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  Issue No 82 Official Organ of LaborNet 20 December 2000  

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Economics

Who Gets Gold??


At the end of this Olympic year, Sydney Uni's Frank Stilwell charts the winners and losers in the new sport of redistribution of income.

 
 

Nearly two centuries ago the British political economist David Ricardo argued that understanding the distribution of income between social classes was 'the principal problem in political economy'. That was in the days when economists felt comfortable talking about classes. Nowadays they talk about 'economic agents' and 'utility-maximising individuals'. But the big issues about class and income distribution that concerned Ricardo, and subsequently Karl Marx, have not gone away. Indeed, the concern with the processes that shape the broad pattern of economic rewards is even more pertinent today.

The last decade has seen massive economic restructuring-globally, nationally and locally. Transnational corporations have been rearranging their activities on a global scale, effectively 'shopping around' the globe for cheap labour, low taxes and lax environmental regulations. National governments have been pursuing 'economic rationalist' policies of privatisation, deregulation and trade liberalisation, which reduce the impediments to the interests of global capital. Locally, our patterns of urban and regional development - some areas booming while others stagnate - are the 'fall out' from this restructuring process.

Dramatic changes are also affecting the workforce. The proportion of manufacturing jobs in the Australian economic continues its long-term decline. Casualisation is affecting an increasing number of workers. Job security has become the exception rather than the norm. Meanwhile, executive salaries escalate to bizarre proportions: over $1 million per annum is common, with some remuneration packages now exceeding $6 million p.a. Even John Howard has conceded that such payments are 'over the top', although he has done nothing about them. Labour is evidently doing it tough, while the recipients of income from capital are feeding at the trough.

The dramatic redistribution of income in the 'nineties has been noted by many radical critics. However, the federal Governments' own Productivity Commission has now confirmed the trends towards greater economic inequality. This is significant because this impeccably conservative institution is usually associated with 'economic rationalist' prescriptions. Certainly no one could accuse it of left-wing bias! Yet, its report, called Distribution of the Economic Gains of the 1990s, published in November 2000, clearly shows a widening chasm between rich and poor, with a 'shrinking middle' in between. The richest ten percent of Australian households increased their incomes faster than any other group over the 'nineties. Those at the bottom end have struggled to maintain their income share, while there has been some hollowing out in the middle of the income distribution. Overall, income inequality is increasing.

The distribution of wealth is even more unequal. The Productivity Commission report notes that, despite the explosion of share ownership from 9% to 54% of households between 1986 and 1989, mainly as a result of the privatisation of public enterprises, the top 10 per cent of income earners own 90 per cent of the shares held directly by individuals. Wealth from home ownership is also unevenly distributed, with the top 50 per cent of households having 90 per cent of the total: that means that the other half of households have only 10 per cent. As the report says 'wealth distribution is more unequal than income and became more unequally distributed during the late 1990s'.

An even more recent report by the Australian Bureau of Statistics shows that where workers are in the distribution of household incomes depends significantly on the industry in which they work and the type of wage negotiations that apply. The average weekly earnings in the mining industry in May 2000 was $1337. At the other extreme, in the hospitality industry, wages of workers in hotels, cafes and restaurants averaged $606 for men and $570 for women. Corresponding averages for all workers in electricity, gas and water supply were $999, finance and insurance $862, government administration $783, and transport and storage $774. These were average earnings for a sample of 55,000 workers surveyed by the ABS.

Interestingly, the ABS survey also shows the benefits of operating under collective agreements rather than individual contracts. The former averaged $888 per week - $30 more than the latter. Workers who have to rely on the 'safety net' minimum legal requirements do very much worse, their pay averaging $235 per week less than other employees.

This new information has important implications. Most obviously, it adds fuel to the ACTU's current case for a $28 per week 'living-wage' increase for low-paid workers. It also shows the benefits for workers who continue to insist on collective agreements. This is the context in which union organisation clearly pays off. Indeed, when the Sydney Morning Herald picked up on this ABS survey, it ran a front-page headline 'best pay still won by union muscle' (12.12.2000): a refreshing change, some might say, from the usual media headline 'Wages Threat Looms' whenever workers' incomes are discussed! So that too is official: get with the strength of the union.

Reversing the trend towards growing economic inequality remains a colossal task. The contest between capital and labour over the fruits of economically productive activity remains the front line struggle. But a comprehensive assault on growing economic inequalities also requires a more progressive tax system and economic policies which limit the power of capital to restructure the economy in its own class interests. It require radical challenge to the globalisation of capital, the practices of corporate manageralism and the policies of economic rationalism. What is at stake is our capacity to live and work together in a reasonably cooperative and harmonious society.

Frank Stilwell is Professor of Political Economy at the University of Sydney. His analysis of the Australian economy and proposals for radical reforms are further developed in his new book, Changing Track: a New Political Economic Direction for Australia, published by Pluto Press, Sydney. Website: http://plutoaustralia.com


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*   Issue 82 contents

In this issue
Features
*  Interview: Being Michael Costa
Labor Council�s secretary on the 2KY sell-off, the Olympics and his plans for the future.
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*  Unions: Millennial Milestones
In a year of highs, some trade union stories stuck in the collective consciousness. Here's ten of the best.
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*  International: Eric Lee's Year in Review
The editor of Labourstart looks back on the global issues that mobilized labour in the past 12 months.
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*  Organising: Dispatches from the Field
Despite the 'Botsmanesque' critiques which have been levelled at Organising, it would be hard to deny that the year 2000 has seen more and more unions in NSW latch onto the approach - at least in principle anyway.
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*  Economics: Who Gets Gold??
At the end of this Olympic year, Sydney Uni's Frank Stilwell charts the winners and losers in the new sport of redistribution of income.
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*  Politics: Election 2000: The Winner is Gridlock
In the last in his series on the US Federal Election Campaign, Michael Gadiel, our roving reporter, gladly signs off.
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*  Satire: Chaser Launches Book
In the great tradition of repackaging old material to cash in on Christmas, the team from The Chaser & Silly 2000 has produced its first book.
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*  Review: Cultural Wasteland
The spotlight was on Australian culture in 2000. But was it a missed opportunity, asks Peter Zangari.
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»  Workers at Centre of Turn Of the Century
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»  Truth about S11 Starting to Come Out
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Columns
»  The Soapbox
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»  The Locker Room
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»  Trades Hall
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»  Tool Shed
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Letters to the editor
»  The Greatest Team Ever?
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»  ABC Online Did Strike
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»  Why Nader Vote was not Wasted
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»  John Scrooge's Christmas Gift
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