Why the top 1% think they're in the bottom 99%

Photo: Scott Barbour/ Getty Images

Reducing economic inequality means addressing the widening social gap in Australia. New research shows that the income gaps within our cities have grown larger since the 1990s. Compared with two decades ago, well-paid workers are less likely to live in places with low average incomes.

University of New South Wales economist Bruce Bradbury, who carried out the study, sums up his findings with the old joke: ‘What did the rich man say to the poor man? Nothing, they never met.’

A major risk of social bifurcation is that policymakers and commentators become disconnected from the reality of lived experience in Australia. Looking out from the boardroom, the parliament or the newsroom, it’s easy to forget that half of all households have disposable incomes below $80,000.

A few years ago, a media outlet asked its readers to estimate where they stood on the income distribution. Two-thirds of respondents thought they were further down than they really were. The problem was particularly acute at the top. Among those whose actual incomes placed them in the top 10%, four out of five thought they were poorer.

Among those whose actual incomes placed them in the top 1%, five in six thought they were poorer. If one thing unites the top 1%, it’s thinking that they are in the bottom 99%.

With poverty greatest in outer suburbia and regional Australia, it’s easy for those who dwell in the central cites not to notice the extent of deprivation. Moreover, Australians are less likely to be involved in institutions that promote class mixing. Church attendance is down and membership in community organisations such as Scouts, Guides, the RSL and Rotary has dwindled.

As they have waned, so too has the chances that people of different backgrounds will rub shoulders with one another.

In my 2010 book, Disconnected, I suggested 10 strategies for building community, ranging from holding street parties to using technology to build face-to-face interactions. As Shadow Minister for Charities and Not-for-Profits, I have been holding forums with charities to exchange ideas on building membership.

We might also consider another idea: Deliberation Day.

Originally proposed by academics Bruce Ackerman and James Fishkin, Deliberation Day is the notion that in election years, we should set aside a civic holiday on which citizens are encouraged to come together and debate the nation’s future. It’s easy to dismiss as a virtuous pipedream, but there is a fresh appetite for town hall conversations in both Australia and the US: delighting Bill Shorten (who has held nearly 50), and shocking some US Republicans (who have cancelled dozens).

Even if only one in twenty eligible voters turned out, Deliberation Day would still create a conversation among 800,000 Australians – making it the biggest civic conversation in our history. Getting to know people who are different from ourselves is important part of reducing inequality in Australia.

Andrew Leigh is the Shadow Assistant Treasurer. This is an edited extract of his third ‘Just Ideas’ speech, delivered at the Australian National University on 20 April 2017.

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