Australia follows USA down the track of more inequality and policy failure

President Obama’s 2014  State of Union address was admirable at many levels, expanding themes of his 2013 addressHis wishes for Americans include jobs growth foremost, but also a rise in the minimum wage, better health care coverage, equality of opportunity for women, and increased focus on education from early childhood to college levels. His overarching message was that although economic growth and profits are surging:

            ……average wages have barely budged.  Inequality has deepened.  Upward mobility has stalled.  The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by – let alone get ahead.  And too many still aren’t working at all.

The issue of blockages to upward social and economic mobility are also at the heart of Robert Reich’s new documentary Inequality for All. The documentary explores the growing polarisation in American society between, not just the rich and the poor, but between the rich and everyone else including the remnants of the middle class. This is, of course, the argument of the 99 percent. The Oxfam report Working for the Few, takes up the same themes in an international context but with a special focus on how political processes are corrupted by high levels of inequality while dampening economic growth including in America.

The tragedy for the USA is that President Obama in 2014 was making  such a speech on these themes at all. It reflects a long history of public policy failures that have led to poor outcomes for that society across many indicators. The State of the Union addresses of 2013 and 2014, the Reich documentary and the Oxfam report give a fair run down of what these are. They are endemic in many dimensions of public life including taxation, regulation of financial markets, funding for education, access to health care, and social assistance.

The tragedy for Australia is that the Abbott Federal Government is taking forward a set of policies and directions along the lines of those acknowledged as failures in the USA and discredited by its own government. The Prime Minister’s speech at the World Economic Forum in January showed not a skerrick of recognition of the importance of social equality as a foundation for economic growth.

The issues raised in this post will be further developed in an article for The Conversation in early February.

Post script  – 5 February -my article in the Conversation, Why Abbott can’t delete society from his economic growth script is available:  click –  here.

Post script – 14 February – New report from the IMF finding that public debt is not necessarily a hindrance to economic growth. Reported in the Conversation

Post script  – 15 February –  In an interview with head of the IMF, Christine Lagarde, the Age journalist, Peter Wilson reports:

While Abbott declared at Davos that “as always, stronger economic growth is the key to addressing almost every global problem”, Lagarde places a different emphasis on the path ahead, stressing that the type of growth is crucial. “We, too, believe that growth improves the solution to many things [because] when you have a bigger cake it is easier to allocate it, it is easier to take the right fiscal policies and to reduce debt, for example,” she says. “But we do also find out, based on our research, that sustainable growth is better and to actually feed sustainability, better [gender] inclusion and less [income] inequality are highly recommended. And obviously ‘green growth’, so to speak, is an area that has to be explored, developed and endorsed by as many as possible.”

Christine Lagarde goes on to say:

“To be sustainable, there has to be less inequality rather than more; to be sustainable, there has to be more inclusion rather than less; and to be sustainable, growth has to be respectful of the environment. I believe the IMF should look into those issues.”

Published in the Age Good Weekend Magazine, 15 February 2014. Story entitled First Among Men by Peter Wilson.

Post script – 20 February – ABC Qand A – An audience with Christine Lagarde – takes up the issues of the importance of social equality, equal opportunity, poverty alleviation and women’s equality in relation to economic growth.

The IMF report – Women, Work, and the Economy:Macroeconomic Gains from Gender Equity

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