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Why does inequality matter?. The effects of a corrosive force. The rich and the rest. Annual income in $. World famous … for inequality Hardly an egalitarian country. Once among the most equal rich countries - PowerPoint PPT Presentation
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Why does inequality matter?The effects of a corrosive force
The rich and the rest
1984 1986 1988 1990 1992 1994 1996 1998 2001 2004 2007 2009 2010 20110
50000
100000
150000
200000
250000
300000
350000
400000
Bottom 10%MiddleTop 10%Top 1%
Annual income
in $
World famous … for inequalityHardly an egalitarian country• Once among the most equal rich countries• From the mid-80s to the mid-2000s, rich
world’s biggest rise in rich-poor gap• Now in the bottom third of the OECD• For wealth, the top 1% own three times as
much as the bottom half put together• Maori and Pacific peoples have twice the
Pakeha poverty rate, and greater inequality
Inequality: the corrosive forceAs people live apart, they think apart
• Lives (right from the outset) become increasingly segregated
• Democracy suffers • Trust declines• Community involvement falls
away• Bonds and ties are eroded
Corroding health and wellbeingMore equal societies are better for most
Corroding politicsMoney well spent for the 1%
“Actual policy outcomes strongly reflect the preferences of the most affluent but bear virtually no relationship to the preferences of poor or middle-class Americans. The vast discrepancy … stands in sharp contrast to the ideal of political equality that Americans hold dear…. representational biases of this magnitude call into question the very democratic character of our society” – Martin Gilens
Corroding opportunityWant the US dream? Go to Denmark
Corroding the economyNot ‘necessary’, despite the claims
• Over the long term, more equal societies have better growth rates and are more productive
• So inequality at current levels is not defensible economically
• In fact it’s damaging to the economy• Especially to opportunity, and in the
longterm
Cause 1: Inequality for workersWhere did all the money go?
19891990
19911992
19931994
19951996
19971998
19992000
20012002
20032004
20052006
20072008
20092010
20110.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
• Bargaining power falls at the low end
• Financial power rises at the top end
• The balance shifts
Average hourly wages since 1990
Cause 2: Inequality for allTax, welfare and employment changes
• Huge rise in number of unemployed• Benefits have been cut sharply• Flat rate GST has been increased (while
top tax rates have been cut)• Overall the welfare system does much
less to support people who are unemployed than it did in the 1980s
Further information…In the book and on inequality.org.nz
So what can be done?Some ideas for unions to consider
• We need to think about ‘predistribution’ and where inequality originates
• The things that shape the rewards for those contributions
• Within existing firms: the Living Wage, pay ratios, worker voice
• Changing firms: worker co-operatives