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

Paul Frijters and Gigi Foster

Australian Economic Review, 2015, vol. 48, issue 1, 67-75

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.

Date: 2015
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