There's far more to the fair go than just economics

Opposition Leader Bill Shorten has often argued that inequality in Australia is the worst it has been in 75 years.

Leaving aside whether that is or isn’t correct, there is a bigger, more pertinent political question: is it inequality itself, or the perception of inequality, that fuels so much of the contemporary mistrust of politicians and political systems?

The growing legitimacy of inequality is a serious problem, even among market advocates like the IMF and World Bank, which seek to confine the fix to more equitable distributions of wealth. They fail to recognise the strong possibility that the push on inequality comes from wider perceptions that the system is so unfair it creates distrust of those in power and their main alternatives, so the damage is social rather than material.

Commentator Ross Gittins has argued that the collapse of the “neoliberal consensus” is as apparent in Australia as it is in Donald Trump’s America and Brexit-ing Britain. Yet the data here do not reveal the serious poverty it brings with it.

The local focus on inequality has very much been more on tax rorts and the presumed sins of the rich than on the poor, either on or off welfare. This looks to be the basis of Shorten’s next policy bid for power, which he promises to release via inequality policies at the New South Wales ALP conference this weekend.

Shorten’s targeting of the voters’ desire for the “fair go” by claiming inequality in Australia creates a “sense of powerlessness that drives people away from the mainstream so creating a fault line in politics”.

His emphasis on the wider effects of inequality suggests he recognises it as a symptom of wider issues, rather than a single economic cause of problems. However, if his proposals are primarily focused on increasing tax takes, he is not tackling the wider damage, such as system distrust, that is widely evident.

He is not alone in this limitation; it dominated the debates on his proposals. The immediate responses from Treasurer Scott Morrison and several economic commentators disputed whether the Gini coefficient (a measure of how wealth is distributed in a society) supported the claims of rising inequalities. They ignored the many other indicators, such as that workers’ share of income is at its lowest level in a half-a-century.

The complex data shown in The Conversation’s factcheck come down mainly on Shorten’s side. These varied sources show the problem of defining what counts as inequality. Are voters very aware of income differentials? Or do most judge inequality by tightening budgets and everyday hardships such as rising utility bills?

It is in fact these perceptions of wider inequality as unfairness that affects how we relate to those in power. These are toxic effects that need to be fixed, not just through adjusting tax or individual payments.

There is considerable evidence that inequality is increasing and, importantly, that it is affecting the views of possible voters. The long-running Australian Election Study in 2016 found voters showed both increased distrust of politicians, and income concerns. More than half – 55% – supported incomes being redistributed versus 19% who did not. There have been other recent polls that show the lack of trust of the mainstream parties.

Who do you trust? Increasingly the answer seems to be: nobody.

After a year when voters worldwide thumbed their noses at mainstream politics and the elite, a landmark annual survey has found trust in major institutions is eroding at a rapid rate. And the effect is particularly pronounced in Australia.

The 2017 Trust Barometer by Edelman, the world’s largest PR outfit, has documented an “implosion of trust”. It found that Australians believe their entire political system is failing and they harbour deep fears of immigration, globalisation and changing values.

We need to consider whether values are the basis of beliefs about inequality. My thesaurus offers eight synonyms of the word: four simply describe it, while four signal negative feelings and perceptions: discrimination, unfairness, inequity, disproportion. None expresses inequality as a material or monetary difference. This indicates how often inequality connects with growing distrust of mainstream parties.

So is inequality a significant but limited indicator of wider issues that need attentions? The current special issue of Australian Quarterly features articles on this topic. The journal’s opening remarks state:

Inequality is arguably the catch-cry of our times, but, when you pick it apart, what does it actually look like in the Australian context? Is it economic, is it political; is it tax breaks for big business, or the everyday homelessness of our capital cities; is it the rot crumbling the sanctified pillar of the ‘fair go’, or has it become a convenient catch-all so broad as to be meaningless?

If this is so, the question will be whether Shorten’s policy options stay within the narrow confines of fairer taxes. If they do, it may be too simply economic to interest voters – unless he creates a broader vision of a trustworthy (fairer) Australia.