December 04, 2003


Australians are wealthier than ever before. Observe as ABC AM host David Hardaker and reporter Stephen Long search for a cloud with which to obscure this silver lining:

STEPHEN LONG: Craig James of Commonwealth Securities has analysed official figures on wealth from the Bureau of Statistics and the Treasury. They show that on average, Australians have never been richer and he says the latest rates pain is a mere ripple in a rising tide of wealth.

CRAIG JAMES: Wealth has been rising very significantly, and in real terms over the past year wealth has increased by just over 12 per cent. Now, that's the fastest growth in 14 years. Assets are increasing much faster than liabilities or debt is.

STEPHEN LONG: So on average, have Australians ever been as rich as they are now?

CRAIG JAMES: Oh, no, Australians now are the richest that they've ever been.

STEPHEN LONG: But saying we're better off on average is to use the logic of the statistician with one foot in the fire and one foot in a bucket of ice, who says that on average he's perfectly comfortable.

Thereís some sophisticated economic analysis for you. Australian National University professor Bob Gregory helps out by explaining how people who work get an unfair advantage somehow:

BOB GREGORY: The distribution of wealth is widening and it's been widening very quickly recently because of the house price inflation, so that those people who own houses have gained wealth relative to those who don't. And that's affected wealth distribution much the way you'd imagine, namely that there's been a big distribution, redistribution towards older people because they're the ones who own houses. There's been a big distribution across suburbs, towards wealthier suburbs, and there's been a big distribution towards those with jobs because those with jobs are the sort of people who can accumulate wealth through working and saving, and thereby own houses.

STEPHEN LONG: So rising asset prices have driven greater inequality?

BOB GREGORY: Yeah, in the wealth dimension that's true.

Iím glad itís only limited to the wealth dimension. Our host summarises:

DAVID HARDAKER: Finance Correspondent Stephen Long there, on the things that divide us.

Davidís a nice guy, and heís married to a old friend of mine, so my advice on how best he can address the wealth gap is offered in kindness: stop working for an organisation that sucks $750 million out of taxpayerís pockets every year and let them use the money to buy houses.

(Via reader Simon R.)

Posted by Tim Blair at December 4, 2003 12:07 PM

The rich are getting richer and the poor are getting....ummmm...richer.

See here.

It takes real talent to make this look like bad news.

Posted by: Alex Hidell at December 4, 2003 at 12:35 PM

So people who have to go out and earn money are more likely to save it than people who just get it handed to them whether they work for it or not ?
Who would've thought ?

Posted by: Jim Flair at December 4, 2003 at 12:46 PM

...and a large chunk of university professors accumulate wealth through being paid well beyond what their intelligence and knowledge would deserve...

Posted by: Skinny Hippo at December 4, 2003 at 01:06 PM

He also came up with a comparison between two people on equal incomes, one of whom bought property four years ago and one who didn't; funnily enough, the one who failed to buy property during a boom fell behind.
Is this the Play School of Economics, or what?
Why not also include another two individuals on equal incomes, one of whom invested in a heroin habit, the other on slow greyhounds and poker machines- how do they they stand on the equality scale?
No wonder this idiot is teaching at ANU.

Posted by: Habib at December 4, 2003 at 01:08 PM

It doesn't take too much talent to see the bad news in this - just a bent towards socialism: Poor but equal good; rich but different bad.

And Prof Gregory is a smart man, but an unreconstructed lefty - every silver lining has a cloud to some people.

Posted by: Chris at December 4, 2003 at 01:20 PM

In the brains dimension, there's even greater inequality. The incompetents are university professors and the clever ones are out buying property. AS GBS put it, those who can,do; those who can't, teach.

Posted by: freddyboy at December 4, 2003 at 02:08 PM

'Bob Gregory ... points out the gains from rising asset prices have mostly gone to the already wealthy.'

Clearly stupid in a typically ABC state-the-obvious kind of way but also - typically - fundamentally dishonest.

While gains obviously flow in the first instance towards those who risk their own funds in the marketplace, those gains are taxed - and at the top rate for those who are 'already' wealthy (and that definition is debatable) - providing an risk-free gain for the non-investor.

Who gets a better return on investment?

Posted by: ilibcc at December 4, 2003 at 02:14 PM

So those who've got jobs are more inclined to buy property and get wealthy. Unemployment is at 5%, the lowest in 30 years. Therefore, more people than ever have the opportunity to become wealthy. So where's the ever-widening gap? Between the rich and the getting rich? Mate or not, Tim, he's a plonker.

Posted by: slatts at December 4, 2003 at 02:40 PM

People who think that university professors are too stupid to know the value of a buck and the role of the investment property in wealth creation have clearly never rented a house from one of them. Whoo Boy.

You follow their lunch room rhetoric or their disposable income and you'll find it ain't the same direction.

Posted by: James Hamilton at December 4, 2003 at 04:24 PM

This is just great news! So why is the Reserve Bank so hell bent on trying to stop people from buying MORE houses?? Crazy buggers! We should be storming the Winter Pal^H^H Reserve Bank right now.

Posted by: Joe at December 4, 2003 at 05:54 PM

Gregory talks about "those with jobs" as though this is a distinct and separate class for all time from "those without jobs". Fact - most unemployed people are in transtion between jobs. By and large, they are not a static class.

Costello is right in saying that 5.6% unemployment is close to "full employment" - ie mainly reflecting turnover in the labour market.

Long term unemployment is a genuine cause for concern but failing to recognise that many of the long-term unemployed have social or psychological "issues" that need to be tackled first is simply avoiding the problem and sliding into wishful thinking.

Posted by: Bob Bunnett at December 5, 2003 at 12:02 AM

Bob - You hit the nail on the head. Anytime anyone tries to talk to me about how Republicans hate "the poor" I ask them, "How exactly are you defining that group? Are you aware that many people who might be poor right now won't be in a few years? Do you really think the The Poor are a static class in America? Are you aware that most people start out in life as The Poor and then work their way up the ladder? Why try to make money flow artificially from The Rich to The Poor, when most people are trying to move naturally (through hard work) from being poor to being rich?"

The same argument can be used against those who demand "a living wage" for unskilled labor. The reasons that such a thing is unfeasible are many, not least of which is that these jobs are low-paying because turnover is expected to be high. Don't tell me that people who work as cashiers at Wal-Mart deserve $20 an hour, because many of those working there are using those jobs as stepping stones. The low wages not only reflect the relative value of those jobs, but tend to spur those who work at them on to bigger and better things.

Posted by: Kimberly at December 5, 2003 at 02:29 AM

The false belief in high income mobility is what right-wingers can use to extinguish any pangs of guilt they may feel in not acting to reduce the shameful poverty in America.

"US in denial as poverty rises
Next door to Yale, the bastion of privilege that turns out the land's leaders, lies a tent city of America's poor, huddled masses.",4273,4538524,00.html

Posted by: William at December 5, 2003 at 12:59 PM

Ooh, the Guardian. That's not a biased source! Juxtaposing Yale with a homeless encampment -- yeah, the whole US is just like that! Idiot.

Posted by: Andrea Harris at December 6, 2003 at 12:38 PM