Leftist Governments and Inequality

There are competing conceptions of the good between the Left and the Right. The former generally prefers equality at the expense of total prosperity where the latter prefer freedom even if it comes at the expense of equality. To put it crudely and perhaps a little simplistically, the Left loves equality even if it is equality of poverty. The terms of this debate has generally been accepted and usually it is conceded by both sides that center Right governments will create greater inequality, where center Left governments will create greater equality even if the total economy and performance of the latter suffers.

The emphasis from the conservative side is less on equality but on mobility. So gaping income inequality doesn't matter as long as people have the freedom through their own hard work, saving and thrift to climb the economic ladder. Thomas Sowell points out that there is great economic mobility in the US and Judith Sloan says the same about Australia. But its always particularly delicious to me to see that often under center Left governments, like the current Rudd/Gillard government, there is the same if not more inequality under their watch

"INCOME inequality has increased slightly on Wayne Swan's watch, despite the global financial crisis pulling back some of the gains of the very rich from the first phase of the mining boom.

Lower- and middle-income households in the first six rungs of the ladder have 0.5 per cent less of the nation's income between them than they did a decade ago, while upper-middle-income earners, on the seventh and eighth rungs, have slipped by another 0.3 per cent. The top 20 per cent of earners on rungs nine and 10 lifted their share at everyone else's expense, after counting for the setback of the GFC....

...But the reality of income distribution in Australia since the economy was deregulated in the 1980s has been patchy, with neither side legitimately being able to claim that its policies have been more egalitarian than the other's.

Lower- and middle-income households were relatively more equal during the Howard years, a fact first identified by NATSEM researcher Ann Harding in 2005, and Australia has yet to suffer the large gaps between top and bottom that the Treasurer worries about."

Similar results have come out of the US with states controlled by the Democrats more unequal than those controlled by Republicans

"This week, to some media fanfare, a liberal think tank called the Center on Budget and Policy Priorities released a state-by-state study of income inequality. The Census-based data sure are interesting, but not in the way the authors seem to think.

Their conclusion is that a growing gap between rich and poor since the 1970s warrants more redistributionist policies on the state level: a higher minimum wage, more generous welfare and unemployment insurance policies, and more "progressive" state tax systems. But if such policies are effective, one has to wonder why the CBPP's helpful map of inequality—those states with the largest gaps are actually coded in darkest blue—looks so much like the Obama Electoral College victory map. California, New York, Massachusetts and Illinois all rank in the top 10 for 'greatest income inequality between top and the bottom.'"

Indeed it may be that the states in the US in the best fiscal shape may also present the most opportunities to the poor which is why the worst performing US states are also the most likely to hold Democratic majorities like California, New York and Illnois;

"Want to know which states are in the worst financial condition? One telling indicator that might not immediately come to mind is whether most of its citizens identify themselves as Democrats."