A conversation? Let’s talk about where the wealth went

Tony Abbott and Joe Hockey and the rest of the Liberals want to have a conversation with us, so they say. I’m usually a bit fussier about who I talk to, but I’ll make an exception in this case, if they will agree that we can talk about a specific topic: where has Australia’s wealth gone?

The question arises because there is a recurring theme behind things like the Intergenerational Report and a lot of the changes imposed by governments over recent decades. This is the idea that the country as a whole has either become poorer or is about to become poorer.

We’re told that the government is drowning in debt because we’re spending more than we can afford to spend – on education, for instance. For several decades beginning with the Whitlam Labor government, Australia had free tertiary education. But somehow, from the 1990s, the country became less and less able to afford free universities. Today, the Abbott government tells us that we have to allow big price rises for degrees if our universities are to survive. It seems we “can’t afford” free – or even moderately priced – tertiary education.

There is also a lot of talk about the country’s “ageing population”, which supposedly means that we’re moving towards a situation in which a dwindling band of overworked young people have to produce enough to feed, clothe, house and treat the ailments of hordes of old bludgers (formerly called “pensioners”).

This idea is rather undercut by the reality that there are significant numbers of young people who would like to be working but aren’t allowed to do so. (Tony, please note: they aren’t allowed to – business refuses to hire people unless they can make a buck out of them. It’s not a lifestyle choice.)

And it is further refuted by the reality that Australia hasn’t been getting poorer. Different economists’ studies come up with slightly different figures for how much the Australian economy has grown over the years, but none of them show the economy shrinking.

An international collaboration called the Maddison Project has compiled a database of real per capita GDP for a large number of countries over several centuries. This shows that, from 1972 to 2010 (the last year of the database), Australia’s GDP per person more than doubled. (Other studies show it increasing even more.) So even if the percentage of the population that was employed became smaller, the amount of wealth produced was still more than enough to double the average standard of living.

So where did the money go? If we’re twice as wealthy on average, why is it that we “can’t afford” free universities or adequate child care or visits to a GP or the dole for young unemployed people during half the year?

Perhaps the average conceals something. If the total production per person has doubled, but most people’s real living standards have stagnated or even declined, it must be that some small group is taking the lion’s share of the increase. Would Tony and Joe like to talk about who might be doing that?