For Richer, For Poorer

Why should we worry about poverty? The answer might seem obvious, so let’s try it another way: is the justification for worrying about poverty based solely on compassionate grounds or is there an aspect of collective self-interest in alleviating poverty?

Referring to an article by Brianna Davidson in New Matilda last week, Ben Eltham wrote yesterday,“The Australian Council of Social Service and the University of New South Wales’ respected Social Policy Research Centre estimate that as many as 2.2 million Australians live below the poverty line, defined in this country as a frugal $284 a week.” Coincidentally, results released earlier this week of a study found that one in 10 Australian households are in “housing stress”. The Housing Costs Through the Roof study, conducted by the National Centre for Social and Economic Modelling at the University of Canberra and commissioned by Australians for Affordable Housing, suggests that some 850,000 Australian households have little money left for bills and other expenses after paying their rent or their mortgage. Meanwhile, the National Australia Bank is seeking court approval to evict without notice renters of properties whose landlords have defaulted on their mortgages. No doubt this is why Treasurer Wayne Swan was so keen to downplay the good inflation news this week, reminding us that “many households still doing it tough”.

While these figures are shocking, new data tends to suggest that in economies like Australia’s we might be better off fretting over income inequality rather than poverty. In a TED talk entitled ‘How economic inequality harms societies’, British researcher and Professor Emeritus of social epidemiology at the University of Nottingham Richard Wilkinson claims, “The average well-being of our societies is not dependent any longer on national income and economic growth. That’s very important in the poorer countries but not in the rich, developed world. But the differences between us and where we are in relation to each other now matter very much.”

While Australia’s income disparity is on the higher level of the scale for developed countries, things are worse in the US, as we’ve reported before. This graphic says it all. This week the Huffington Post reported on a study suggesting that, in the last 30 years, the gap between rich and poor American households has soared, reaching levels not seen since the early 20th century (known as ‘the gilded age’). From 1979 to 2007, income for the richest 1% of Americans increased 275%, while that of most of the middle class rose by 40%.

While 25% of millionaire US households pay less tax than middle class households, American politics seems caught in a deadlock over the issue of raising taxes for the rich - this despite evidence that 68% of American millionaires support paying more taxes. Oddly, this is a higher figure than support among the general American public (64%) for raising taxes for the wealthy, according to a recent poll.

Read more about the 1% here and here.

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