Mr Gaynor on Inequality

The OECD report shows that the top 1 per cent have a much higher share of total taxable income than they did 30 years ago (see table).

Only the Netherlands, which has seen the top 1 per cent have its share of total taxable income fall from 5.8 per cent to 5.6 per cent, has experienced a decline in inequality as measured by the OECD. The top 1 per cent now has 18.1 per cent of total taxable income in the US compared with 8.1 per cent in 1980.

In Australia, the top 1 per cent has increased its share of total taxable income from 4.8 per cent to 11.2 per cent, and in New Zealand from 5.6 per cent to 9.0 per cent.

Brian Gaynor

Of course, we knew this. The interesting thing is that Mr Gaynor is telling us that this is now a problem that won't go away (which many of us also knew). It is both an economic and  political problem. Economically, it has severe repercussions for consumption, saving, poverty and productivity. Politically, it is an arrow at the heart of Mr Key's unswerving support for greater inequality. His "muddling through" is an explicit statement of his commitment to greater inequality.

It will end in tears, for people will not put up with a model that assumes that the affluent must become ever more affluent.