Andrew Leigh - Battlers and Billionaires: The Story of Inequality in Australia

One of the most brutal tests of national identity was described by Gavan Daws in his study of prisoners of war. Looking at men who were barely functioning skeletons, beaten by their Japanese captors, weighing less than forty kilograms and surviving on less than 1000 calories a day, Daws imagined that national character would disappear.

Not so, he discovered. Among captured soldiers in World War II, Daws observed clear national patterns:

The Americans were the great individualists of the camps, the capitalists, the cowboys, the gangsters. The British hung on to their class structure like bulldogs, for grim death. The Australians kept trying to construct little male-bonded welfare states. [Unlike Americans] Australians could not imagine doing men to death by charging interest on something as basic to life as rice. That was blood-sucking; it was murder. Within little tribes of Australian enlisted men, rice went back and forth all the time, but this was not trading in commodities futures, it was sharing, it was Australian tribalism.

Tom Uren, a prisoner of war who went on to serve in parliament, talked in his maiden speech about the difference between the Australian and British troops working on the ThaiBurma railway. The Australians, under the command of Weary Dunlop, mostly pooled their allowances from the Japanese (officers received more than other men). They lived by the principle of the fit looking after the sick, the young looking after the old, the rich looking after the poor. By contrast, the British each kept their own allowance and divided up their tents according to rank. When the wet season came, cholera and dysentery killed all but twenty-five of the 400 British men. As Uren put it, only a creek separated the camps, but it was the difference between equitable sharing and the law of the jungle.

Clearly even the Australian military, one of our most hierarchical institutions, is infused with the nations egalitarian spirit. Indeed, it has been suggested that this is one reason why our forces are such effective peacekeepers. When the United Nations intervened in Somalia in the 1990s, our troops were more inclined to go on foot patrols than the French and US forces, who tended to stay in jeeps and behind sandbags. As a result, our troops were more likely to listen to local townspeople rather than just hearing the views of tribal leaders. This in turn made them more effective at solving local disputes. It was, as one account put it, an example of the traditional Australian sympathy for the underdog being put to very good use.

Egalitarianism goes deep in the Australian character.

In January 1994, Los Angeles was hit by an earthquake and parts of Sydney were burned by bushfires. In the United States, the result was a tent city. In Australia, neighbours opened their homes to one another, with not a tent to be seen. Tim Flannery wrote, For the people of places like [the Sydney suburb] Jannali, the prospect of a tent city housing their neighbours would have been a deep insult to their sense of mateship. They would have done anything in order to avoid it. When Hurricane Katrina hit the United States, thousands were left stranded by the disaster. But not since the Great Depression has a crisis left large numbers of Australians living in shanty towns when other accommodation was available.

Our language has egalitarian cues. The word mate is a universal leveller. I will say, Thanks, mate to a cabinet minister and a bus driver sometimes in the same day. The word sir is now going out of fashion in the United States and the United Kingdom; but for at least two generations, Australians have used it only as a form of politeness, not deference. If Bill Gates and Alan Greenspan have similarly down-market nicknames, theyre keeping them extremely quiet.

Yet an egalitarian spirit is no guarantee of true equality. Indeed, as the nineteenth-century political philosopher Alexis de Tocqueville suggested, When inequality of conditions is the common law of society, the most marked inequalities do not strike the eye; when everything is nearly on the same level, the slightest are marked enough to hurt it. De Tocquevilles point is that sometimes people in equal societies worry too much about inequality, while those in unequal societies worry too little about inequality. Put another way, just because we call each other mate, it doesnt mean we have an equal distribution of incomes.

An important goal for public-policymakers is to ensure that economic gains are broadly shared across the community. Over the past generation, Australian inequality has increased significantly. To see the full extent of inequality today, imagine a ladder on which each rung represents a million dollars of wealth. Now imagine the Australian population spread out along this ladder, with distance from the ground reflecting household wealth.

On this ladder, most of us are just a few centimetres off the ground. Half of all households are closer to the ground than they are to the first rung. The typical Australian household has a wealth of about half a million dollars, placing it halfway to the first rung. A household in the top 10 per cent is one and a half rungs up, at about knee height. A household in the top 1 per cent is five rungs up, about neck level. The mining billionaire Gina Rinehart is nearly ten kilometres off the ground.

The rich are different from you and me, said an awestruck F. Scott Fitzgerald. In 2012, there were more than thirty billionaires in Australia.

Should we care? To see if you regard inequality as important, take this test. The pictures below show Australias wealth divided into five pieces. Suppose that you had an equal chance of being in any of the five slices. Would you prefer Distribution I (where the richest fifth have 54 per cent of the wealth), or Distribution II (where they have 62 per cent)?

If youre like most people, you will opt for Distribution I. Not knowing where you might end up, youre behind what the Harvard philosopher John Rawls famously called the veil of ignorance. This reminds me of the way my parents would divide up a piece of dessert between my brother Tim and me. If I got to cut, Tim got to choose. And here the result is the same: if you have to choose how to cut the pie without knowing which piece youll get, youre likely to choose a fairer distribution. Oh, and in case youre curious, Distribution I shows how Australias wealth was distributed in the mid-1960s. Distribution II shows how it is distributed today.