As Inequality Worsens, Millionaires Are Pulling Up the Drawbridge Behind Them
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When I became a partner in a law firm, something strange happened at the bank. Our relationship deepened. I became a premium client with premium needs.
I was introduced to my customer relationship manager. Soon after I realised I didn’t have to queue in a bank branch again. If I had a problem, he could sort it out. I received a discount on the bank’s advertised variable interest rate. Other bank employees contacted me to discuss "wealth management", "exciting investment opportunities" and "great insurance deals".
Then a financial advisor came to see me armed with a voluminous folder containing an investment strategy for my super fund. He said I should aim for a $10,000,000 nest egg for retirement. With apologies to The Graduate, the strategy could be boiled down to one word: "timber". Actually, four words: "tax deductible timber plantations". I passed it up.
I was referred to an accountant who suggested that paying tax for someone in my position was a life choice. My skin crawled. I passed on that too.
I am not sure exactly when it happened, but at some point I realised life had increasingly come to resemble a long-haul flight. Goods and services began to be increasingly tiered to target the well-off and sold at different prices, like seats on a plane. First class travellers sit up the pointy end of aeroplanes with plenty of space, comfort and fine food and are able to avoid long queues, including those that develop outside in-flight toilets. Towards the back, people are moulded into unsuitably confined spaces.
This isn't limited to plane journeys, of course. Take a universal constituent part of the human condition: our distaste for waiting in a queue. In the US, a market has emerged for the services of homeless people who are paid to wait in lines on behalf of lobbyists seeking access to congressional hearings. The time-poor wealthy pay the time-rich poor to wait in queues.
And remember when luxury cinema viewing, such as Gold Class, first appeared? Instead of sitting in the democracy of a cinema, this too was a premium service offering space, comfort and exclusivity – even if trying to eat a choc top washed down by a glass of Merlot while reclining in a furry chaise longue was not as special as it may have seemed at first blush. Likewise, in recent years, premium transport services have emerged offering luxury cars and personalised relationships to transport clientele. Even psychologists have got into the act, metamorphosing into "executive coaches" and in the process tripling their hourly rate.
In Australia, the economic transformation wrought by 22 consecutive years of economic growth and an unprecedented mining boom has played a crucial part in these changes, generating enormous prosperity. Entrepreneurs have increasingly tiered their business offerings to target this wealth.
Australia is now one of the wealthiest countries in the world, vying with Switzerland and Norway to head the league table on various measures of wealth and wellbeing. But all this prosperity has been rather unevenly distributed. The incomes of our top 1% have far outperformed the rest of the population, just as they have done in other economies like Canada and the US. Between 1994-2008, the wealthiest 10% of Australian households enjoyed the highest increase in incomes of any advanced economy.
The profit share of economic growth rests at a record high. This means that the share apportioned to the wages of the labour force sits at a record low. It has not always been like this. Between 1900 and the 1970s, income inequality actually reduced. Since then, it has made a rapid about-face. According to the Australian Council Of Social Services, over 2m of Australians live below the poverty line. Half of all Australian families live on a pre-tax income of $77,000 or less.