Sunday, October 23, 2011

income inequality

An interesting chart from Possum Comatatis on historical income variation between Australia and the USA for the top 1% of income earners. The most curious aspect here, in hstorical context, is that huge spike in Australia back in 1950, associated with the wool boom.

A search uncovered this paper with some interesting historical background: Before the storm: the making of Australian anti-inflationary policy, 1945-1965.

The wool boom in 1950/51 tripled wool prices compared to the previous year’s average. With fixed exchange rates, the sudden windfall directly boosted farmers’ money incomes, and though the Commonwealth Bank made special account calls to prevent it from augmenting bank reserves, the increase in expenditure was enough to take consumer price inflation to an annual rate of around 20 per cent.
The policy response also included a 'horror budget' from the Menzies Guvmint. It makes an interesting comparison between periods with the terms of trade now back up at the same lofty levels, abeit on the back of iron ore and coal rather than a sheep. 

Update: This post form Michael Stutchbury at The Oz last year touces some of the history in context of current debate ...... 

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