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Rising Inequality: A Benign Outgrowth of Markets or a Symptom of Cancerous Political Favours?

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  • Paul Frijters
  • Gigi Foster

Abstract

type="main" xml:lang="en"> Is the rise in inequality in Australia due to global changes in the distribution of marginal productivity or changes in the allocation of political favours? This article lays out the arguments for both views. Looking at the tax and subsidy changes that favour the rich, and considering that almost all the 200 richest Australians look like the beneficiaries of political favours rather than innovators or superstars, the article concludes that inequality is probably increasing due to changes in the political realm. The discussion outlines a research agenda and possible counter-moves, such as more direct democracy and having open markets for political favours.

Suggested Citation

  • Paul Frijters & Gigi Foster, 2015. "Rising Inequality: A Benign Outgrowth of Markets or a Symptom of Cancerous Political Favours?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 48(1), pages 67-75, March.
    • Handle: RePEc:bla:ausecr:v:48:y:2015:i:1:p:67-75
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    Cited by:

    1. Tony Ward, 2017. "Inequality and Growth: Reviewing the Economic and Social Impacts," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 50(1), pages 32-51, March.
    2. Peter Saunders & Bruce Bradbury & Melissa Wong, 2016. "The Growing Gap Between Rich and Poor in Australia," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 19(1), pages 15-32.
    3. Paul Frijters, 2018. "Fair Share: Competing Claims and Australia's Economic Future," The Economic Record, The Economic Society of Australia, vol. 94(307), pages 508-511, December.
    4. Andrew Leigh & Adam Triggs, 2016. "Markets, Monopolies and Moguls: The Relationship between Inequality and Competition," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 49(4), pages 389-412, December.

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