The Other School of Economics

I have a hunch about the reason of that Australian “collective whinge”

Matt Cowgill flagged this UN report on his twitter stream: “Measuring child poverty – New league tables of child poverty in the world’s rich countries” http://www.unicef-irc.org/publications/660

A very rich document proving numerous insights on “how tough” societies are doing (for example measured by the relative child poverty rates before taxes and transfers – market income) and how good they are at redistributing the wealth (for example measured by the relative child poverty rates after taxes and transfers – disposable income).

In this sum of data, one graph copied below particularly grabs the reader’s attention and might shade some light on a specific debate raging in Australia at the moment: why do Australians keep whingeing about their condition when economic indicators have apparently never been so good (low joblessness, low inflation, trend growth, etc)?

A beginning of an answer (just a personal hunch, having experienced both systems) might be in the nature of the social redistribution.

As the graph shows, in countries like France and Scandinavia, a lot of it is delivered via “services”, which provide a sense of comfort of being looked after. The “cash transfer” is relatively low in comparison.

Whereas in Australia, the bulk of this social spending is done via “cash transfers”, which reinforces the perception of a ’socialist’ Europe vs a more liberal Australian approach: as the libertarians would say “give people cash, and they’ll know better how to spend it“. This approach may be fine when choosing the latest smartphone, however it is a little bit more unhinging when it comes to schools, childcare and hospital. A reason is that using those services usually involves a level of uncertainty, stress, if not distress in the case of hospitalisation, at odds with the toughness of a ‘market’ of privatised services where everything is up for sale.

To be clear, that is not to say that European public services do not have their share of issues, and do not cause frustration for those using them…

However I would strongly argue that this psychological dimension is missed by the macro indicators and causes this obvious dissonance between the ‘dashboard’ and the ‘perception’ in Australia. Commentators such as Jessica Irvine and George Megalogenis have identified it as a “collective whinge” in their recent respective pieces and asked their readers to realise how good they’ve got it. (links to the pieces: Jessica Irvine and George Megalogenis)

So maybe, a way to continue this conversation would be to realise that beyond the quantitative accounting value of the “social entitlements” (the cash transfers) it is actually the qualitative nature of those services that is at the core of the current debate. And if a war was to be declared it could be to bring a Scandinavian quality of services to Oz in order (for example) to improve women participation in the workforce (see the less than rosy state of affairs here) or better work-life balance as detailed by the Global Mail here.

{ leLaissezFaire, Sydney – 30 May 2012 }

UN Child Poverty Rc10_eng

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3 Comments

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