Since the GFC (Global Financial Crisis) the owners of capital have been accumulating great wealth. Central banks, in reviving western economies, have driven up asset prices, resulting in the 1% Club in the US amassing 95% of US wealth since the Lehman crash. According to Barack Obama “Whereas in the past, the average chief executive typically made about 20-30 times the income of average workers, today CEOs make 273 times more.”. So how are the ordinary people fairing?
There are two prevalent schools of thought on wealth inequality:-
- Trickle-down economics, where growth will take care of such inequalities
- Marxist-style, where common sense judgements of ordinary people prevail
The one truism is that as things stand now, there is inequality in wealth distribution, driven by the consensus view of western economics “hell-bent” on investing in growth (driven by the rich) in the hope that this will inevitably trickle-down and take care of the poor. The Marxist theology, applied by China, stands as testimony to its claim; where around 500 million more people have begun to taste middle class affluence and a billion worldwide. Unfortunately, the unskilled and very poor in western society are yet to taste middle class affluence after 5 years of GFC global recovery. In Australia, recent statistics suggest wealth inequality, especially since the passing of the mining boom, has begun to worsen. So there is an imbalance here, because the lot of the very rich has improved markedly (mainly from our mining boom). Or as some call it, a temporary log jam has slow the flow-on effect to the poor.
Where inequality arises is when the already poor are expected to carry the biggest (percentage-wise) burden of economic recovery, simply because past welfare funding has grown out of control, creating a culture of “entitlement”. Most ordinary Australians appreciate that having a balanced budget is good for the nation as a whole. The question is how to shift the mindset of ordinary people from “entitlement” to one of “self-empowerment, self-help and self-motivation”. Today western government preoccupation with their growth strategies has failed to bring about a shift in mindset to any other alternative, other than simply “trust us”. Western governments (to their credit) have steadfastly stuck to their “trickle-down economics” strategies in the knowledge that after the middle class cash grab has been satisfied there will still be sufficient overflow to pass something onto the poorer (maybe).
I see no reason why both approaches (“ordinary people empowerment” and “trickle-feed”) cannot coexist and work effectively together. Bottom-up meets top-down. Most western governments are already committed to their “trickle-down” economics strategies where “growth will eventually take care of the current inequality”. Little more needs to be said on this subject because commitment to this strategy is already in-train. A key objective of the Yourself Helper website is, therefore to avail ordinary people with a social network platform for self-empowerment (through self-transformation) and the need for greater altruism in volunteering help to support the needy in their own quest for self-transformation. The mindset of ordinary people (able to make some contribution to society – be it paid or unpaid work) needs to shift from one of “welfare entitlement” to one of self-confidence in their own “self-empowerment”; drawing upon their most valuable assets:-
- their (voting) numbers and purchasing power.
- their spirit of generosity.
- their caring for others in need.
- their ability to call upon help when in need and .
- their recognition that “more of the same” is not going to work.
- their belief in the common good and that all should share in the success of a society.
Why is it that most of the lower echelons of western society suffer the most from the big hard problems facing society today? They are the most vulnerable, because they have the most reasons for wanting to take their minds off their current poor situation. As a result they are far more susceptible to the strategies of powerful wealthy lobby groups, intent on producing products with the promise of instant gratification – from unhealthy food, drugs, gambling, pornography, smoking, computer games, reality TV, etc. All the while making ordinary people’s life worse and consequentially dragging society further into these unsolvable big hard problems. Rather than caring about their customers, they profit from well thought through strategies that stimulating the need for people to seek even more instant gratification from their products; a vicious cycle fuelling society’s big hard problems. Discover how the apathy or apathetic mindset of ordinary people is the kind of stuff broken democracies thrive upon. Discover why wealthy industry lobby groups exploit, corrupt unions and big business revel in this status quo. So where might one expect the greatest push-back to come from; on a platform purporting to bring about a shift away from the current status quo?
Ordinary people today are caught in a cycle of false hope, exactly where broken democratic processes, successful lobby groups and ineffective governments want to keep them. Discover how the proposed Yourself Helper website is designed specifically to break this vicious cycle and replace it with one based upon the empowerment of ordinary people and their need to participate in a more mature social model. A journey of self-transformation is one where ordinary people develop stronger will power and strategic determination for a better life: to be the best you can be now and contribute towards solutions to the big hard problems facing society. Bottom-up wealth, gender and race equality lacks a platform for ordinary people to shift their tactical entitlement mindset and to the grassroots level where their most valuable assets can be leveraged to great effect. Greater self-help and helping others in need is a key component of the new social model, shifting away from the an era of entitlement, in the knowledge that there will always be a public funded safety-net for those no longer able to make a serious contribution to society (be in paid or voluntary effort). At the moment, it’s the other welfare entitlements that are putting the public safety net at risk.
The IMF (International Monetary Fund), World Bank as well as the Bank of England are warning the globe about the economic costs of inequality. The Chiefly Research Centre in Australia estimates the recent deterioration of Australian equality will take $500 from the pockets of ordinary people within a few years. Economic growth and policy making that fails to generate benefits for ordinary householders and that have no “social benefits” requires a very different framework in place than exists today.
Europe, USA and Australia are all struggling with sluggish economies and to boost living standards. Monetary policies have run out of steam, leaving governments with few options. Around the world today you have extreme disillusionment with the political systems with its preoccupation with growth, wealth and “trickle-down” economics. In a recent paper produced by Equity Economics, the so called Gini coefficient (recognised measure of inequality) has risen in Austrlian from 0.27 to 0.33 over the past 30 years. The paper estimates this will cost the economy $31.1 billion by 2019-20. If left unchecked, this increase in inequality will likely balloon over the next 25 years to 3% of GDP, or $48 billion in today’s money. This is much larger than the 2.5% of GDP boost the Productivity Commission delivered in Australia’s 1990s Competition Reforms and 30 times that projected to arise from our recent trade deals with Japan, South Korea and China.
The paper goes on to explain that such inequality hurts the economy because ordinary people tend to sacrifice consumption and investment, both major drivers of growth. It erodes people’s ability to invest in their education and skills, drags down productivity and national income (tax revenue). Together with the OEDC, the paper suggests effective solutions lie in reducing inequalities that:-
- improve access to better education and training
- encourage greater female labour force participation with equal pay entitlements
- facilitate affordable housing and healthcare
- place less emphasis on brakes for big business and the wealthy (traditional trickle-down economics) and more on dispensing with the many other inequalities prevalent across Australia (racial, cultural and gender)
This series continues with an increased awareness into the most important dimensions to “Inequality” – Wealth, Cultural & Gender:-
To complete your “Awareness” into each and every one of the above Inequality problems, simply “click” on one of the three associated “Inequality ” buttons above.
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