Inequality


The society of St Vincent de Paul has released a social policy issue paper which shows that income inequality is rising in Australia. Our gini coefficient has gone up from 0.296 to 0.309 in 5 years between 97 and 03. A more recent UN Human Development report lists our Gini cofficient as 0.352, higher even than India. On the face of it, that’s a pretty shocking statistic.

However, the thing about income inequality measurements such as the Gini coefficient is that it measures exactly what it purports to measure, the relative income of the lowest earning people compared to the highest earning people. What it doesnt measure is how relatively poor those from one country (for eg Australia) are when compared to those of another country (for eg india) and also how much effort the lowest income earners in one country have to exert to make the income that they do when compared to other countries. More controversially, it doesnt measure why these people have such low incomes.

First, I’m going to preface this entry with a statement that my argument following does not include indigenous australians especially those in the remotest areas of australia as I believe that merits a seperate focus outside of mainstream community issues.

Given that, there are three different issues that I can see:
– what are the factors behind the lowest income earners earning as little as they do?
– how much effort is required for the lowest income earners to earn as much (or as little) as they do?
– what are the living conditions of low income earners?

The first issue is one of cause. I think it is useful to see that low income comes from a combination of external and internal factors.

External factors are such things as systemic factors in the system with high entrance costs like education fees or business startup costs so that the poor are unable irregardless of talent or hardwork to break out of the poverty trap. The working poor, those forced to work such long hours that they cannot afford the time to improve themselves through further training are prime examples. These are factors that are definately the duty of the state to address. Ensuring equality of oppurtunity is essential.

Internal factors are such things as lack of ability, training, will and motivation perhaps complicated by alcohol and drug issues. Such internal factors can only be influenced indirectly if the dignity and freedom of an individual to make their own choices (and mistakes) are respected. Education (again that old liberal solution) may play a part and a better health system can certainly work but direct intervention even with the best of intentions are often morally repugnant and have severe consequences. A good case in point is the type of strategies the commonwealth government used to put in place to address aboriginal poverty back in the 50s, 60s and 70s.

As well, internal factors include different lifestyle choices. There are retirees, nomads, self-sufficient cashless communities and downshifters out there who have a home but pull the occasional beer for a living. Such people who have choosen to have a lower income than most should not be considered poor. The St Vincent De Paul report which measure household income does not make any such distintinction.

Secondly, how much effort is required for low income earners?

In a country with a social welfare system like Australia which covers the unemployed and sets a minimum wage, arguably the amount of effort for the very lowest paid is not much greater than the higher paid. I admit I do not have the statistics, and certainly I am concerned about the working poor and exploited outworkers in sweatshops. So this in one area that I’m certainly interested in – how many hours do the lowest ten percent of earners work?

Finally, what are the living conditions of the lowest income earners? With the social welfare system, provided you obey the admittedly facistic centrelink people, unemployment benefits can pay for shelter, clothes and food. Internal factors especially if drug related or involving a chronic inability to postpone gratification can certainly blow a large hole in the dole. But these are internal factors which again should be considered differently.

This brings me to the crux of my argument. I believe that a large proportion of the reasons for poverty in Australia are due to internal factors and that these are predominantly health issues and should be considered as such as opposed to ideological or economical or poltical issues. In general, people are poor in Australia because they have mental health, drug and alcohol and systemic cultural issues, not because they do not have the opportunity and certainly not because Australian society is intentionally unjust. I believe that this should be the focus when we talk about poverty and it should not be confused with a different issue such as income inequality.

Also, this is about expectations. Where is the line drawn between low income and poverty? Can low income earners in Australia be considered poor? If not, is income inequality then a problem?

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