Economic inequality

Income inequality and radical right parties have both been on the rise in Western democracies, yet few studies explore the linkages between the two – despite prominent arguments about voters feeling ‘left behind’. We argue that rising inequality not only intensifies relative deprivation, but also signals a potential threat of social decline, as gaps in the social hierarchy widen. Hence, voters higher up in the social hierarchy may turn to the radical right to defend existing social boundaries. Using International Social Survey Programme (ISSP) data from 14 OECD countries over three decades, we find that rising income inequality increases the likelihood of radical right support – most pronouncedly among individuals with high subjective social status and lower-middle incomes. Adding to evidence that the threat of decline, rather than actual deprivation, pushes voters towards the radical right, we highlight income inequality as the crucial factor conditioning perceived threats from a widening social hierarchy.

Democracy, we are told, allows people a voice in politics. But only, it seems, if they have a few million to give to a political party. As the political scientist Prof Martin Gilens notes in his book Affluence and Influence: “Under most circumstances, the preferences of the vast majority of Americans appear to have essentially no impact on which policies the government does or doesn’t adopt.” GDP growth was strong under Joe Biden, but as the economics professor Jason Furman points out: “From 2019 to 2023, inflation-adjusted household income fell, and the poverty rate rose.” GDP and social improvement are no longer connected.

All those good things? Sorry, they’re not for you. If you feel an urge to tear it all down, to burn the whole stinking, hypocritical, exclusive system to the ground, Trump is your man. Or so he claims. In reality his entire performance is both a distraction from and an accelerant of spiralling inequality. He can hardly lose: the more he exacerbates inequality, the more he triggers an urge for revenge against his scapegoats: immigrants, trans people, scientists, teachers, China.

But such killer clowns can’t pull this off by themselves. Their most effective recruiters are centrist parties paralysed in the face of economic power. In hock to rich funders, terrified of the billionaire media, for decades they have been unable even to name the problem, let alone address it. Hence the spectacular uselessness of the Democrats’ response to Trump. As the US journalist Hamilton Nolan remarks: “One party is out to kill, and the other is waiting for its leaders to die.”

By returning income inequality to the levels found in 1970, the United States could reduce the rate of extreme house poverty sixfold, and cut the rate of extreme rent poverty eleven-fold.

These numbers are so large that they sound magical. But that’s the thing about returning stolen money. It’s a concrete action that, as if by magic, makes people less poor. And when folks are less poor, they can better afford housing.

Sarcasm aside, my point is that the unfolding housing crisis is a catastrophe of poverty that can be solved by reducing inequality. Take money from the rich and hand it to the poor, and the housing crisis will solve itself. And let’s not call this policy ‘socialism’. Let’s call it a return to the ‘Great Society’ (the inverse of MAGA).

To be fair, boldly redistributing income is a big ask that’s unlikely to happen in the short term. Which is why anti-poverty groups are wise to lobby for the smaller ask of subsidized housing. That said, subsidizing rent is like handing food stamps to the victims of theft. It’s less bad than doing nothing. But if we want to eliminate rising rent poverty, there is a better solution. Give back to the American poor the money that was stolen from them.

The presence of security guards in a place is arguably a good indicator of this “negative social capital.” Guards are needed because a place otherwise lacks the norms of reciprocity that are needed to assure good order and behavior. The steady increase in the number of security guards and the number of places (apartments, dormitories, public buildings) to which access is secured by guards indicates the absence of trust.

The number of security guards in the United States has increased from about 600,000 in 1980 to more than 1,000,000 in 2000 (Strom et al., 2010). These figures represent a steep increase from earlier years. In 1960, there were only about 250,000 guards, watchmen and doormen, according to the Census (which used a different occupational classification scheme than is used today). The Bureau of Labor Statistics reports that the number of US security guards has increased by almost 100,000 since 2010, to a total of more than 1.1 million. As a measure of how paranoid and unwelcoming we are as a nation, security guards outnumber receptionists by more than 100,000 workers nationally.

Sam Bowles and Arjun Jayadev argue that we have become “one nation under guard” and say that the growth of guard labor is symptomatic of growing inequality. The U.S. has the dubious distinction of employing a larger share of its workers as guards than other industrialized nations and there seems to be a correlation between national income inequality and guard labor.

The notion that negative gearing leads to an increased supply of rental dwellings is flawed: 92% of
investment is used to purchase existing dwellings, displacing previous owner-occupiers or tenants to
buy or rent elsewhere, respectively, resulting in little to no net increase in the rental stock. Negative
gearing is a poor investment strategy over the long term for investors pursuing capital gain rather
than rental income as housing prices have increased by an average of 2.4% annually from 1880 to
2011 in real terms (before 1996, housing had delivered a real return of only 0.7% annually). Negative
gearing for purposes of realizing capital gain, however, becomes a viable strategy during the boom
phase of a housing cycle as capital values are substantially appreciating. Contrary to claims that
quarantining negative gearing during 1985-87 caused a surge in rental prices, rents increased in only
some capital cities while stagnating or falling in others.

[…]

It is recommended that, at a minimum, negative gearing be quarantined to the purchase of newly-
constructed dwellings, or preferably, be abolished. The Commonwealth Rent Assistance (CRA) scheme
is better targeted towards those who require help in the course of renting rather than subsidising
residential property market investors. Although the CRA could increase rents, it appears to be the
most straight-forward mechanism available to policymakers to aid tenants.

The Australian Inequality Index is a ground-breaking new tool that provides a multidimensional measure of inequality across a range of economic, social, and demographic indicators. By tracking changes in inequality over time, we hope to enable a richer, more nuanced understanding of the root causes of inequality and develop targeted solutions to address them.

The over-reliance of economists and policy makers on traditional measures of progress, such as Gross Domestic Product (GDP) or Gross National Income (GNI), is understandable: it has been the dominant measure of economic progress for the better part of a century. Yet there is a shift afoot, with many policy thinkers and leaders now acknowledging its limitations as a tool to measure genuine social progress.

This shift can be seen in the rise of movements advocating the implementation of wellbeing budgets as a core part of government policy processes. That the Australian Federal Government has recently embraced the wellbeing framework underscores the utility and timeliness of our Index.

The Index provides seven conceptually sound, easy to follow sub-indices, and a composite index that brings these seven dimensions together. The sub-indices provide a useful set of insights into progress achieved within each of the chosen dimensions: income, wealth, gender, generation, ethnicity, disability and First Nations. 

ACOSS (the Australian Council of Social Service) has partnered with UNSW Sydney to undertake a research and impact collaboration to sharpen the national focus on poverty and inequality in Australia. The partnership monitors trends in poverty and inequality over time, explores drivers, and develops solutions to sharpen the focus and stimulate action to tackle these policy challenges.

The World Income Inequality Database (WIID) presents information on income inequality for most countries and historical entities. It provides the most comprehensive set of income inequality statistics available and can be downloaded for free. ​

This page hosts the latest version of WIID, but also the WIID Companion datasets which report standardized WIID data to create more comparable country level inequality series, inequality indices, and complete country and global income distributions for the longest periods possible. The WIID Companion datasets are directly accessible in real time through our WIID Explorer, a powerful tool for accessing and analysing the most comprehensive collection of comparable income inequality statistics in the world.

The World Inequality Database (WID) aims to provide open and convenient access to the most extensive available database on the historical evolution of the world distribution of income and wealth, both within countries and between countries.

This year’s edition of the annual Institute for Policy Studies Executive Excess report finds that the 100 S&P 500 firms with the lowest median wages, a group we’ve dubbed the “Low-Wage 100,” blew $522 billion over the past five years on stock buybacks. Nearly half of these companies spent more on this once-illegal financial maneuver than they spent on capital investment vital to long-term competitiveness.

Why the fixation on buybacks? This is a CEO pay-inflating financial scam, pure and simple. When companies repurchase their own shares, they artificially boost share prices and the value of the stock-based compensation that makes up about 80 percent of CEO pay. An SEC investigation confirmed that CEOs regularly time the sale of their personal stock holdings to cash in on the price surge that typically follows a buyback announcement.