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Middle class chase crumbs as the elites eat cake

Opinion

As wealth continues to gather in the bank accounts of the secure few, a swathe of the Australian middle-class is languishing in part-time work with stagnant pay, argues Malcolm King.

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The barbecue stopper this federal election isn’t about boat people, terrorists or the #MeToo movement.

It’s how the wealthy elite and the splintering of the workforce are turning many middle-class white-collar workers into short-term contract fodder.

This has historical ramifications for Australia and the western world because, for the last 100 years, the middle class have acted as a socio-political buffer between the hoi polloi and the mega-rich.

Most economists define the middle class as having a median gross household income of $1600 a week or $84,000 a year.

But this drops to $850 or about $44,200 a year after tax and then adjusted for different household sizes. I suggest this is too shallow and that the median post-tax income is closer to $55,000.

It’s no wonder more than one million Australians are working two jobs.

Of course, income only tells part of the story but it gives the lie to those on $140-$180k, who think they are middle class. They are in the top 10 per cent of income earners in Australia.

There is also growing division within the middle class. The cultural middle class is battling to hold on to what it has and the trade-based middle class is pulling away with increased disposable income.

This is one reason why white collar middle-class Australians are demanding that governments maintain their historical standard of living in the face of globalisation, immigration, job-slashing algorithmic technology and offshoring of work, to name just a few of the dynamics of concern to them.

Many of my stories in InDaily have been about aspects of this revolutionary phenomena. The erosion of the middle class comes at a time when society is atomising and almost every credo in western life is in dispute, from religious intolerance to the mindless tribalism of public discourse.

The only qualities that are ‘trickling down’ are risk and insecurity. Massive profits, like hot air, are convecting up.

Here are a couple of examples of the rising convection of wealth to the upper-income percentiles.

The December 2018 tax transparency report showed that 722 of the largest Australians companies paid no company tax in the 2016-2017 financial year. Yet some of these firms reported more than $1 billion in income. Even with tax offsets, how can that be?

Meanwhile, wage growth across all industries came in at just 2.3 per cent last year, according to the ABS. The share of GDP going to wages has declined from 58 per cent in the 1970s to 47 per cent in 2017.

That’s the lowest level since the ABS started gathering this data in the 1950s. The productivity of Australian workers is rising but they are earning relatively less.

The key reason we have flat wages is that corporate Australia is redirecting those monies to shareholders and executive salaries. In the finance sector, they’re investing in algorithmic technology, which is predicted to slash the workforce by up to 20 per cent over the next 20 years.

Plutocrats blame the government for not lowering corporate taxes, so they can engage in the fantasy of hiring more workers. The only qualities that are ‘trickling down’ are risk and insecurity. Massive profits, like hot air, are convecting up.

The corporate elite trot out self-serving ‘thought leaders’ who proselytise in business conferences across Australia and around the world that social and economic change should be pursued by the free market. Yet it’s this economic philosophy that is punishing the middle class.

I call them ‘single thought leaders’ because these boosters usually come from one discipline such as accounting, demographics or IT.

The time has come to dump this dog-eat-dog economics, this tyranny of the few over the many.

They often blame the individual, as if the battering the middle class is taking can be located in character or attitude, rather than collective and systematic issues festering at the core of capitalism.

They punch out their single thought but do nothing to fix rising income inequalities, the growing disconnection between the finance and the real economy, the winner-takes-all ethos of our markets, rising social distrust or the capture of politics by vested interests.

They talk of disruption, self-empowerment and entrepreneurialism, much like Elmer Gantry talked about religion in the movie of the same name.

These defenders of neoliberalism roll out an array of statistics, PowerPoint slides and graphs, which promise ‘blue skies from now on’.

Yet any sense of human reality or understanding, any sense of reporting from the frontline, has been quantified away. The men and women at the barbecue have been turned into numbers. They are watching the upper echelons of society grow fat on the cake they produced.

Rising productivity and the vintage methodology used to measure unemployment will mask some of the job losses. But eventually, job losses will overwhelm productivity, with knock-on effects across the board.

This is just a couple of steps away from ‘collective bargaining by riot’, as the British historian Eric Hobsbawm once wrote.

The time has come to dump this dog-eat-dog economics, this tyranny of the few over the many.

The time has come to increase corporate taxation on the top 2000 Australian companies and lift the personal taxation of income-earners over $150,000.

Governments should introduce a four-day week for all Australians and reduce payroll tax for small businesses by 20 per cent.

Most people are unemployed because they can’t find work. Eliminate unemployment and sickness benefits and replace them with a living wage of to $25,000 for every adult. They could earn an extra $10,000 taxed at the lowest rate.

We also need to expand Medicare-funded dental care for every child, aged pensioner, full benefit recipient and concession card holder.

As Tolstoy wrote: “I sit on a man’s back choking him and making him carry me, and yet assure myself and others that I am sorry for him and wish to lighten his load by all means possible … except by getting off his back.”

It’s time to get them off our backs.

Malcolm King is a professional writer who splits his time between Canberra and Adelaide. He is a regular InDaily columnist.

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