2022-02-25
Covid-19 has completely laid bare the economic inequality that is the backbone of our capitalist system. So why do we continue to accept that vast levels of inequality resulting from the market economy are rational or fair?
By Rob Delves
We live in times where the wealth gap between rich and poor has widened so much that our everyday adjectives struggle to cope.
Vast? Obscene? ‘Astronomical’ is possibly the most appropriate, especially since Jeff Bezos returned from his space jaunt and humbly thanked his underpaid Amazon workers for making it possible.
Living through Covid-19 has caused many of us to question these levels of inequality, because it has delivered instructive reminders about whose work is most valuable and worthy of high esteem. We quickly realised how much we depend on each other’s work to keep the show on the road – and, indeed, that the most essential work isn’t necessarily the highest paid.
Think of the vast wealth ‘earned’ by casino moguls or whizz kids in the finance industry compared to the contribution made by cleaners, health care workers, care workers generally, drivers, people working in the food system from farm to shop, people making home deliveries, rubbish collection, those who provide essentials services – and, of course, public health experts.
It has been a salutary lesson, and a correction to the previously unchallenged belief that the value of each job is most fairly and accurately determined by the all-knowing invisible hand of the market pay rate. Some of these essential jobs are well paid, others much less so – but in pandemic conditions we see clearly that the market rate of pay bears almost no relation to any rational or fair evaluation of the contribution of different workers to the common good. So why do we continue to accept that vast levels of inequality resulting from the market economy are rational or fair?
For a long time I’ve had a strong emotional and moral attraction to a belief in the basically equal value of everyone’s work, including the many tasks that are unpaid. A huge variety of work is required to build a good society, and therefore my feeling is that all those who contribute should be paid roughly the same.
In other words, I don’t need to justify that my contribution should be rewarded as highly as all others – what needs to be justified is why anyone’s work deserves much higher pay and esteem than the rest of us. Two people have strongly influenced my thinking and feeling on these issues.
Jonas Salk was elected the professor of the School of Medicine at the University of Pittsburgh in 1947. He devoted himself to developing a vaccine against polio, and succeeded in 1955. Salk decided that in order to maximise its global distribution, he would not patent the vaccine or seek any profit from it. The vaccine is calculated to be worth $7 billion had it been patented.
When the TV personality Ed Murrow asked him, “Who owns this patent?”, Salk replied, “Well, the people I would say… there is no patent – could you patent the sun?”
Salk acknowledged that life had already showered him with enormous good fortune: an education system that allowed him to pursue studies in his chosen field to the highest level; the chance to work with a wonderful team at an engaging job he loved; to be held in high esteem and so well paid that it afforded him a beautiful home, car, holidays and much more.
Salk asked how anyone could believe that a mountain of extra money could add anything of value to his life. He also noted with a smile that it would be taxed at 91% – which he added was a humane and sensible policy that sent the right signals about what levels of inequality a good society deems acceptable.
The second person is RH Tawney, who wrote Equality in 1931 – and it still makes a compelling ethical case for equality of outcomes. However, it also makes the case for equality on rational economic grounds: there is no economic or social justification for inequality; its survival is a matter of prejudice. Tawney distinguished between two notions of equality:
- Equality of opportunity, which addresses the huge inequalities of income and wealth by seeking to give everyone an equal start in the competition to rise from the massed ranks of the impoverished to grab one of the relatively few highly paid jobs in the social hierarchy. This false notion of equality condemns millions to poverty and destroys the values he regarded as essential to the good life: social cohesion, a high level of general culture and a strong sense of common interests.
- Practical equality, which seeks a society in which everyone’s contribution is valued and rewarded with the income and resources to participate fully, mainly by providing good quality education and health services and well-paid, decent jobs to everyone.
Expounding the latter point, Tawney writes: “Individual happiness does not only require that men should be free to rise to new positions of comfort and distinction; it also requires that they should be able to lead a life of dignity and culture, whether they rise or not.”
Tawney’s book includes extended rebuttals of the two ‘tired old arguments’ that equality is inimical to freedom and produces a dull uniformity.
Of course, a case can be made for paying more for such things as work that involves a lot of responsibility, long training and very high levels of skill; demands at times very long hours; or is potentially dangerous or physically demanding. But the pay difference should be modest, rather than vast, gobsmacking or astronomical.
How much more? As an example, workers in waste management make an essential contribution to the common good. Therefore, in a wealthy country such as Australia, they deserve a wage that enables them to enjoy more than the basics – at least $80,000 per year. By comparison, surgeons and other medical specialists perform highly skilled work we should all be thankful for. However, I’m not persuaded that they are making a contribution to the common good, in this case to public health, that is even three times more valuable than workers in waste management.
Maybe surgeons somehow believe that $240,000 isn’t a generous enough remuneration for their long years of training and high skills? Or maybe, for reasons beyond my imagination, that $240,000 isn’t enough to afford the good things they deserve? Well, in that case, then pay the waste management workers $100,000 and the surgeons can have $300,000.
In other words, any attempt to justify large salary differences between the two jobs must begin by acknowledging that waste management and medical specialists are both absolutely essential to improving public health. Martin Luther King articulated this powerfully in a 1968 speech to striking sanitation workers:
“One day, our society will respect the sanitation workers if it is to survive, for the person who picks up our garbage is in the final analysis as significant as the physician, for if he doesn’t do his job, diseases are rampant. All labour has dignity.”
So what is the Greens’ answer to this question: How much equality?
The answer is ‘a lot more,’ though obviously it doesn’t get to specifics such as ‘the highest paid should receive no more than three times that of the lowest paid.’ Under the social justice pillar, the Greens have a variety of policies dedicated to reducing inequalities to ensure a much fairer sharing of the wealth produced.
For the upcoming election, our 15 Big Ideas are an ambitious, wide-ranging program of public spending to improve access to essential services, reduce carbon emissions and create huge numbers of jobs in the clean energy economy and the caring economy. The spending is partly funded by new taxes on extremely wealthy individuals and a super-profits tax on all companies earning over $100m. It’s explicitly presented as a radical program to address levels of inequality that have raged out of control leaving millions struggling to afford the basics, while the top 1% have received obscene increases in their wealth.
The Greens cite the fact Australian billionaires grew their wealth by a third to $68bn during the pandemic to call for the measure. We will make billionaires and corporations pay their fair share of tax.
These 15 Big Ideas bring us much closer to Tawney’s notion of practical equality, and my reading is that they present three important strategies to address poverty and inequality.
The first is providing a much wider range of public services to ensure everyone has free or affordable healthcare, education, childcare and housing. This is an important egalitarian reform because everyone receives the same high-quality services regardless of their income.
It is also an important reform towards eliminating poverty, because these four essentials can be very expensive in the user-pays neoliberal economy. Therefore, people can live much better on lower incomes, as more of that income is available for food, clothing and household energy and water bills – hopefully even some left over for treats.
I would also like to see us add transport as a fifth essential public service. It has the same egalitarian and poverty-reducing functions as affordable housing. Providing decent, affordable social housing allows people to live well without the expense of a mortgage or private rental. Improving public transport and walkability allows people to live well without the expense of private car ownership. Of course, urban design and transport is a state responsibility, but generous federal funding and investment guidelines make an important contribution.
The second is the crucial role of the national jobs guarantee. This is the government’s unconditional offer of a job to anyone who is willing to work but can’t find a job elsewhere. It should be set at a modest living wage – I would suggest something like $25 per hour or $52,000 per year – with security and other decent conditions. It is crucial in at least three ways. First, it lifts people out of poverty. Second, its security, fair pay and conditions put pressure on the private sector to be better employers and therefore gives private-sector workers more power in their relations with their employers.
It also acknowledges the importance of the dignity of work, the need for people to know they are making a contribution to the common good. This is a central theme of The Tyranny of Merit, a brilliant new book by the Harvard University political philosopher Michael Sandel. He quotes Bobby Kennedy as the politician who argued this case in the most persuasive, down-to-earth manner:
“Fellowship, community, shared patriotism – these essential values of our civilisation… come from dignified employment at decent pay, the kind of employment that lets a man say to his community, to his family, to his country, and most important, to himself, ‘I helped build this country, I am a participant in its great public ventures.”
The third strategy is the use of tax reforms (the billionaire’s tax), partly to finance the public spending program. However, more crucial is the role of this tax reform in two other ways:
- To reduce inequality by taxing those with greater income and wealth more heavily, and
- To express society’s judgement on what contributions are most valued, what contributes to the common good and what distracts from it. In nearly all cases, billionaires have not gained their wealth primarily by working for a high salary but by speculation and ownership of assets (for example, property portfolios) that benefit from high inflation (and very low taxation). So, tax speculation and asset inflation heavily to express society’s judgement that they make less contribution to the common good than income from labour.
I’m excited by this federal election platform and believe it is the best we’ve ever presented to the country. It goes directly to the major problems we face and the issues that are of primary importance to our daily lives. It is a bold set of reforms that will reduce the huge and unjust inequality that is destroying our sense of community and making a mockery of the belief that we’re all in this together. The 15 Big Ideas will make us much more equal.
Rob Delves is the co-editor of Green Issue.
A version of this article originally appeared in Green Issue. The views and opinions expressed in this article are those of the author.
Image: Pixabay.