Here’s the thing: if Gates, Zuckerberg and Buffet decided to migrate to Australia (Buffet probably wouldn’t be let in, he’s too old – but that’s another story), observed income and wealth inequality in Australia would increase.
Would anyone be worse off if these three likely lads made the move? In fact, we would be better off.
What then explains the near obsession with inequality in so many bureaucratic and academic circles? The OECD goes on and on about inclusive growth and releases report after report about income and wealth inequality. Democrat academic economists in the US are likewise obsessed.
And of course we have had our very own Andrew Leigh MP (formerly Professor Andrew Leigh) recently released a book called Battlers and Billionaires (where did he get the time? oh, yes, he was on the back bench for most of Labor’s time in government).
Here’s a thing or two:
- Rising inequality in the context of strong economic growth is not an issue
- High income earners pay all the tax and receive few benefits
- Do we really care much about the top 1 per cent (much of the US analysis is focused on this)? (If their income and wealth is the result of enterpreneurial effort in competitive markets, good luck to them, I say.)
- The Productivity Commission’s work on disadvantages puts a figure of 1 to 2 per cent of the population who are profoundly and permanently disadvantaged in terms of income, wealth, housing and social exclusion. Mainstream policies will not touch the sides for this group.
- Most of the rest at the bottom either escape or have bad times followed by good times followed by bad times, etc. It is probably worth looking at the characteristics and experience of those who escape.
Here is a bit of weepy piece in the Silly from Julia Baird.
Congratulations, Australia! We are now the richest people on the planet. Officially loaded. According to the Credit Suisse 2013 Global Wealth Report, released this week, our median wealth – $233,504 – is higher than any other country. (Granted, for those pedants who actually prefer to measure average wealth, Switzerland beats us – but we still come second! – with $425, 603.)
This has been almost entirely driven by the fact that property prices have risen here, while they have slumped in the US and Europe.
It’s surely something to celebrate on a gloriously sunny weekend, as boat motors idle, and beetles crawl on newly renovated patios, right? Esteemed economists have, after all, shown a nation’s happiness is clearly linked to its GDP.
There are only two small problems.
First, most of the money is going to those who are already affluent. Over the past three decades, almost half of our growth in income has gone to the top 10 per cent of the wealthiest people. As reported by Fairfax Media, in a lecture at Melbourne University this week, the former director for employment, labour and social affairs at the Organisation for Economic Co-operation, John Martin, cited new OECD data showing almost a quarter of all growth in our household income from 1980 to 2008 went to the top 1 per cent.
Economist and Labor MP Andrew Leigh believes this number is inflated – in his book Battlers and Billionaires, he claims 13 per cent of growth in Australia from 1980 to 2010 went to the top 1 per cent.
Still, it’s a skew we don’t challenge enough. As Franklin Delano Roosevelt said, the test of progress is provision for the poor, not whether ”we add more to the abundance of those who have much”.
Second, there is a growing body of research on wealth that is overwhelmingly consistent and shows the rich tend to be more selfish, less empathetic, less generous and less compassionate.
Yes, this is a massive generalisation.
But the question is – if it has been proven that rich people lack empathy as individuals, what happens to a nation when it grows fatter, sleeker and wealthier? Are we likely to share more, or less?
First, the research. I know, bagging out rich people is not just a national pastime, but also a historically appealing cliche. Ebenezer Scrooge, Montgomery Burns, Gordon Gekko. It also provides a neat way of pretending we are not ourselves privileged – most people reading this would hover somewhere near the top 10 per cent, as I would myself.
But psychologists have been exploring the effect wealth has on social behaviour, and the evidence has been steadily mounting that the powerful are, in some important ways, less armed with virtue than they are with money.
Studies have found the wealthy are less interested in the needs and motions of others and are not as helpful, compassionate or generous as those who possess less. One study, published in 2010, found people with less money are better at reading faces in a measure called empathy accuracy.
Two psychologists from Berkeley, Paul Piff and Dacher Keltner, have been researching how wealth influences social behaviour for years. In one study, they watched drivers at a congested intersection. They found drivers in luxury cars were more likely to cut off other drivers, and speed past pedestrians. In another study, they asked people to think about where they stood compared to other people, financially. The participants were then given a jar of lollies and told to help themselves to whatever they wanted – and that what was left would be given to children in a lab nearby.
Those who considered themselves affluent took significantly more.
In a further study, wealthier people were shown to be less likely to agree with statements such as ”I often notice people who need help” and ”It’s important to take care of people who are vulnerable”.
Again, when shown videos of cancer patients, the hearts of the less well-off people were more likely to slow down – a classically empathetic response.
(This research is a nice corrective to those who blame the poor for being poor, although it does not factor in other detrimental psychological effects poverty can have.)
The most likely reasons for this empathy gap stem from the independence of the rich, the lack of reliance on other people, and the insulation from the vagaries of life – anyone’s life. In short, we are much less likely to pay attention to people we don’t need.
As The New York Times put it in a succinct headline this week: ”Rich People Care Less.”
Daniel Goleman, the author of the book Emotional Intelligence, cited research showing rich people were more likely to interrupt and express disregard in conversations, and less likely to show concern for people going through hardship.
The implications are potentially profound. ”Reducing the economic gap,” Goleman argued, ”may be impossible without also addressing the gap in empathy.”
I am not suggesting money destroys a capacity for compassion. A quick glance at our greatest philanthropists shows that to be untrue. Nor am I suggesting that a property boom could have the power to turn decent people into Scrooges overnight.
I am just wondering whether this research might suggest growth in wealth could blunt our ability to imagine what it might be like to be without. To be unable to buy into the property market. To be a single parent stripped of benefits. To be homeless. To be fleeing persecution, and travelling across oceans in dodgy boats with infants because you are desperate for another life.
As a nation, we have so much. It’s easy to forget how much. You can only hope that in a time of extraordinary prosperity, that we do not forget what it is like to have little, or nothing at all.