Andrew Leigh — Inequality and Egalitarianism [Australian Policy Series]
Feb 14, 2025
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In this engaging discussion, Andrew Leigh, Australia’s Assistant Minister for Competition and former economics professor, tackles pressing issues surrounding economic inequality. He delves into Australia’s egalitarian roots, tracing cultural influences from the 1800s to present disparities. The conversation touches on how societal norms affect innovation, the impact of automation on jobs, and the complexities of proposing a universal basic income. Leigh emphasizes the need for policy reforms to foster equity, community trust, and educational improvements to bridge gaps in society.
The historical commitment to egalitarianism in Australia coexists paradoxically with rising economic inequality since the 1980s, necessitating policy reevaluation.
Technological advancements, declining union membership, and reduced top tax rates have significantly contributed to the resurgence of income inequality in Australia.
Education quality and accessibility are critical for fostering equality, yet concerns over declining standards may jeopardize future egalitarian outcomes.
Deep dives
The Roots of Australian Egalitarianism
Australian culture is characterized by a strong ethos of egalitarianism, which became a defining aspect of national identity in the 1890s despite prevalent economic inequality at the time. Historical context reveals that later 19th century Australia exhibited stark social disparities, with a significant portion of personal income concentrated among the very wealthy. Scholars suggest that the landscape shifted towards greater equality following Federation and lasted until the 1970s, after which economic inequality began to rise again. This paradox of rising inequality alongside a cultural commitment to egalitarian values prompts questions about how these two dynamics can coexist in Australian society.
Drivers of Income Inequality
The discussion identifies three main factors contributing to the rise of income inequality in Australia since the 1980s: technological advancement and globalization, declining union membership, and reduced top tax rates. It is argued that while technology has increased returns for highly skilled individuals, it has simultaneously disadvantaged lower-skilled workers. The reduction in union membership has played a significant role in weakening collective bargaining power, further exacerbating disparities. Lastly, the decline in top tax rates has enabled wealth accumulation at the top, reducing the effective redistribution of income.
Cultural Implications of Success and Failure
The conversation explores the cultural phenomenon known as 'tall poppy syndrome,' which reflects Australians' ambivalence toward success and the societal implications it has for innovation. While this attitude may discourage ostentation, it also fosters a sense of community that values humility over individual achievement. Though there are anecdotes suggesting fear of failure might inhibit entrepreneurial spirit, many successful Australians perceive success as a product of luck rather than pure merit. This cultural framing encourages a collective responsibility towards giving back and supporting others, rather than creating an environment where success ostracizes.
Education as an Equalizer
Education is posited as a crucial factor in promoting equality, emphasizing not only the quantity of education but its quality. The historical context shows that opportunities for high education have expanded significantly in Australia over recent decades, which helps to level the playing field. However, there are concerns that the decline in educational standards, particularly in critical areas like literacy and numeracy, could undermine future egalitarian outcomes. Solutions discussed include attracting talented educators and ensuring effective teaching practices are in place to make education as equitable and impactful as possible.
The Future of Economic Inequality
Looking ahead, participants express concern that increasing economic inequality may threaten the foundations of Australia’s egalitarian culture, indicating the critical need for ongoing policy discussions. Current trends show that wealth is increasingly concentrated, with a significant portion of wealth held by a small percentage of Australians. At the same time, it is emphasized that while promoting equality is essential, it's also necessary to ensure policies facilitate access to opportunities across the socioeconomic spectrum. There is a call for creating a balanced approach that encourages both economic growth and social equity to maintain Australia's egalitarian values.
This episode is the second of my live policy salons. It was recorded in Sydney on January 29, 2025.
What is the relationship between economic equality and egalitarianism in the cultural sense? Where does Australia's egalitarian tradition come from? Are we too egalitarian? Is economic inequality increasing? What's been driving it? And does it even matter?
We sit down with Andrew Leigh to discuss these questions and more.
Dr. Andrew Leigh MP is Australia’s Assistant Minister for Competition, Charities, and Treasury, and Assistant Minister for Employment. An economist by training, he was previously Professor of Economics at the Australian National University and earned his PhD from Harvard. The main theme of his academic research has been inequality.
If you’d like to attend an upcoming salon, you can get tickets here: https://josephnoelwalker.com/events/