Record profit share even as recession hits
Former US presidential candidate Bernie Sanders tweeted on September 10: “We can no longer tolerate an economic system that allows 467 billionaires to increase their wealth by $800,000,000,000 during a pandemic, while 150,000,000 Americans are facing serious financial problems and 30,000,000 people in our country don't have enough food to eat.”
That’s the United States, you may think, but a similar grossly twisted dynamic is taking place here in Australia.
On September 2, the Australian Bureau of Statistics (ABS) released the national account figures for the June quarter, which showed that the wages share of national income had fallen to below 50% for the first time since 1959.
Meanwhile, the share going in profits rose by 15% despite a 7% contraction of the economy over the quarter and a 9.6% contraction over the first six months of this year.
The gap between profit and income shares of national income has been growing without a break since the early 1980s, as workers’ freedom to organise in defence of wages and conditions has been steadily whittled away.
The right to strike was progressively restricted as was workers’ right to act in solidarity.
Sadly, it was a Labor government which kicked this process off through a deal with the trade union peak body, the Australian Council of Trade Unions. Workers were encouraged to trade off hard-won conditions and job security began to decline.
The power to act collectively in struggle — the engine of workers’ power — was restricted by enterprise bargaining. Industrial solidarity between workers in different enterprises was banned. Strike action plummeted.
So, it is not surprising that a massive transfer of wealth to the capitalists has taken place since the 1980s. This was supplemented by waves of privatisations, which transferred public assets into private hands.
If the power of the working class is based on solidarity, the power of the capitalist class is the use of the wealth it has accumulated through years of exploitation of labour and natural resources to force more such exploitation.
That power includes not just the power to break worker solidarity — pitting ever more insecure and debt-burdened workers against each other — but also the power to make governments hand them more tax cuts and subsidies.
Over the past four decades, corporate welfare has grown as social welfare and social spending has been cut.
During the COVID-19 pandemic, corporate welfare had a massive boost as the JobKeeper subsidy was used by big corporations to deliver profits, fat dividends and CEO bonuses even as the economy contracted.
Treasurer Josh Frydenburg has promised to fast-track $158 billion worth of tax cuts to help mitigate the recession but the Australia Institute’s modelling shows that 91% of the benefit from the 2022 tax cuts would go to the richest 20%.
About the same time as the ABS released its national accounts data, the Social Policy Research Centre at the University of New South Wales and the Australian Council of Social Services (ACOSS) released a report showing that inequality was already increasing before the pandemic.
The Inequality in Australia 2020 report revealed that the incomes of those in the top 20% are six times higher than those in the lowest 20%. That gap had widened since 2015–16, when the ratio was 1:5.
Further, the average wealth of the top 20% is 90 times that of the lowest 20% and has grown by 68% since 2003.
The wealthiest 20% hold almost two-thirds of all household wealth (64%), more than all other households combined.
This growing inequality is not just unfair but increases the power of the vested interests that are determined to ignore the climate emergency and seek even greater government subsidies for a recession recovery plan built on an expansion of Australia’s fossil fuel exports and gas in particular.
What is happening in this pandemic-shaped recession is perverse and we should not accept it.
The blind pursuit of even greater wealth by the already too wealthy is already eating the future. We urgently need to change the system.
[Peter Boyle is a member of Socialist Alliance.]