Sir Tony Atkinson: The Economist who had the measure of inequality, Canberra Times, 4 January 2017
If you've ever referred to ‘the 1 percent’, you're using the work of Tony Atkinson. Tony, who died on 1 January, aged 72, contributed as much as any modern economist to the study of poverty and inequality.
When I first met Tony in the early-2000s, I was struck by the contrast between his exalted status and his willingness to engage with a mere PhD student. He was the head of Oxford's prestigious Nuffield College, and had recently been knighted by both the British and French governments. It always made me smile when I thought that the only ‘Sir’ I knew was my inequality coauthor.
Trained originally as a mathematician, Tony could crunch numbers with the best of them. But like Adam Smith and John Maynard Keynes, he recognised the importance of economics being grounded in history and politics. He was generous to intellectual predecessors like his Cambridge teachers James Meade and Joan Robinson. When we worked together on the antipodes, he made sure that our articles acknowledged the groundbreaking work of Australian researchers like Timothy Coghlan and Colin Clark.
Tony's interest in poverty and inequality was piqued in the 1960s, when he worked with deprived children in Hamburg, Germany. Over the next five decades, there was virtually no aspect of the field that he left untouched. He created his own inequality measure (the Atkinson Index), devised a novel technique for estimating wealth inequality from inheritance data, and shook up public finance through his work on optimal taxation with Joseph Stiglitz (who would go on to win the Nobel Prize).Read more
Off with her head (on our coins)! The case for an aussie republic in 2017, crikey.com.au, 22 December 2016
This week, the Australian National University published its ‘Trends in Australian Political Opinion 1987-2016’. The document compiles the results of the Australian Election Study surveys, which have been undertaken after every election to gauge political opinion.
Among the fascinating findings is the percentage of Australians who favour a republic. After the 2013 election, with a monarchist Prime Minister, support for a republic had ebbed to 53%, its lowest level in nearly three decades. In 2016, with the Australian Republican Movement's former leader as Prime Minister and an Opposition that had made achieving an Australian republic a key part of its 2016 election platform, support for a republic was unchanged, at 53%.
Could this be spun positively? Perhaps. It is the first time since 1996 (when support was at 66%) that support for a republic has not fallen in the Australian Election Study surveys. Yet the brutal reality is that even if 53% support carried through to referendum day, there is little likelihood that a referendum would carry the required four out of six states. Despite the barnstorming efforts of Peter FitzSimons and the Australian Republican Movement, support for having one of our own as head of state is as low as it's been in a generation.Read more
Why You Should Host December Drinks, The Chronicle/The Queanbeyan Age, Tuesday 6 December 2016
The other day, I was thinking about the many ways our neighbours have helped us. They’ve loaned us lawnmowers and camping tents, looked after a child when another suddenly had to be taken to the emergency room, and helped locate our dog when he snuck under the fence.
But as a society, we’re less likely to know our neighbours than in the past. One survey asked people to count the number of neighbours of whom they could ask a small favour. The average answer given in the 2000s was 1½ fewer people than when a similar survey was done in the 1980s. Another question asked people how many neighbours they had on whom they could drop in uninvited. This time, respondents reported an average of three fewer close neighbours than in the 1980s.
What can we do about it? For the past decade or so, our family has organised December drinks for our local street. We pick a date, type up a simple invitation, and invite people to join us in our backyard for drinks and nibbles.
As it happens, we quite like our neighbours. But December drinks would be worthwhile even if we didn’t. A friendlier neighbourhood is a safer and happier place to live. Reuniting with old-timers and getting to know the new arrivals is an activity that pays off for the rest of the year.
So why not consider inviting your neighbours over for a summer drink? Tis the season – to get connected.
Andrew Leigh is the Federal Member for Fenner, and the author of Disconnected.
Why Unions Matter in Australia, The Canberra Times, 10 December 2016
Last week, I read in the press that the Turnbull Government intends to spend 2017 saying to the electorate that unions do a lot of damage to the economy. But while we prepare to re-live Groundhog Day, it’s worth answering the question ‘what did unions ever do for us?’.
Over the years, unions have brought about lasting gains in the workplace. Sick leave in the 1920s. Annual leave in the 1930s. The eight hour day in the 1940s. Unfair dismissal protection in the 1970s. Banning asbestos in the 1980s. The weekend. Careful economic research finds that unions have a causal impact on making workplaces safer. Today, unions are making the case for family and domestic violence leave.
Unions have often found themselves on the right side of history. Maritime unions refused to load ‘pig iron’ onto Japanese ships in the late-1930s because they foresaw the risk that it would come back in bombs. When 200 Gurindji people walked off the Wave Hill cattle station in 1966, it was the trade union movement that supported the right of Indigenous people to be fairly paid. If you’ve ever enjoyed Centennial Park and the Sydney Botanic Gardens, then you should thank the union members who stopped them being destroyed in the 1970s.
Unsurprisingly, unions also increase wages. One recent study finds that unions increase wages by 5-10 percent. Given that union dues are generally 1 percent or less, this is a pretty good rate of return.Read more
‘EXPLAINING THE RISE OF AUSTRALIAN INEQUALITY’
JUST IDEAS TALK #2
PER CAPITA’S REFORM AGENDA SERIES
MONDAY, 5 DECEMBER 2016
***CHECK AGAINST DELIVERY***
There are many forms of inequality, but perhaps the starkest is the difference between those who own no assets and earn their living by selling their labour – and those who earn vast assets, and can live off the proceeds.
Between these two extremes lies home ownership. It’s not a perfect marker, but if you don’t own a home, it’s likely you live by the sweat of your brow. Conversely, if you’re living off your investments, it’s a pretty good bet you own your home.
At the end of World War II, Australia was a nation where just 53 percent of households owned their homes. In the major cities, the figure was just 46 percent. Most city-dwellers rented. And most homes were made of wood or fibro cement.
Then in the post-war years, something remarkable happened. The Australian home ownership rate surged. By 1954, it was up to 63 percent. By 1961, it was 70 percent. In just over a decade, the distribution of Australian housing wealth became significantly more equal.
It wasn’t just homes. Shared prosperity in the post-war decades meant cars became cheaper. By the 1960s, most Australian homes had a vacuum cleaner, a washing machine, a television and a fridge – items that in the pre-war era were only owned by the most affluent. Even access to university was shared. For someone like my grandfather Keith Leigh, attending Melbourne University would have been impossible on a modest clergyman’s wage. Only a post-war veteran’s scholarship made it feasible.
The intellectual seeds for these changes were sown in John Curtin’s white paper on full employment, and his clearly professed view that ‘there will have to be a fairer distribution of wealth’.
But the surprising thing is what happened next.Read more
The Cost Of Inequality Can't Be Priced In Dollar Terms, Huffington Post, Monday, 28 November 2016
Why should we care about inequality? The starting point is to acknowledge what economics lecturers everywhere teach their first years. Economics is about maximising wellbeing, not money. If one person had all the money in Australia, we’d be just as wealthy, but much less happy.
Globally, there are about one billion people who live on less than a dollar a day. Most of it goes on keeping hunger at bay. But then there are about 1800 people who have more than a billion dollars. For them, more money means a faster jet, fancier jewellery or another holiday home. If you believe that moving a person from $1 a day to $2 a day brings more happiness than giving a billionaire another dollar, then you’ve accepted the idea of diminishing marginal utility of money. There is no better argument for caring about inequality.
Putting numbers around this can be tricky, but an analysis by Lateral Economics finds that to get the same increase in life satisfaction, you either have to give someone on $15,000 another $6000, or someone on $100,000 another $100,000. Lateral Economics estimates that the cost of inequality to national wellbeing is the equivalent of $54 billion, making it a bigger problem than mental illness, obesity or long-term unemployment.Read more
Companies that lie must be hit harder, Herald Sun, 28 November 2016
When it comes to household brands, who do you trust? That’s the question Australians were asked earlier this year as part of a Reader’s Digest survey. The top three were vacuum cleaner manufacturer Dyson, and battery makers Energizer and Duracell. But what’s more interesting is who came in at number four: paint manufacturer, Dulux.
Unfortunately, Dulux’s time atop the trust list might be short-lived. Earlier this month, the company was fined $400,000 by the Federal Court for misleading its customers. Dulux claimed that its outdoor paint could reduce the temperature of a house by up to 10 degrees.
If true, Dulux’s outdoor paint would’ve been a cool product indeed. Unfortunately, as soon as the temperature rose on Dulux, their claims began to peel away. When they couldn’t brush off the criticisms any longer, Dulux admitted that they didn’t have the evidence.
Alas, Dulux is not the first coat in Australian false advertising. Every year the Australian Competition and Consumer Commission receives 14,000 complaints of misleading and deceptive conduct. The competition watchdog can only take a small share of these complaints to court. The list of companies that have been reprimanded by the competition watchdog or the Federal Court over the last 12 months reads like the ‘who’s who’ of big companies, including Jetstar, Virgin, Arnott’s, Uncle Tobys, Optus, Harvey Norman franchisees, Kogan, Nurofen, Unilever and Volkswagen.Read more
What would modern Australia look like without China? The Australian Financial Review, 25 November 2016
Over recent years, there’s been no shortage of commentary on China from the glass-half-empty brigade. So it’s sometimes useful to ask the basic question: what would Australia be like today had China not opened its economy in 1978?
Based just on merchandise exports, Australia’s economy would be almost 5 per cent smaller. That’s $8,000 less for every Australian household every year.
Prices would be higher. Since 2007, the price of goods we import from China has fallen 20 per cent while the price of goods we produce at home has increased by 20 per cent.
Our universities would be nearly $6 billion poorer each year. They would educate almost 100,000 fewer students.
Our tourism sector would earn $6 billion less each year with 1.2 million fewer visitors visiting our attractions, eating in our restaurants and buying our souvenirs.Read more
Labor’s reforms to promote inclusive ownership and inclusive growth, Business Insider, 18 November 2016
In history’s page not much is recorded about events in the Scottish village of Fenwick, except in 1769 – when some members of the Fenwick Weavers Society, so their story goes, lugged “victuals” they’d purchased with Society funds to the front room of a small cottage.
From here the items were sold at a discount to fellow Society members while the profits went into the Society’s funds (deposited – literally – in a box).
This small community enterprise appears to be the first consumer cooperative of which there are records, while the fund the Society established to lend money for members to “purchase high cost items” seems very much like a primitive credit union.
However, equally important as these profit-orientated activities was the motivation of the Society’s members and their objectives.Read more
COUNTING THE COST OF INEQUALITY
‘JUST IDEAS’ TALK #1
UNIVERSITY OF SYDNEY
FRIDAY, 18 NOVEMBER 2016
***CHECK AGAINST DELIVERY***
One of the many things I love about Australia is our egalitarian ethos. We’re a nation that doesn’t have private areas on our beaches, and likes using the word mate. We rarely stand up when the Prime Minister enters the room, and prefer to pay a decent wage than have people relying on tips. Since the 1800s, when European migrants alighting from boats said that they felt they had entered a ‘workers paradise’, the spirit of Australian egalitarianism has burned bright.
Unfortunately, when there’s a bright light shining in your eyes, it can be hard to see anything else. Sometimes, I fear that we think that equality is merely about battlers and billionaires sharing the showers at Bondi Beach. An equality of manners is a lovely thing, but as many a homeless person has observed, you can’t eat politeness.
How much equality is there in Australia? One way of answering that question is to imagine that we divided up the population into five groups of about five million people each, and allocated the Australian land mass to them in the same way that wealth is distributed in Australia. For simplicity, let’s start from the bottom, and just draw lines of latitude across the nation that match the current distribution of wealth, as measured by the Australian Bureau of Statistics.Read more