(rf) 12.25.15 at 1:14 pm

I wouldn’t take it personally. You all just overdid it with that flurry of tv soaps over the 90s and 00s. It’s very difficult to maintain such momentum . Or unsee alf Stewart.

35

Shane 12.28.15 at 4:23 pm

Re the end of the mining boom- I’m told that what’s ended is the setup phase, with its masses of local jobs and sky high wages, but that extraction and export is only just getting going.

Is that so, and could it (have been) counteracted by Norway or Alaska style redistribution?

36

Bill 12.28.15 at 11:44 pm

Not an economist, I cannot share Quiggin’s sanguinity. A better tax-welfare nexus may explain some of Australia’s better performance in the equality stakes, but I’d guess that the contribution by wages policy, strong unions and collective bargaining would explain more; and there is now a strong push from old style capital and managerial conservatives to weaken these. And tax law enables significant tax avoidance by corporations and the wealthy – witness, by the P.M. The outlook is not as rosy as it was. Inequality is growing fast: in 1975 the ratio of the average Sydney house price to the average income was 4; that ratio is now, in 2015, more than eleven and rising. This must surely concentrate property ownership and cause much of the inequality

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