Why does inequality matter? The effects of a corrosive force

The rich and the rest Annual income in $

World famous … for inequality Hardly an egalitarian country Once among the most equal rich countries From the mid-80s to the mid-2000s, rich world’s biggest rise in rich-poor gap Now in the bottom third of the OECD For wealth, the top 1% own three times as much as the bottom half put together Maori and Pacific peoples have twice the Pakeha poverty rate, and greater inequality

Inequality: the corrosive force As people live apart, they think apart Lives (right from the outset) become increasingly segregated Democracy suffers Trust declines Community involvement falls away Bonds and ties are eroded

Corroding health and wellbeing More equal societies are better for most

Corroding politics Money well spent for the 1% “Actual policy outcomes strongly reflect the preferences of the most affluent but bear virtually no relationship to the preferences of poor or middle-class Americans. The vast discrepancy … stands in sharp contrast to the ideal of political equality that Americans hold dear…. representational biases of this magnitude call into question the very democratic character of our society” – Martin Gilens

Corroding opportunity Want the US dream? Go to Denmark

Corroding the economy Not ‘necessary’, despite the claims Over the long term, more equal societies have better growth rates and are more productive So inequality at current levels is not defensible economically In fact it’s damaging to the economy Especially to opportunity, and in the longterm

Cause 1: Inequality for workers Where did all the money go? Bargaining power falls at the low end Financial power rises at the top end The balance shifts Average hourly wages since 1990

Cause 2: Inequality for all Tax, welfare and employment changes Huge rise in number of unemployed Benefits have been cut sharply Flat rate GST has been increased (while top tax rates have been cut) Overall the welfare system does much less to support people who are unemployed than it did in the 1980s

Further information… In the book and on inequality.org.nz

So what can be done? Some ideas for unions to consider We need to think about ‘predistribution’ and where inequality originates The things that shape the rewards for those contributions Within existing firms: the Living Wage, pay ratios, worker voice Changing firms: worker co-operatives