TJ Ryan Foundation Board member, John Quiggin, writes in Inside Story (25.7.17) about recent data showing increasing levels of social and economic inequality. With the gender pay gap persisting, the author asks if we will have to learn to live in a patrimonial society.
‘It’s hard to pinpoint an exact date, but sometime in the early years after the global financial crisis the problem of inequality moved to centrestage. Evidence that had once been discussed mostly in academic seminars found a wider audience among people trying to understand what had gone wrong in Western economies. What the figures showed were striking disparities in income and wealth, particularly in the United States, where they challenged the longstanding self-perception of a land of opportunity unshackled by the social rigidities of “Old Europe”.
‘Among all the research, two findings were crucial. First, French economists Thomas Piketty and Emmanuel Saez went back to the raw evidence of the income share flowing to the top 1 per cent of households. This detail had been buried — for statistical or privacy reasons — in the broad income categories used by data collectors, or had been obscured by sampling problems. Piketty and Saez found that the share of income going to these households was substantially larger than had previously been supposed, and was growing rapidly. Most of the benefits of economic growth were flowing to a relatively small part of the population; living standards for everyone else were stagnant or even declining.
‘The second finding, from a wider range of researchers, was that social mobility — the chance that someone born to poor parents would become wealthy, or vice versa — was declining in the United States, and was now lower than the more egalitarian European countries. Because comparisons across time are difficult, the most reliable way to quantify this trend is to look at relativities between countries. By this measure, the chance that a person with parents at the top (or bottom) of the income distribution will end up in the same or a similar position is now higher in the United States than in Europe. Until at least the late twentieth century, the evidence had suggested the opposite to be true.’
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