Brian Mitchell & Andrew Leigh, "Aussie Economy Starting to Look Like a Game Show", Hobart Mercury, 19 October 2016
Growing up, we were both fans of the television show Sale of the Century. Throughout the 1980s and 1990s, millions of Australians tuned in to the quiz show, to see contestants try their hand at winning cars, holidays and cash. Guided by hosts like Tony Barber, Glenn Ridge, Delvene Delaney and Jo Bailey, some contestants won big. In 1992, Robert Kusmierski took home cash and prizes worth $676,790. But most who chanced their hand went home with next to nothing.
It made for a terrific gameshow, but today, as Labor parliamentarians, we’re worried that our society is starting to look too much like a gameshow. If you compare wages in 1980 (when the first episode of Sale of the Century went to air) with today, then you see a labour market where earnings have growth three times as fast for the top tenth as for the bottom tenth. It’s been a great generation for lawyers and landlords – not so much for retail workers and renters.
To some extent, success in life is determined by hard work, but luck matters too. Billionaire Warren Buffett likes to reflect on his good fortune at being born in an era when his investing skills can be put to work. For most of human history, those skills wouldn’t have been much use. We also know that the labour market pays more to men, tall people and right-handers. That’s luck, not skill.
In today’s economy, wages are growing slower than they have been in decades. And yet there are still some who argue that we need more labour market flexibility. Unfortunately, they don’t mean the flexibility to work from home when a child is sick, or to arrange your roster so it suits your family. Instead, they’re generally talking about the flexibility of employers to pay people less for working on the weekend, not to deal with unions in the workplace, and not to have a decent minimum wage.
The trouble is, the more we hack away at Australia’s hard-won labour market protections, the more that our society will begin to resemble Sale of the Century. The ‘fast money’ round was great to watch, but it’s not so entertaining when today’s cleaners and checkout workers see the top 1 percent of Australians doubling their share of national income. In July 2017, Malcolm Turnbull will cut the top tax rate, paid by those earning $180,000 or more. Ninety-four percent of the benefits of this tax cut will go to the top 1 percent of Australian adults. They don’t need it.
A better approach is to recognise the values of Australian egalitarianism. Ours is a nation where we call each other ‘mate’ rather than ‘sir’, where many like to sit in the front seat of the taxi, and where we prefer decent wages to a culture of tipping. Unlike people in many other countries, Australians don’t stand up when the Prime Minister enters the room, and we don’t have private areas on our beaches.
And yet that fundamental equality is at risk from a winner-takes-all culture that puts tax cuts for billion-dollar businesses ahead of properly funding the poorest schools. A decent social safety net isn’t an optional extra, and people in a high-unemployment region aren’t to blame for the fact that the factories have closed down. Rather than trying to pretend that ‘trickle down’ economics works, let’s try a better approach – building economic growth from the middle outwards, with economic institutions that help everyone.
It’s time Australian conservatives realised that life shouldn’t imitate art. Because gameshows might be fun to watch, but they’re no way to run a society.
Brian Mitchell is the Federal Member for Lyons. Andrew Leigh is the Shadow Assistant Treasurer and author of Battlers and Billionaires: The Story of Inequality in Australia. This Opinion Piece was first published in the Hobart Mercury on Thursday, 20 October 2016.