Perhaps, but the “devil is in the detail”. The importance of place and specific structural challenges faced by communities is always masked by the “average”, a data-point that doesn’t exist…
In 2015 the OECD said:
The gap between rich and poor keeps widening. Growth, if any, has disproportionally benefited higher income groups while lower income households have been left behind. This long-run increase in income inequality not only raises social and political concerns, but also economic ones. It tends to drag down GDP growth, due to the rising distance of the lower 40% from the rest of society. Lower income people have been prevented from realising their human capital potential, which is bad for the economy as a whole. This book highlights the key areas where inequalities are created and where new policies are required, including: the consequences of current consolidation policies; structural labour market changes with rising non-standard work and job polarization; persisting gender gaps; the challenge of high wealth concentration, and the role for redistribution policies.
Morgan Stanley says:
Inequality matters for market participants. It affects consumption, investment, and, at some levels, catalyzes growth, by acting as an incentive. Its nature is complex: it stems from a variety of factors, including random events, economies of scale, capital deepening, and technological progress.
However, when protracted, inequality can disrupt business models, fuel political discontent and trigger policy missteps. This could damage the growth potential. This risk is high in DM, where inequality within countries is increasing, in contrast to inequality between countries globally, which is diminishing.
Growth matters but so does its distribution. Inequality is inherent in economic processes but its persistence – when it prevents social mobility and perpetuates discrepancies – is pernicious. It may pose entry barriers to health and education, assets and access to credit, employment opportunities, political representation and basic infrastructure. Thus, rather than working as a catalyst for social mobility (acting as a reward for differences in efforts or responsibility), widening and protracted inequality may trigger social immobility by perpetuating it.
The Australian Treasury notes:
Research by economists David Johnson and Roger Wilkins found that the Gini coefficient increased from around 0.27 in 1981–82 to around 0.30 in 1997-98 [for Australia] . Subsequently, the official ABS income statistics show that the Gini coefficient increased to 0.34 just before the global financial crisis in 2008, then fell to 0.32 in 2011-12.
The most recent Credit Suisse Global Wealth Report, prepared by Anthony Shorrocks, one of the most highly respected world experts on wealth distribution, estimates that the distribution of wealth in Australia is the second least unequal (after Japan) of 27 major countries and the 12th least unequal of 174 countries.
- A Nation Divided – Inequality in Australia 2015 [PDF] – Excellent
- Trends in Income Inequality – How is Australia faring? – The Conversation
- Income Inequality in Australia – Australian Treasury
- Global Wealth Datebook 2013 [PDF] – Credit Suisse
- Australian Household Economic Well-being – 2012