Metiria Turei
Inequality in Aotearoa: Mind the Gap!

As you know, I’ve been writing a series of blog posts about Inequality in Aotearoa during April and May.

I’ve also been working on ideas for solutions to the growing gap between rich and poor in New Zealand, and this morning I’ve launched a major package of eight practical ideas to reduce inequality. Here I am at the launch earlier today.

We’ve called this package ‘Mind the Gap’, and it is the third tranche of our Green New Deal initiatives for dealing with the biggest social, economic, and environmental challenges facing New Zealand. The Green New Deal is what a Green Government would be doing right now to address these challenges. You can read or download ‘Mind the Gap’ here.

On Thursday Bill English will deliver this Government’s second Budget. These solutions should be in there. But sadly, this Budget will be about helping those who have the most, not those who have the least.

John Key and Bill English have choices in this Budget. Inequality is driving health, social, and economic problems, and costing taxpayers billions of dollars per year. An investment in reducing inequality now would pay dividends in reduced costs in future.

We know this Budget will spend hundreds of millions of dollars on tax cuts to the wealthy, and pay for it with a GST rise that will hit those on low incomes hardest.

If John Key and Bill English choose instead to introduce a comprehensive capital gains tax (exempting the family home), they would raise around $4.5 billion per year in the long term, that could be invested in other measures to reduce inequality – like a tax-free threshold of $10,000, a progressive pricing system for electricity, extending the In-Work Tax Credit to every low income family who needs it, reintroducing the Special Benefit, building new state and community housing, and ensuring security of rental tenure.

It’s all about choice and priorities. A Green Government would make reducing inequality one of its highest priorities, and we would start with these solutions.

How about you?

139 thoughts on “Inequality in Aotearoa: Mind the Gap!

  1. Why exempt “the family home” from a capital gains tax?

    Surely, this makes the Greens’ capital gains tax much less progressive? After all, isn’t the family home where the richest, say, 50% of New Zealanders have managed to increase their wealth rather substantially over recent decades. And the richer you are the more you’ve made from the huge increase in the prices of houses?

    Like or Dislike: Thumb up 2 Thumb down 10 (-8)

  2. Good call, Meyt.

    It’ll be interesting to see if N/ACT have any concept of how inequality continued by their policies so far could cost them dearly.

    It certainly cost the Coates Government in the 1932 elections, after their ‘relief’ policies were only aimed at landowners and businesses.

    Like or Dislike: Thumb up 3 Thumb down 3 (0)

  3. @Bryce

    I’m more interested in targeting the top 10%, who have managed to accrue 48% of New Zealand’s wealth, rather than the top 50%.

    The top 10% haven’t made much of their money from their family homes, but a hell of a lot of them have made lots of it it from other people’s (rented) family homes.

    The apportionment of wealth among the New Zealand population means some of the top 50% are not very wealthy at all.

    The bottom 50%, however, have only 7% of New Zealand’s wealth.

    Like or Dislike: Thumb up 12 Thumb down 3 (+9)

  4. Capital gains tax on ALL property is a far more elegant solution. Taxed the same as any other income. I’m not sure how expense deductibility works then though?
    How about no foreign ownership?

    Like or Dislike: Thumb up 1 Thumb down 0 (+1)

  5. They did it in Sydney, people overcapitalised on their private homes, pushed prices through the roof, housing was made more unaffordable for those that are worse off.

    Capital taxation on all property would incentives people to buy and hold, thus reduce supply, increasing house prices.

    Like or Dislike: Thumb up 8 Thumb down 1 (+7)

  6. A CGT in and of itself will not change behaviours too massively, as we have seen in Aussie, the UK, parts of the US and Canada as prices have continued to rise steeply there too…

    If it is combined with compulsary super at Australia rates and a Government policy to buy back former SOEs and then sell down 49% of them as shares for NZ citizens only we can see the kind of growth in wealth in the middle and lower classes that we have seen in the top 10%…

    I’d start with an announcement in the budget of the introduction of compulsary super of 4.5/4.5 personal/company contributions with matching personal and company tax cuts, a CGT to offset tax receipt losses and a buy back of Contact to reform Electricorp which would then be 49% sold down over a decade to NZ citizens only…

    Like or Dislike: Thumb up 3 Thumb down 1 (+2)

  7. Bryce; I think that the idea of a capital gains tax is to stop land lords and developers having a virtual monopoly on the accommodation market and creating huge cashflows into that market creating ‘bubbles’.

    I don’t think a Capital Gains Tax on the 1st home matters much after all we all need our own home. I think that capital gains tax would best be applied as a graduation tax eg. 2% on 2st house, 5% on 3rd house, 10% on 4th house etc.

    Rather than make issues complicated it would be best to use the finance of the CGT to balance the land market. Hence a state housing project to provide lower paid workers with reasonable accommodation and will in turn lessen the demand of rental property which unscrupulous landlords take advantage of. I don’t agree with Jeremy I think if a government applies CGT correctly it could make a big difference.

    Therefore excess unearned (investment) capital is taken out of the top heap and shuffled to the below heap.

    I don’t think you will ever see a NAT/ACT govt do the above in a million years.

    Like or Dislike: Thumb up 3 Thumb down 1 (+2)

  8. The easiest thing you can do is ring-fence the losses derived in rental property, one of the big drivers for rental property in NZ is not the cashflow rewards from rental income, but using the losses (mainly derived through depreciation) to offset other income. That is the sort of tax planning that some have used to unfairly gain WfF (which is allocated based on net income). Ring-fence the losses. Give credit where credit is due and acknowledge that National getting rid of the ability to claim deprecation is a great policy decision.

    Like or Dislike: Thumb up 2 Thumb down 1 (+1)

  9. My primary concern once again comes down to, how are you going to deal to the inevitable increase in rents? If the returns that people are getting from rental property suddenly decrease, then the returns are going to have to come from somewhere, and you will see tenants being hit by an increase in rents. Even if some people sell their rental properties, you are still going to see an increase in rents (decrease in the supply of rental accommodation), and have the problem of people being forced to move.

    And all for what? Taxation changes have not solved the housing affordability problem overseas, and the sooner we acknowledge it, the sooner we can consider solutions that will actually solve the housing affordability problem.

    Like or Dislike: Thumb up 2 Thumb down 3 (-1)

  10. In fact I do agree, I think it is idealistic to say that there should be a comprehensive capital gains tax. The reality is the people that will be paying for it wont be the landlords, it will be the tenants, and to think otherwise is naive.

    In Sydney, house prices went mad, people literally purchased their neighbours houses up, demolished them, and called them “gardens” so the capital gain wouldn’t be taxable. The reality was that it made housing affordability worse.

    Like or Dislike: Thumb up 2 Thumb down 1 (+1)

  11. You can’t compare a CGT here with a CGT in the USA. The rest of the tax structure AND the lending structure has to bear some resemblance or the comparison breaks down.

    In the USA you can deduct your mortgage interest for the home you live in, and the CGT on the house doesn’t cut in unless you live there less than 5 years, and the banks will loan you money for 30 years at a fixed rate and the mortgage loan interest is usually less than we pay here. Even more interesting, the adjustable rate mortgage interest is always lower than the fixed.

    I haven’t decided which place is weirder in that regard, but the way we offer privilege to the landlord/investor is one part of the reason the house prices go up. If the mortgage interest is not taxed, the price can get out of hand more easily, as other taxpayers are subsidizing the house purchase. If that benefit is handed out unevenly, penalizing as it does here, the person who wants to live in the house, home ownership will be pushed out of reach for the bulk of the population.

    I find the front page of the Dom Post refreshing. Looks like Key and National are going to take a bit of a beating on their package. However, they may “fix” the housing issue to some extent.

    respectfully
    BJ

    Like or Dislike: Thumb up 2 Thumb down 1 (+1)

  12. If I can buy a house from the landlord who finally does not get subsidized in preference to me, I will. That gives me options with respect to maintenance and home improvements. It also takes me out of the rental market. The fact that people will not be landlords will not reduce the supply of houses, but it will alter the ownership dynamic and reduce their prices. Which will put a chunk of people on the path to ownership. It won’t reduce the will to build, but will alter the imperatives that currently dictate half-million dollar and up price tags on the McMansions built on the overpriced sections.

    It isn’t all that needs to be done. The councils and the issues around leaky-homes and the insurance and inspection arrangements… all that remains too, but the heart of the absurdity that is the NZ housing rort will be treated. I don’t think one can be sure what will happen anywhere at all based on foreign experience. Auckland is trouble no matter what is done.

    Everyone wants to live in that one place at any price. Makes for a mess.

    respectfully
    BJ

    Like or Dislike: Thumb up 1 Thumb down 0 (+1)

  13. John-Ston,

    An increase in rent is an issue and we have included in our package a state house and community housing building project to help increase the affordable supply of housing. The other measures also have an impact on income, the tax free band and the extension of the in work tax credit. Even the progressive pricing will help for those on the lowest incomes in the private rental market. Thats the point with this Mind the Gap package – we need a range of measures that deal with inequality from different angles. This package is not comprehensive, but it does attempt to address issues like housing affordability more holistically than is usually done.
    meyt

    Like or Dislike: Thumb up 7 Thumb down 3 (+4)

  14. BJ,

    For the life of me I cant see how the price of housing will come down even with a CGT, no depreciation to claim back and no ability for a PAYE earner to offset rental losses against tax paid through earnings.

    What you are relying on is for PAYE investors to bail out from the rental housing market.

    I dont know how many that is but I would suggest not that many.

    Most have companies or trusts owning the property so are not exposed to the proposed tax changes.

    Just sold one of my properties, Simply sold the company owning the property to another person. No drama, minimum transaction fees, just depreciation to pay back. No CGT on selling companies.

    The depreciation claimed and having to be paid back is judged as income and only the tax component has to be returned to the IRD (about 30% in 2012). Depreciation ALWAYS has had to be paid back anyway.

    So where will the drop in housing values materialise?

    I just foresee increased rents and landlords sitting on their properties.

    Just waiting for the bounce that must happens as new housing units are falling well below the demographically required stock level.

    There is only one way to reduce housing values. Build more stock units. But that trend is downwards so no decrease in house prices until the housing stock levels exceed the demand.

    Like or Dislike: Thumb up 1 Thumb down 2 (-1)

  15. Met, those ideas might help the absolutely poor, but what about those (particularly those who live in Auckland), who are not wealthy enough to afford their own home, but are not poor enough to qualify for government assistance?

    “There is only one way to reduce housing values. Build more stock units. But that trend is downwards so no decrease in house prices until the housing stock levels exceed the demand.”

    Gerrit, that is exactly it – the only way to solve this problem is by building more dwellings; tinkering at the tax system might make everyone feel good, but it will not cause house prices to decrease.

    Like or Dislike: Thumb up 2 Thumb down 2 (0)

  16. Any increase in costs to landlords will be passed on to tenants.

    As has been shown in the West-Island, a capital gains tax exempting family homes actually pushes prices up. So this policy will deny struggling families the option to buy a home.

    If you want to make people better off, you must drive growth which will drive spending, which will drive employment which will drive wages. To do so invest in infrastructure, increase spending (tax cuts), and lower compliance costs (cutting through the red tape imposed by the RMA). Oh wait, we do have a government doing that! :)

    Like or Dislike: Thumb up 4 Thumb down 6 (-2)

  17. @john-ston 9:21 AM

    Of course there will still be people who are not wealthy enough to afford their own home but are not poor enough to qualify for state assistance. The way I read the package, its priority is to help the absolutely poor.

    In that regard, I think the package is fiscally responsible – it is all very well putting up ideas that cost untold billions of dollars and would assist low-middle income earners into home ownership, but the revenue has to come from somewhere.

    I note that elsewhere in Green policy is a proposal to “Limit residential land sales to New Zealand citizens and permanent residents”. That would certainly also have an impact on housing affordability.

    So would the Green proposal to replace part of Working for Families with a Universal Child Benefit, similar to the old Family Benefit, that could be capitalised for a deposit on a first home. I presume the reason that one in not in this package is that, as a measure that would also benefit very wealthy families, it is lower on the Greens’ priority list than measures to assist the poorest New Zealanders.

    Like or Dislike: Thumb up 6 Thumb down 2 (+4)

  18. Your Inequality drive doesn’t quite pass the smell test.
    I think people will accept your inequality message at the upper end but not at the lower end. People like my seamstress friend who struggles on a low wage will be scornful of many of the people who would be deemed as most deserving of a lovely new state house. Only people in the community (like her) can make a call about who is deserving and who isn’t…. (rose coloured spectacles aside).

    Like or Dislike: Thumb up 0 Thumb down 5 (-5)

  19. Why don’t the Greens say 100% tax, and let them reallocate it to everyone evenly?

    Like or Dislike: Thumb up 0 Thumb down 7 (-7)

  20. How about community land trusts to prvent a concentration of property wealth?
    The community land trust (CLT) is an equitable and sustainable model of affordable housing and community development that has slowly spread throughout the United States during the past 30 years.
    http://en.wikipedia.org/wiki/Community_land_trust

    Like or Dislike: Thumb up 0 Thumb down 1 (-1)

  21. Why don’t the Greens say 100% tax, and let them reallocate it to everyone evenly?

    Thats called communism isnt it ?? reminds me of an old saying, “Free men are not equal and Equal men are not free”

    Tough choice to make really, I dont deny that there are people on low incomes struggling to makes ends meet on the most basic things (food and rent).

    But do we drag down the standard of living of those who earn more or those that perhaps went out an worked hard to get rich and make a better life ?

    For society to work we will always need the low income workers to take those jobs that pay less (we cant all be corporate business men).

    Poverty isnt fair, but neither is tall poppy syndrome, surely there is a solution that can benefit all ?, how do we make the country the richer as a whole without penalising those on middle to high incomes ?

    Like or Dislike: Thumb up 0 Thumb down 5 (-5)

  22. This Govt. keeps saying.. “close the gap with Australia” and yet they dont support similar tax policies i.e. Tax-free thresh-hold, No GST on fresh food, Capital gains tax on profits from property sales… etc

    I agree with Ms Turei.. they are intent on looking after the rich & adding that burden to the rest of us !
    Kia-ora

    Like or Dislike: Thumb up 4 Thumb down 1 (+3)

  23. equality is not just about how much money is in the bank (in my case $22 LOL)

    How about turning around the economy and Apartheid system with regard to the hundreds of thousands of third class citizens who consume cananbis, and are being exploited and alienated through the criminal injustice system and general social discrimination?

    tax weed and lift the underclass out of their alienation, instead of building prisons and propping up jobs in police courts and corrections. redistribute wealth by fixing the great social disaster prohibiton has become…

    arent you missing something Meteria, from your holistic view of society and what ‘equality’ really means?

    regards
    Kevin O’Connell president ALCP 027 265 7064

    Like or Dislike: Thumb up 3 Thumb down 1 (+2)

  24. The “Mind the Gap” document is in many ways quite impressive as a short-term programme.

    It also raises a whole number of interesting questions, most significantly: is the Green Party committed to reversing the expected rise in GST? This is a crucial issue in the issue of inequality, and I hope I’m wrong but I got the impression from reading this alternative budget that the Greens aren’t factoring in a reverse in the GST rise. For example, the document says: ‘assuming GST is increased to 15 percent and stays there’. What’s that about?!! I know that the Greens – like Labour – are critical of the expected rise in GST, but this means nothing if you don’t actually advocate a return to 12.5% and then factor in the cost of that. I can’t see where the reverse is factored into the Mind the Gap plan. Please tell me I’m wrong! Surely the Greens can’t be just as disingenuous as Labour about raising GST?

    Like or Dislike: Thumb up 2 Thumb down 1 (+1)

  25. Don’t worry Heylin it’s not a value that I hold, but I was suggesting that perhaps the greens should adopt it as it would alleviate inequality for good…

    Though, it’s not fair is it, that someone that has spent their life, going through university, becoming a Doctor, spending countless hours stressing about how they can give someone a new lease on life, and increasing their wellbeing, It isn’t fair that they would earn the exact same as someone that dropped out of school and never did anything to better themselves.

    The “rich” i.e. the top 10% of income earners already pay an effective 76% of the income tax in New Zealand. Clearly it is not an effective solution to target them and get the government to hand out in order to get equality. What is needed, to get people ahead, is opportunities. That means growth, more business, more employment, and then they can command higher wages. Give them the tools through education and health, and let them reach their potential.

    Metiria’s capital gains tax idea will have the opposite effect because it was conceived by someone with an ideal vision, the problem is that in realty rents will go up to compensate, and exempting family homes (as is demonstrated in Sydney) will increase house prices. Those that are worse off will have to either pay more rent, or higher mortgage.

    Like or Dislike: Thumb up 5 Thumb down 6 (-1)

  26. @Bryce 12:47 PM

    A potential problem with winding back the GST increase is that it won’t necessarily see prices drop. Take the supermarket duopoly, for example. I’m sure both Foodstuffs and Progressive would just quietly keep charging the same prices and rake off a tidy increase in their profit margins. With no effective competition and no price control mechanism there is nothing to stop them.

    Like or Dislike: Thumb up 5 Thumb down 4 (+1)

  27. Rimu,

    Indeed. However, until the duopoly is busted, it matters not.

    Like or Dislike: Thumb up 2 Thumb down 1 (+1)

  28. tax cannabis, drop GST to 10%

    police courts corrections get real jobs and you tax goes into health not alienation and exploitation.

    Help us fix this Greens. Please stop ignoring the smoking issue and hypocrisy and inequity surrounding alcohol tobacco and cannabis etc.

    Like or Dislike: Thumb up 2 Thumb down 1 (+1)

  29. Or tax cannabis, keep GST where it is, and increase investment.

    Like or Dislike: Thumb up 1 Thumb down 1 (0)

  30. “I note that elsewhere in Green policy is a proposal to “Limit residential land sales to New Zealand citizens and permanent residents”. That would certainly also have an impact on housing affordability.”

    Would it though? If we look at the real estate that foreigners own in New Zealand, the majority of it are things like farms and high value residential property (you know, the multi-million dollar mansions). You don’t find that many foreigners who own average rental properties in New Zealand, and those that do are more likely to be New Zealanders who have moved overseas.

    Is there an example of such a policy having the desired effect in an overseas country?

    “Of course there will still be people who are not wealthy enough to afford their own home but are not poor enough to qualify for state assistance. The way I read the package, its priority is to help the absolutely poor.”

    You might be helping the poor, but you are kicking the middle class in the guts. In Auckland, the average household income is simply not sufficient to purchase a house any more – for instance, to be able to afford a median dwelling, you need a household income of well over $100,000. The median household in Auckland could only afford a house worth about $270,000 – and those houses are few and far between.

    “So would the Green proposal to replace part of Working for Families with a Universal Child Benefit, similar to the old Family Benefit, that could be capitalised for a deposit on a first home. I presume the reason that one in not in this package is that, as a measure that would also benefit very wealthy families, it is lower on the Greens’ priority list than measures to assist the poorest New Zealanders.”

    Such a scheme might deal with the deposit hurdle, but it would not deal with the reality that houses in Auckland cost far too much for the average household these days. Until you can get the median house price down to somewhere around the $300,000 mark, none of your other proposals will fix the problem.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  31. Good to hear Russel in parliament addressing this topic on taxing NZers and how unfair it is. Imagine Key telling us not to hate the rich for all the taxes they do not pay- grossly unfair to the max! Eat the rich I say. Maybe he would make good tucker after all.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  32. We mustn’t be envious Dianne.
    Grateful is how we should feel, grateful.
    Isn’t that great?
    Our does that grate?

    Like or Dislike: Thumb up 3 Thumb down 0 (+3)

  33. Interesting to see that Kevin Hague puts property into a loss-attributing qualifying company and uses the losses (gained through depreciation) to off-set his other income.

    Like or Dislike: Thumb up 4 Thumb down 3 (+1)

  34. I’m really quite sick of the drive for equality. Humans come in great variety and should not have to feel guilty for aiming high and making an effort to better themselves.

    Is this tall poppy syndrome the reason why Maori never even so much as made a pottery plate in the 1000 years they were here?

    Education, effort and advancement are what we should be aiming for – not tearing down the achievements of others.

    This culture of hatred and jealousy is spawning a generation of wanters instead of motivated people who aspire to better things based on their own efforts.

    As long as there is a tax system to redistribute cash to the sick and old we should not panic about the relative wealth of the rest of our citizens

    Like or Dislike: Thumb up 0 Thumb down 4 (-4)

  35. I’m really quite sick of the drive for equality.

    There’s hardly a societal indicator you can mention that is not better in countries with more equal incomes than in those that are less equal like the US, UK and NZ. What you’re sick of or not doesn’t come into it.

    Like or Dislike: Thumb up 3 Thumb down 0 (+3)

  36. And what “drive” is there to be sick of anyway. We’ve been increasing inequality for the last 25 years, so you should be plenty happy.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  37. Greengeek,

    It must have been tall poppy syndrome which prevented the European sea farers from traveling the same distances the Polynesians did until half way through the second millennium (thousands of years after the Polynesians had achieved similar feats). Just goes to show the Europeans were a backward lot incapable of any meaningful achievements.

    Like or Dislike: Thumb up 2 Thumb down 0 (+2)

  38. Just goes to show the Europeans were a backward lot incapable of any meaningful achievements.
    .
    Yet you are suggesting we follow them now.

    Ha!

    Like or Dislike: Thumb up 0 Thumb down 2 (-2)

  39. Just goes to show the Europeans were a backward lot incapable of any meaningful achievements.

    My Viking ancestors would disagree with the fact that the Europeans did not cover the vast oceans (in much colder conditions by the way) in times past. Not just oceans but the vast Russian river systems to establish trading routes.

    You also forget about the ancient Celts that manage to pop up all over the place.

    Mind you the other Europeans may have been busy creating writing, reading and arithematical skills. Including navigational maps so they knew where they were going the second time around. Did the polynesians ever get around to thinking about the advantage of the wheel?

    This racial comparison is pretty purile.

    But still which racial group kept boat building developments going to todays modern ships.

    Did the polynesian ever built a better Waka (vaka)? Without access to iron and later steel it is probably a mute point.

    Having had a minor (very minor) input into the building of the vakas

    http://www.stuff.co.nz/auckland/local-news/north-shore-times/3572596/Vaka-sail-away

    I’m proud to have seen the spirit of the ancient polynesian mariner still alive in some people.

    Wonder what happened to that spirit with settled polenesian Maori tribes here in South Auckland.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  40. Gerrit wins!

    “This racial comparison is pretty purile. But still…”

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  41. Rakiura Maori harvesting muttonbirds fabricated containers from kelp, inflated, deflated transported flat to the titi islands re-inflated and filled with cooked birds preserved in their own fat. The kelp bags were wrapped in totara bark then bound with flax to create a strong vessel that could be transported back home safely and could keep their contents safe for up to 6 years.
    Not bad use of technology. The real beauty is that everything was able to be reabsorbed into the soil once it was redundant. The materials cost nothing, were renewable, locally produced, socially binding, etc…
    Can you beat that technology Gerrit?
    Seems as perfect as it gets.

    Like or Dislike: Thumb up 3 Thumb down 0 (+3)

  42. Greenfly,

    Nah, muttonbirds are like the rotten corn “delicacy”, why bother.

    Like or Dislike: Thumb up 0 Thumb down 1 (-1)

  43. Gerrit,

    You wrote “This racial comparison is pretty p[e]urile.” That’s exactly the point I was making (replying with a silly comment about the European’s lack of sea faring skills after Greengeek made some equally silly comment about pottery).

    There is a guy called Jared Diamond ( http://en.wikipedia.org/wiki/Jared_Diamond ) who has some pretty interesting hypotheses about why the Europeans eventually developed a higher level of technology than people from other places, and then colonised much of the world. He wrote a book and made a TV series called “Guns, Germs and Steel” which describes this; you might find it interesting (definitely much more interesting that the racist arguments Greengeek et al. put forward).

    Like or Dislike: Thumb up 1 Thumb down 0 (+1)

  44. I’m really quite sick of the drive for equality. Humans come in great variety and should not have to feel guilty for aiming high and making an effort to better themselves.

    You are making a joke right?

    BJ

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  45. This issue is the great failing of left wing thought. It’s like a morally justifiable tall poppy syndrome, which being NZ is exactly what it is.
    Polynesians were not better explorers than their European counterparts, their achievements were admirable but they were not comparable.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  46. “As long as there is a tax system to redistribute cash to the sick and old we should not panic about the relative wealth of the rest of our citizens”
    Greengeek-When tax systems grossly favour one section of society compared to another there should be concern. It has been revealed that those in the highest tax bracket will be around $250 dollars better off per week and those on the lowest will be $15 better off, where’s the fairness?

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  47. Shunda – can you define ‘better explorers’ for us?
    ‘Comparable’ means able to be compared – are you sure that’s what you mean to say?
    European explorers surely adopted technologies and strategies from each other and from other cultures (the Chinese for example) as part of their climb to the their ‘mastery of the seas’. Maori did the same thing, absorbing the methods and machineries of Europeans. Do you think that Maori, some of whom owned very sophisticated ships and sailed them in a sophisticated manner soon after ‘contact’, were any different from Europeans? In other words, Maori have now achieved exactly the same level as Europeans where it comes to seafaring.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  48. Gerrit – muttonbirds are not like kanga pirau – rotten corn – at all. You have no idea (it seems) of the titi economy in the south, past and present.
    Regardless, you’ve not commented sensibly about the sophisticated packaging technologies that I offered. Those made present technologies look primative.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  49. Gerrit – muttonbirds are not like kanga pirau – rotten corn – at all. You have no idea (it seems) of the titi economy in the south, past and present.
    .
    Greenfly, a guy I know was down there recently getting mutton birds, were you there too? How many people are allowed to get them?

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  50. Not this year Shunda, but I’ve been down. Not sure of the total number of birders across the islands this year – it fluctuates anyway, depending on various factors. This year, the birds are plump and numerous. Last year they were scrawny.
    No one, it seems, is willing to challenge me over the high-tech nature of poha titi.

    http://maoriartauction.files.wordpress.com/2007/06/poha.jpg

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  51. No one, it seems, is willing to challenge me over the high-tech nature of poha titi.
    .
    I agree with you greenfly, a very impressive piece of food gathering ‘kit’.
    And this is where we should give credit where credit is due.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  52. Shunda,

    Its hard to compare, but one could make a reasonable argument that until about the 1500s the Polynesians were better sea farers and navigators than the Europeans. Most of the Pacific Islands were settled thousands of years ago, at a time when the best the Europeans were doing was sailing within the Mediterranean.

    In any case, arguing who was better at this or that misses the main point. It was factors such as geography, climate and availability of natural resources which determined which people developed which technologies, not some racial or ethnic characteristic as Greengeek implied.

    Like or Dislike: Thumb up 1 Thumb down 0 (+1)

  53. Yes samiuela I can see your point now.
    It would have been interesting to see the look on the faces of the crew of the Endeavour when an islander shot past their bow at 20 knots on a multihull!!

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  54. Samiuela – there is nothing racist about my comments. I value the difference between races, and between cultures.

    I despise those who would attempt to make everyone the same.

    I think it is appalling that so many people keep trying to tear down successful achievers and high income earners.

    There seem to be many who are content to do just the minimum they have to, and don’t reach out for advancement. They seem to lack any kind of curiosity or hunger for knowledge. I see historic Maori in that way. Whether it is racial or cultural I have no idea.

    They are welcome to live how they choose but I see no reason to allow that attitude to impose stultifying attitudes on others.

    Vive la difference.

    Like or Dislike: Thumb up 0 Thumb down 3 (-3)

  55. “There seem to be many who are content to do just the minimum they have to..”
    Greengeek – those people are as you say, content – surely a state we all aspire to. They are also demanding the minimum from the world, again an admirable characteristic. Perhaps if all of us adopted that world view, settled for less, ceased our clamour for more, demanded less from the physical world, accepted a balanced state where there was no longer a ceaseless fight to ‘better’ ourselves, we’d all be assured of a future that wasn’t bleak, wrung out, exhausted and over-exploited. Perhaps ‘historic Maori’ were wiser than you realise!

    Like or Dislike: Thumb up 2 Thumb down 0 (+2)

  56. He’s hallucinating or something, fly. Do you recognise the country he’s described?

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  57. Perhaps if all of us adopted that world view, settled for less, ceased our clamour for more, demanded less from the physical world, accepted a balanced state where there was no longer a ceaseless fight to ‘better’ ourselves…

    That worked out well for the Maori, didn’t it? Invaded, colonised, culturally emasculated. If that’s ‘wisdom’, then wisdom is clearly not adaptive.

    Like or Dislike: Thumb up 2 Thumb down 0 (+2)

  58. Nil – and yet that doesn’t accurately describe Maori, except perhaps in Greengeek’s eyes.
    I believe there is wisdom in demanding less from the physical world, quieting the ceaseless clamour for more and so on.
    You don’t?

    Like or Dislike: Thumb up 2 Thumb down 0 (+2)

  59. Greengeek,

    The Europeans did not achieve the technology and power they have today because they were the only ones with curiosity and a hunger for knowledge. To start with, many of the things which you probably admire did not come from Europe … where do you think a lot of our maths came from? (Answer: the Arabs). Where was gunpowder invented? (Answer: China). The list of notable non-European achievements is extremely long (as is the list of European achievements).

    The Europeans achieved a lot of their current technology and power through plain good luck; the geography and climate of the places their ancestors lived was kind to them and they had a larger range of crops and domestic animals than people living in other places.

    Your comments about Maori illustrate your own lack of knowledge, if nothing else. Why on earth do you believe historic Maori lacked curiosity or hunger for knowledge? Your only attempt to back this claim up is by noting they didn’t have pottery! For crying out loud, what sort of argument is this! (By the way, you might want to find out about Lapita pottery, and then find out who the Lapita people’s descendants are believed to be).

    Like or Dislike: Thumb up 1 Thumb down 0 (+1)

  60. Shunda barunda

    It would have been interesting to see the look on the faces of the crew of the Endeavour when an islander shot past their bow at 20 knots on a multihull!!

    The look would be of bemusement.

    Whule on a single point of sailing (broad reach) the vaka can reach a decent speed, 20 knots is not. Sail area is just not big enough.

    Add to the fact that the is by a single sweep oar (manned by a single person), the likelyhood of a wipeout (chinese gybe) is not just a chance, it will be certainty.

    I would say the sailors on Endaouvour would be most amused and having a good chuckle!!

    One has nothing but admiration for those early polynesian sailors when one considers the steerage challange faced with the single sweep oar, espacially in rough seas.

    Form the vaka steering system see here

    http://www.youtube.com/watch?v=UWAMZE_KS98

    And notice the marriage of old and new, using solar power to drive a vaka. Brilliant concept.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  61. Samiuela – you have hit the nail on the head. Note that you mentioned Europeans. I didn’t.

    I am not Euro-centric. Many “races” have a legacy of curiosity and development.

    These characteristics generate inequality.

    The task for us is to accept those inequalities and still find ways to move society forward.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  62. Greenfly – I agree with your comments. There can be a great deal of merit in living beachside in harmony with nature. Enjoying the kai moana and natures other bounty.

    However, given that it is human nature for other people (perhaps even other “races”) to live differently, and to push the boundaries, then what exactly are we saying; that only certain humans have the right to live and we should tear down those with active minds and a technological curiosity??

    Are we saying that all humans should have that “beachside” mentality? I actually think this is at the heart of New Zealands “clash of the cultures”.

    How can anyone live in harmony with nature while we have a taxation system that expects productive work from other people?

    Half our people are stuck propping up our financial system while the others are draining it.

    Only Maori have somewhere they can go and live without paying rates (the marae) whereas a white man wanting to live that way has no chance.

    Wouldn’t it be fairer for all people to live on equal terms?

    Note “Nil”s response: the rest of the world came to visit and NZ hasn’t been the same since.

    Is it possible to move forward while many still hope to live the lifestyle of the past?

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  63. Greengeek,

    Can you explain why curiosity and thirst for knowledge generate inequality?

    I reckon a much better explanation for inequality between different societies is that some societies had the good fortune to have resources, good location and climate which others didn’t. Thats basically the hypothesis that Jared Diamond put forward in hos book “Guns, Germs and Steel”.

    Within society there are a whole raft of factors which lead to inequality. For example, children born to wealthy parents automatically have a head start; even if they squander their inheritance they are likely to be better off than most children born in poor families. People like to talk about children having equal opportunities, but its a nasty fact that in our society money buys opportunities for ones children. This is getting worse, not better. With government funding cuts to services such as education, wealthy parents will literally be able to buy their children a better education than parents and children reliant upon state education.

    Like or Dislike: Thumb up 1 Thumb down 0 (+1)

  64. I agree there are many sources of inequality. But is it realistic to attempt to overcome those inequalities by stigmatising the wealthy? What exactly would you have to do to society to take good opportunities away from those who had them?

    How would those people feel as a result?

    Tearing down the opportunities and wealth of hard working achievers ultimately destroys society and in my view leads to violence and fascism as those people seek to defend themselves against the “theft” of what they consider to be their rightful gains.

    I think instead of focusing on negative emotions toward achievers we should force our government to boost opportunities amongst the poor.

    In my view the primary weapon should be to take away the need for poor to fund other peoples mortgages, and instead help them reap the rewards of their own efforts. Let me offer an example of how it can be done:

    I believe every young person should be given an assisted opportunity to selfbuild a Portacom style hut (complete with a toilet, shower and basin) and space should be found where small villages of such accomodation can be situated.

    The building of this portacom could take place as part of military service/training, or else under the auspices of an tertiary institution like Unitec, or as part of a marae initiative etc etc.

    The Portacom would become assigned to (or owned by) that individual. (even if they later did time in prison for a crime – it would be available to house them after they left prison)

    This way, the person concerned can put their money toward their OWN future instead of funding someone elses “investment” mortgage. This would be a huge move toward breaking the back of poverty.

    A young couple could live like this while saving for their first home.

    A young man could ship his Portacom to wherever he could find work (fruitpicking or mining – whatever), or wherever he decided to live.

    I am glad John Key has taken steps to discourage “investors” funding their retirement incomes by snapping up rental homes. It is obscene that first home buyers should have the market skewed against them in this way.

    I have no gripe against people having millions of dollars at their disposal. However I do object to them being able to deprive young people of the right to live somewhere cheaply.

    Once better opportunities exist for people to live CHEAPLY they will have much better opportunities to enjoy life, REGARDLESS OF HOW WEALTHY THE REST OF THE PLANET IS !!

    It is not inequality that is the problem. It is simply specific resources or opportunities that are missing.

    1000 years ago a family could simply up anchor and go live next to a beach somewhere and not worry about the land having been assigned under “private property rights”

    If we could just get back to the idea of accepting families living dirt cheap off the land in a hut somewhere (like our ancestors and pioneers did) we would take the load off poor families.

    It is government policy forcing people to live in fancy 3 bedroom homes that is depriving us of the chance to get ahead.

    It is NOT the wealth of others that is our stumbling block.

    Like or Dislike: Thumb up 1 Thumb down 2 (-1)

  65. jh – your suggestion of ideas like the CLT is a perfect example of the best way forward.

    It doesn’t stigmatise the wealthy, or act to concentrate wealth to the disadvantage of the poor.

    Like or Dislike: Thumb up 1 Thumb down 0 (+1)

  66. And returning to Mind The Gap children… The package makes sense across the board. Rising inequity is harmful for ALL of us if folk but would look at the results on the quality of life, if not life expectancy itself. Reducing inequality means addressing at very least the causes/impacts for those at the bottom. Like the first $10K tax free. Like housing policy. Like the differential electricity pricing.
    A CGT on residental property used for renting (whether owned by the individual, a compacy or a trust) can clearly make it less profitable for the tax-paying unit. So to can preventing the use of depreciation or using tax losses to reduce overall tax liabilities. Would this lead to increased rents? Perhaps so, but one way out of this ‘problem’ is for the state to buy these ‘tax-payers’ out and the state to rent at 25% of the tenants income on a rent-to-buy scheme. That way the middle income earning renters would get thier chance to buy their own homes.
    Certainly addressing income inequality would mean many on middle incomes would be able to become home-owners rather than renters and we might get back to the same percentage of home-owners that we had in the 1970s.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  67. inequality is about discrimination. I dont think the green party and frogblog quantifying the vast discriminaltion, stigmatisation and branding factor in our drug laws (and the economic implications).

    When i said frog, ‘please stop ignoring this issue’, i meant in the context of this discussion about equality, noting ‘decriminalisation’ is not on Meteria’s hot-list of actions (even though cannabis law reform is a well-know flagship policy of the greens…go figure…)

    Like or Dislike: Thumb up 0 Thumb down 1 (-1)

  68. Umm. ‘Mind The Gap’is a series of measures to tackle socio-economic inequality. Cannabis law reform, while undoubtedly a significant policy of ours that would arguably have some effect on mitigating the effects of socio-economic inequality, is not in the same league as the measures we have highlighted. Not everything is about Cannabis.

    Like or Dislike: Thumb up 2 Thumb down 0 (+2)

  69. Further your and Kevin Hague’s comments, Kevin OConnell, I have posted several times on frogblog this year advocating drug law reform – pointing out the hypocrisy of a system that rewards booze barons but criminalises cannabis users, condemning Simon Power for his dismissal of the Law Commission’s interim report on drug law reform, and encouraging frogblog readers to make submissions in support of reform, to highlight just three.

    Like or Dislike: Thumb up 3 Thumb down 0 (+3)

  70. greengeek

    I do not think many of us are “stigmatising the wealthy”. Perhaps I missed something, but I for one do not.
    But I object to the casual way that you associate “wealthy” and “high achiever”. There are many high achievers who are poor as church mice and plenty (less) idle rich who never achieved a thing, other than choosing the correct parents. There are many more high income individuals who had the good fortune to be born into a family that expected and supported them to join the professions where the real money is. Not non-achievers but no more a “high achiever” than my cousin who has worked all his life and has very little to show for it.

    It is no pleasure to be rich in a society where there is avoidable poverty. If there exists such a thing as conscience.

    It is no sin to be rich.
    It is a sin to be poor.
    That is the sin of the rich.

    peace
    W

    Like or Dislike: Thumb up 3 Thumb down 1 (+2)

  71. Looks like we’ve got the right on the defensive on this one.

    Over at Kiwiblog David Farrar is trying to argue (not very well) that inequality doesn’t matter and that it is opportunity for social mobility that counts.

    He’s even suggesting 19 year olds earning $10 an hour would be a good idea, as long as they have the opportunity to earn $25 an hour by the time they are 30!

    Like or Dislike: Thumb up 2 Thumb down 1 (+1)

  72. Of course, among the “most diserving” (I think NOT) bludgers off the state are those earning six figure salaries but then having tax loss making Trusts and companies meaning they pay no taxes but they still use our roads and tax-funded private schools…. too say nothing of their WfF and use of community services card. Such is the machinations of the law and deserving poor, because to access this state support they have to be poor….DON”T THEY…. to say nothing of being deserving.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  73. Your inequality campaign seems to conflict with the “welfarism” meme, but that argument comes well supported:

    “The relationship [between single-parent families and crime] is so strong that controlling for family configuration erases the relationship between race and crime and between low income and crime. This conclusion shows up time and again in the literature. The nation’s mayors, as well as police officers, social workers, probation officers, and court officials, consistently point to family break up as the most important source of rising rates of crime.(6) ”
    http://www.cato.org/testimony/ct-wc67.html

    Like or Dislike: Thumb up 0 Thumb down 2 (-2)

  74. Here is an interesting fact-let in relation to JH’s post.

    A friend of mine whom has been on welfare for a rather long time, and has never held a job for any length of time without quitting or being fired, has just (2.5 months ago) decided that she felt she was in the right place to have a child. She is now two months pregnant and still on the dole. That ‘right place’; ‘dole’.

    Like or Dislike: Thumb up 2 Thumb down 0 (+2)

  75. One cause of growing inequality (in the western world over the last 30 years) is the impact of the adoption of monetary policy as a more important economic tool. It necessarily involves deliberately maintaining a pool of unemployed – even at the peak of the economic cycle – so of course unemployment can get to high levels in any downturn.

    Then some governments advocate

    1. reducing the cost of welfare to manage the budget deficit in that downturn
    2. a lower minimum wage (falling in real terms against inflation) during periods of higher unemployment – and the longer these go on the greater the working family poverty (creating pressure for government subsidy of the incomes of families).

    Like or Dislike: Thumb up 1 Thumb down 0 (+1)

  76. SPC,

    A friend not as close as she once was.
    One could say she was on the peripheral of our little group.

    Contact with her is, now, occasional. At one point we had not made contact for about a year and a half to two years and when we did I found she had been doing some under-the-table prostitution for extra gadgets. A bit of a sex addict she was; brilliant body but a bit of a “bag over the face” girl. One of my more interesting case studies.

    I am still deciding if congratulations are in order. She has never been a responsible one, though that seems to be changing; at least as far as one can consider refrain from alcohol and weed a change. This one has always been one of those “the state owes me this money” people. Was brought up in a state house and adopted the philosophy whole-heartedly; gotten through most of the time since she was 15 by hooking up with guys. I supose that, at least now, they are closer to her age.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  77. Bliss – you say that you yourself don’t stigmatise the rich, yet the poem at the end of your post suggests the opposite.

    Is it right to blame the rich for the fact we have poor people?

    Shouldn’t we instead castigate governments for failing to make available low cost housing estates?

    If we can just make some progress on allocating areas where individuals and families can live cheaply in trailer parks and the like then we will truly be helping people to get ahead. It is not the fault of the wealthy.

    Like or Dislike: Thumb up 0 Thumb down 1 (-1)

  78. Greengeek

    I see you are still defending the indefensible.

    The truth is that the game is rigged. It has been since the 1920′s but the nature of the WAY it is rigged leaves a lot of people ignorant of the bias.

    People who are highly educated and productive can conceivably add value to the economy even at high rates of remuneration. A hundred thousand, maybe even 3. Five – to – nine times the average wage.

    More than that and the result demands not respect but criminal investigation and understanding that is where the understanding of the unequal playing field begins.

    TANSTAAFL applies.

    The problem is that we’ve GOT a fractional-reserve, fiat monetary system in which the money supply is dictated by bankers, not governments. This gave the bankers control of the money, which in time gave them control of governments. The laws were altered. They do as they please, we tax peons bail them out when they scr3w up and in the end the Jefferson quotation becomes true.

    Now can you examine who has the money, who OWNS stuff and how they have succeeded where the rest of us have lost our life’s savings in their various schemes, and examine who is on the hook for paying back the vast amounts they have caused to be borrowed, and tell me with a straight face how honest the system is?

    I don’t think you can. Not really. Which is why I don’t cavil at the notion of a progressive tax that claws back some substantial amount of their gains. A 50+% tax rate that kicks in at over 8 or 9 times the average wage is perfectly reasonable to me as a result.

    Right now, they get to pay exactly the same on their 800K or 8M as I do on 80K. That is NOT anything like reasonable IMHO. Not when we are still running a big g*%dammed! deficit. Which my kids will inherit.

    BJ

    Like or Dislike: Thumb up 2 Thumb down 0 (+2)

  79. BJ – what is indefensible? You say you are on 80k, which is almost twice my income.

    Should I hate you for that?

    Should I demand you give me some of your wealth?

    If your earnings are honestly gotten I have no claim on them.

    I don’t like the smell of jealousy that permeates a lot of these posts.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  80. GG –

    I made it entirely clear that I regard that there is no way to legitimately make more than 8 times your income. That isn’t jealousy, it is an observation of thermodynamics… TANSTAAFL. It is impossible for a single human’s work, however talented he or she may be, to usefully augment the production of humanity by that sort of factor on a continuous basis.

    I chose 80k because it started with 8, not because that is what I am making today. I, unlike the people making 10 times what I make, actually pay the 39%. That’s a choice, as much as anything, in a game which is rigged to benefit people who take advantage of wholly bullsh!t rules that they have created for themselves. I choose not to do so.

    I am p!ssed to the max by the way some people think that they are entitled to things that they have NOT earned… not people who are poorer than me, but people who are an order of magnitude and more wealthier. Who demand lower taxes and whose accountants and parliamentarians ensure that they pay lower taxes than I do, while the country goes deeper into debt.
    What can the most productive guy in a company possibly earn compared with the average worker in the company or in the society as a whole? What multiple should that person be paid? I just specified 5x-8x

    Fortunately, here in NZ the average CEO pay is on average right in the neighborhood of what I specified. So not a lot needs to be done with pay.. (though the negative examples make the headlines) but most of these guys are paying 33% or less. They get alternative compensations. All legal… as noted above, they make the rules and they own the bat and ball. That’s also a place where taxes want reform.

    So some of my wealth already goes to others at that 39% tax rate, which is actually higher than the average wealthy guy’s, but I don’t own property here in NZ.

    If I were going to be taxed 60% on every dollar I made over 150k and someone offered me a 220k salary (unlikely as that seems) I’d take it of course and I wouldn’t reckon it unfair that 60 cents of every dollar I was earning was going to other people. The notion that this is evil is a measure of how distorted things have become in the marketplace of ideas and ideals.

    Actually examining the concept of “fair” is necessary. You reckon that whatever someone gets, they should keep. You don’t account for the manner of the “getting” well. As long as they didn’t use force directly, or they managed to spread the theft over so many victims that nobody really noticed… it’s all good.

    That story often told about raffling off the dead horse and giving the winner back the money on the ticket… do you understand the fraud? This is clever capitalism in action, and where was the criminal behavior? That’s what has been going on in businesses and banks at the behest of the moneyed classes for at least 3 decades.

    Used to be people were a lot more honest… now we call honest people suckers. I’ve been called that for refusing to use a trust and an LAQC to shelter my income.

    No mate, I want justice, fairness in that the bloke on 10 times my salary doesn’t escape tax, a reasonable shot for every single kid who is starting life and I know why those things aren’t available. Jealousy of what some other guy can do? Not possible. I can do more than most people and I am happy to find a peer as I am quite over-committed as a resource. Jealousy of what some other person earns? Wrong again, as I earn quite enough to get by on. Jealous of their tax advantages. No… that isn’t the right word at all. I do not want those advantages for myself. I want there to be none.

    You can swallow the libertarian, laissez-fair capitalism pap and believe it if you like. It is indefensible. You’ll probably never let go of the notion that I’m jealous but my anger comes from a more primal desire for justice. I’m from New York… someone picks my pocket, I notice. Doesn’t matter if the man smiles… I watch his hands.

    You’d do well to notice that the stimulation you and your economy are getting, isn’t from having MONEY in your pockets.

    BJ

    Like or Dislike: Thumb up 4 Thumb down 0 (+4)

  81. The problem with a comprehensive CGT (as assessed by Treasury) is that it does not necessarily raise money in the short term and nor is the revenue flow easy to forecast.

    There are ways to make the income flow both immediate and more predictable.

    My preference is to place a 1% annual land tax on rental property and farmland in lieu of a CGT liability.

    For example property and land would be valued at the year in which the CGT began for liability on the capital gain – but losses would only occur if the property was sold for less than the original cost (adjusted for inflation IF the same was done for interest income). If there was no CGT liability the land tax paid would stand. If there was a CGT liability, then prior land tax payments would be deducted before the balance was payable (if the land tax was paid was greater than the total CGT liability, then the land tax paid would stand). This is slightly one-sided (in the interests of the government) but is fair when one considers the untaxed CG that most asset holders have already made and which would be exempt from any CGT.

    The same system would not apply to shares – as there is on-going tax on dividends each year.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  82. BJ,

    Have been thinking about the inequality issue from a different perspective lately.

    And that is that we have reached PEAK WEALTH in the world. Much like peak oil, peak wealth creates the inequalities.

    A small band of people have the power (either of capitalist, socialist or communist persuation) to control the wealth that is available.

    So how then to bridge the inequality gap.

    You cant because the measure of inequality is fiscal and based on a collapsing monetary system fuelled not buy growth but by debt.

    The future is based on a new system measured by how frugally you as an individual and collectively as a tribe one can manage the resources available after the existing monetary system has collapsed.

    Inequality will be measured by what resources (land, knowledge, endeavour, will power, desire, etc.) the individual and tribe have a their disposal.

    Like or Dislike: Thumb up 2 Thumb down 1 (+1)

  83. Gerrit! that IS an interesting thought. Thank you for dropping that bomb into my thought process!

    respectfully
    BJ

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  84. In the meantime, while awaiting the collapse, we can choose to be a more equal society if we wish, and enjoy the clear benefits that other countries show go along with that.

    Like or Dislike: Thumb up 1 Thumb down 0 (+1)

  85. BJ,

    No growth, no corresponding increases in wealth. Simple really.

    No increases in wealth, only thinner slices of the wealth cake are available for an increasing not contributing population (in New Zealand around 30 to 40%).

    It simply is not sustainable and yes Valis you can cut increasingly thinner and equal slices but at some point the slices will be unsustainable for BOTH the contributing (tradeable – tax payer sector) and nontradeable – state employee and benificiaries) sectors.

    We create artificial wealth by printing money hoping that the “loans” will be paid back by our childrens childrens children and that we can carry on slicing the wealth cake forever.

    This tertiary economy is the one that will collapse.

    As you know, I have been a long time reader of the ArchDruid report and his insights are pretty clear where the problems lie, the resultant reaction and future configuration of human population societies.

    http://thearchdruidreport.blogspot.com/

    I leave with this thought from the ArchDruid report

    That latter, of course, is the central point of this example. At a time when the tertiary economy is undergoing the first stages of an uncontrolled and challenging simplification, if you can disconnect something you need from the tertiary economy, you’ve insulated a part of your life from at least some of the impacts of the chaotic resolution of the mismatch between limitless paper wealth and the limited real wealth available to our species on this very finite planet. What garlic is to vampires and a well-fueled chainsaw is to zombies, being able to do things yourself, with the skills and resources you have on hand, is to the undead money lurching en masse through today’s economy; next week, we’ll replace the garlic with a mallet and a stake.

    Note the most significant words

    ……..chaotic resolution of the mismatch between limitless paper wealth and the limited real wealth available to our species on this very finite planet………

    Like or Dislike: Thumb up 2 Thumb down 1 (+1)

  86. If real wealth in the end becomes control over the land, the rivers and sea, and I suspect it is, then we need to control its ownership so that when the paper wealth system fails all those around have access to the creative qualities of the land, rivers, sea.
    In that way when cash cropping in NZ fails, such as dairy or revenue from overseas tourists, we have the range of foods growing and being distributed to sustain us all. We also ned to be able to stop the previously paper wealthy from continuing the type of land control that existed in pre-industrial times. Not sure when the collapse will occur, but my neighbours and I have a little community garden…. so we are some of the way there, and not having a motor car means I care not too many whits what happens when fuel prices means thousands learn legs are made for walking, faces for smiling, and other such riches become common place…

    Like or Dislike: Thumb up 1 Thumb down 0 (+1)

  87. Problem is Graham,

    The very control of ownership becomes an issue as central government (unable to function due to no taxation funding) will not ba able to assert control or power.

    Your “ownership” is no certainty.

    Nor is “ownership” on a national level, centralised power and control have no resources to command “ownership”.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  88. So one of my on-going dilemmas is that, if peak wealth etc is a reality, then maybe we (NZ) should be borrowing even more insane amounts than we already are from overseas. Rack it up, baby!
    Then just go “whoopsie” and default.
    The system is cooked anyway so why not just make a meal of it?
    But that offends my sense of sustainability. Then who gives a rat’s about sustainability in the modern world? Precious few it would seem.
    If the system is going to collapse then it would seem to me that a population of 4.? million on an island(s) at the far corner of the world, makes us about the richest people around. Those slices of cake could/should be nice and fat.

    Like or Dislike: Thumb up 2 Thumb down 0 (+2)

  89. Samiam,

    It depends on who controls society at that point in time. The parliamentary system of democracy may well have broken down due to lack of funding.

    The “we” may well become many many different layers of “us”. With no homogonised central government at all.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  90. And if the authority of the centralised state collapses perhaps my ability as a kid (very small, I weighed 4 stone when aged 13, and 8 and a half now) to work well with the guys 10-12 stone then (15-20 stone now) could be an advantage in ensuring I get sufficient callories and water to survive.
    Village/hapu linkages may well reign supreme… then again those with the ability to recompense those with guns or a bit of 4 by 2 may rule. Who knows.
    In the meantime, Mind the Gaps has merit, and policies which increase inequality show themselves to worsen the quality of life of the majority and nation-state collectively…. so when will NACT see the light, or as is more likely, the voters who put them there recognise which side of bread is buttered.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  91. There is no such thing as peak wealth as wealth is generated in part by knowledge and knowledge growth continues. (Which is why good business involves R and D tax credits).

    The argument that there is, is designed to convince people that government must be cut back to a smaller size (despite the fact that only a few years ago we ran large surpluses and were paying down debt and saving into the Fund). This was all without a CGT.

    It’s an argument that is supposed to appeal to the back to nature and
    live within the habitat resources conservation of the planet Green. It’s supposed to drive a wedge between the pure Green brand and “unaffordable” activism on behalf of the have nots. Of course others use the totally opposite approach and claim that only growth delivers more to the poor (all) and that the pure Green brand is in the way of the required growth.

    If people don’t believe in national (collectively held) wealth there won’t be any. If people believe that government provision is not affordable, they won’t have any.

    Existing wealth inequality can be reduced by $4.5B pa by simply taxing capital gain and public provision can be funded with this money/investment. It enables a low rate and comprehensive tax system and the continuance of the affordability of public provision.

    There is enough evidence to show that a sustainable society needs to constrain growth in income and wealth disparity and that a sustainable economy is one that grows within resource and environment health limitations. Green policy is accurately focused where it needs to be on both these points.

    Like or Dislike: Thumb up 1 Thumb down 3 (-2)

  92. You reckon that whatever someone gets, they should keep.

    BJ – This is not correct. Dishonestly gotten gains should be clawed back, if they can’t be stopped in the first place.

    Honestly gotten gains should be respected. It is morally indefensible to infuse the upcoming generation with the idea that wealth is bad.

    … now we call honest people suckers. I’ve been called that for refusing to use a trust and an LAQC to shelter my income.

    I respect you greatly for that. There are too many who are building their wealth by using an LAQC to shelter the ripoff they are imposing on their tenants.

    No one should own more than one second hand house. If they are building new homes it is a slightly different story.

    If people here could make clear distinctions in identifying honest gains THEN it would become possible to formulate specific policies to combat poverty, WITHOUT implying that a hunger for wealth is bad.

    Like or Dislike: Thumb up 2 Thumb down 1 (+1)

  93. SPC

    I disagree with your definition. Wealth is about the control of resources… and while knowledge contributes to control, resource availability and distribution is critical to the development of wealth.

    Nor is Gerrit directly making an argument about the size of this government… (though he has let himself be drawn). He is pointing up a phenomenon of finite planets and expanding populations, overconsumption and maldistribution and he seems to me to make significant sense. Not directly addressing inequality either… but another way of stating the limits to growth.

    Samiam’s notion of borrowing until default would need to be timed closely. You really want your creditors to be in a state of collapse at that point, and it is entirely unethical and unsustainable (equivalent to putting more sheep on the commons). Moreover its result would be greater shock to our system when the borrowing stops as a result of no further blood being present in the dead corpse of banksters capitalism.

    To which end SPC has drawn some quite reasonable conclusions…. my only problem is with this…

    It’s supposed to drive a wedge between the pure Green brand and “unaffordable” activism on behalf of the have nots.

    It is a description of what appears to me to be a natural and real phenomena. One which is not negated by any of your other arguments. To the extent that Gerrit is correct, and I have no reason to think he is not, the notion of “unaffordable” activism is a real issue. We have the morality we can afford.

    To ME his observation doesn’t affect issues of wealth distribution within NZ but the notional obligations we assume in terms of the rest of the planet. Moreover, it very directly affects the “grow our way out of poverty and damn the inequality” meme, which is championed by NACT.

    …..

    As SPC says, Green policy is accurately focused with respect to creation of a sustainable and egalitarian society. Not much needs tweaking, but we are very much on target – within Aotearoa.

    BJ

    Like or Dislike: Thumb up 1 Thumb down 2 (-1)

  94. SPC,

    Existing wealth inequality can be reduced by $4.5B pa by simply taxing capital gain

    You missed the point entirely SPC.

    With the collapse of the monetary system there will be no “capital gain” to tax.

    Your “capital gain” is totally reliant on someone purchasing something from a vender a a higher rate then the vender paid for it.

    No one sells, or no one buys, your capital gain tax collects zip of nothing and your ability to reduce inequality is zip as well.

    You want to base a tax system on idiots who are buying gold (or more exactly bits of paper to say they own gold – whether the gold actually exists is a illusionary).

    They are buying gold certificates hoping that some sucker will come along and pay a higher price for it then they did in the first place.

    And you want to base a tax regime on that type of non-productive and unsustainable transaction?

    Nuts.

    You and Greengeek simply havent figured out that money is not wealth. Money is a vehicle for transferring wealth.

    That is why it is called the tertiary economy. I have a feeling you think that the finance industry (or rort more accurately) is the primary economy.

    Like or Dislike: Thumb up 0 Thumb down 1 (-1)

  95. GG

    The “hunger for wealth” is not of itself evil. It is the result in human and governmental terms that invariably becomes so.

    Which is how I decided that I NEED my rule-of-thumb about how much someone can earn honestly. I have never seen any instance in which the person’s individual contribution to the process justified any more than the 5-to-1 spread in income and I can’t imagine any more than 8-to-1.

    Government has no power to impose sanity on corporate boards that are voting their own compensations ( I’ve never understood the way people ON those boards justify themselves… the demonstrable dishonesty with oneself involved would shatter me as a person ). It has the power to tax.

    I guess that where I am going is this. Both Capitalism and Communism have limits. Neither in pure form, recognize some fundamental truths about humans. There MUST be rewards for working harder or why bother. From each according to abilities to each according to needs is a recipe’ for disaster in terms of productive labor and innovation. On the other hand the UNFETTERED “Greed is Good” of bankster’s capitalism simply invites development of a wealth based tyranny.

    Neither work as a basis for healthy human society. So I would use the rule of thumb to set one of the tax bands and I support CGT and several other measures to ensure that no one form of income is given privilege over others… and given that the wealth based tyranny has already taken control of the USA and is digging in here, I view people who have great wealth, not with suspicion- as they may well be simply taking advantage of some rules that others have made, but with the CERTAIN knowledge that some of that wealth was generated by legally sanctioned fraud/theft that is built into the rules (taxes and laws) we have now. It can be as subtle as an interest rate spread that does not properly reflect risk of default… or something more blatant like the way we don’t have a CGT.

    It is what it is.

    respectfully
    BJ

    Like or Dislike: Thumb up 3 Thumb down 1 (+2)

  96. BJ,

    Personally I haven’t seen anyone whose individual contribution justified more than about a two times spread in hourly income. People do different jobs, some of which are more in demand than others. However, I still can’t see why the cleaner at my work place deserves perhaps 1/10 th the income of the director.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  97. Gerrit

    What an interesting point of view – your idea that anyone proposing support for a CGT is just supporting speculation and the capitalist centred monetary system. Why not the idea that law, police and courts is just a way of supporting a crime centred justice policy?

    A forecast collapse of the “monetary system” does not mean there should not be fair tax while it continues. No more than a temporary recession should result in a long term change in the size of government relative to the size of the economy. Both are simply reasons not to have fair tax or to sustain the provision of public services.

    A CGT should operate while we have any form of exchange, lack of one is just enabling reward for greed.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  98. bjchip

    If you define wealth as the control of resources – how do you factor in R and D and knowledge?

    Some economies have no resources, but their people but they thrive because they can access the worlds resources through the global market. Their R and D and knowledge suffices.

    Many wil presume that the word resources mean natural and finite ones. Yet our well-being will increase despite rising population pressure on natural and finite resources and historic depletion. Because we can operate a growing economy through harnessing alternative and renewable resources.

    Of course a lack of CGT means resources are exploited for profit rather than to grow the economy.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  99. SPC,

    Kwowledge and R+D are resources.

    Some economies have no resources, but their people but they thrive because they can access the worlds resources through the global market.

    Your definition of resources seems solely to be based on the physical. Though your argument is cyclic (they have no resources but can access them — therefore they have resources).

    Singapore or Hong Kong are classic examples that are resource rich in having a motivated workforce providing services required by other economies.

    Their resources athough are as finite as the resources being dug up in the red centre of Australia.

    Once the physical and finite resources are gone, the need for “intelectual” resources to utilise them, will vanish as well.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  100. SPC –

    No amount of knowledge or R&D will generate a single erg of energy or a single tonne of Aluminium or a single loaf of bread.

    Those things make improvements to the control of resources, but provide no resources to control. They make better use of what exists, but cannot make something from nothing.

    That is how I factor it in. R&D turns useless into useful… but doesn’t provide the initial raw material.

    respectfully
    BJ

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  101. You and Greengeek simply havent figured out that money is not wealth. Money is a vehicle for transferring wealth.

    Gerrit – that’s a bit harsh. I think you might be lumping me in with the opinions of others.

    Money is just as illusory as the gold bars you referred to in your post. Thats why so many have been stung by finance companies.

    However, as you say, it is a vehicle for transferring wealth.

    What would happen if money ceased to exist and we had a law that one hours work became the “transfer of wealth” standard? Would that be a fairer way of measuring equity?

    Such a system would have merit but would still end up in some people controlling more resources than others. They would be more “wealthy”.

    My point is that we should ACCEPT inequity with equanimity. It will always be part of life, and attempts to excessively claw back the successes of achievers damages society as a whole.

    Inequality will be measured by what resources (land, knowledge, endeavour, will power, desire, etc.) the individual and tribe have a their disposal.

    I agree with you. I also believe land needs to be controlled by a democratically elected government. I think we need to be confronting a 100 year plan to collapse private property rights (where land is concerned)

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  102. bjchip

    Knowledge which enables use (and better and more efficient use) of renewable resources creates wealth. Whether that is tidal power or hydro power or solar power, etc.

    As for the concept of peak wealth, as our ability to grow in knowledge has no known limits, it’s a presumptious term and clearly too pessimistic.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  103. gerrit

    Direct your post to bjchip (who has clarified his position).

    I was the one who wrote “If you (bjchip) define wealth as the control of resources – how do you factor in R and D and knowledge? Some economies have no resources, but their people but they thrive because they can access the worlds resources through the global market. Their R and D and knowledge suffices.”

    So to say my “definition of resources seems solely to be based on the physical” is clearly wrong.

    I also disagree when you say “Once the physical and finite resources are gone, the need for “intelectual” resources to utilise them, will vanish as well.”

    The R and D and knowledge (grows whether the number of people increases or not) that applies to utilising finite resources, also apply to the utilisation of renewable ones. Which is why peak wealth is a flawed concept.

    And as to the idea that there is some confusion about wealth and money, no not really – some medium of exchange is always used to store relative value and whatever system is used there is always the prospect of capital gain allowing wealth disparity and inequality. A CGT does no more than re-distribute a share of the gain to the benefit of the wider community.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  104. SPC

    Knowledge can (through improvements in productivity) help “create” wealth.

    It is not wealth. Wealth is the actual control a person or nation possesses.

    Knowledge facilitates it… but is not the thing itself. It can help us to cut up the pie with less waste and may help us to grow the pie (there are thermodynamic limits to this), but it is not pie.

    I never claimed that our ability to grow in knowledge was limited. However, I DO point out that there are limits to what that knowledge can accomplish.

    I am pointing out that the planet is finite and the age of cheap energy (petroleum) is about done. Which means that the pie is not growing as fast as population. Not nearly.

    So the resources, particularly the energy resources, that the average person controls are dwindling.

    We may not LIKE it but it looks real enough to me. We know heaps more than we used to, but the entire planet is suffering from excessive debt and the debt-GDP ratio has gone to cr@p overall. So we are borrowing from our kids to try to maintain a lifestyle that is really quite over.

    The renewables will prevent us from having zero wealth, and better knowledge will make that non-zero value larger… but the huge advantage that the cheapest non-renewables gave to the 20th century disappears. As it does the concept of peak “wealth” becomes reality, not a flawed reality, just an unpleasant one.

    The laws of thermodynamics apply to the use of renewable resources. They have never applied to the extraction of the non-renewables.

    It may appear that I am only discussing energy, and to be sure, energy is the most significant contributor to the phenomenon. However, every non-renewable (iron, bauxite, rare-earths, copper….) is getting harder to find and more expensive to extract. Growth in the agricultural sector requires more work than simply finding a bit of empty land and plowing it now… the fresh water resources must be mustered and the land available is not the best for farming, that has already been farmed ( or some fools built a city on it. The best farmland in the USA is probably buried under the suburbs of Long Island. I didn’t know the difference between topsoil and dirt until I buried my first dog. A meter and a half down I hit some harder lighter colored stuff… clay-dirt. Everything down to there was black and rich and… you get the picture.)

    The point is Wealth equals knowledge times thermodynamic-limit times resource (renewable + non-renewable), divided by population. W=k*t*(rR + nR)/p. In this equation knowledge is taken as a fraction between 0 (total ignorance) and 1 (perfect understanding). T is a constant, also between 0 and 1, a general expression of the laws of thermodynamics.

    If nR (non-renewable Resource) is reducing faster than the rR (renewable Resource) is being brought on line, wealth decreases… and knowledge cannot alter t, so the multiplier has limits even though knowledge itself does not. The removal of substantial non-renewable resources and the additional population we continue to produce, forces us down the backslope.

    Now I just ginned that equation from nothing in the past 15 minutes and I reserve the right to be wrong as I haven’t thought about it much yet. I think it indicates what happens properly however. A theory, to be refined.

    Wealth is control of resources.

    BJ

    Like or Dislike: Thumb up 2 Thumb down 0 (+2)

  105. Samiuela

    I can believe that. My observations of more productive people include some of the best of the best. I feel that the 5 is a fair assessment of what they can do and were doing at JPL. The higher multiples are reserved for people of unique and sometimes short-lived talents. Maybe. I’ve never met any of those folks… haven’t made up my mind about ‘em either. A small enough subset that I don’t worry about it.

    respectfully
    BJ

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  106. American National Debt tops
    $13,000,000,000,000

    Debt per Taxpayer – $117,975
    DEBT TO GDP RATIO – 90.3%

    …and that is only the official number, not according to generally accepted accounting principles.

    We are in better shape here.

    BJ

    (

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  107. BJ,

    As per usual, you explain perspectives ten fold better then I ever could.

    SPC

    I’m but an engineer but even I know that when I look at a wind turbine I see carbon fibre blades (made from burnt nylon – oil dependent) aluminium hubs (mined finite resource), steel gearings (finite resource requiring coal to create), copper wiring in the generator (finite resource), etc, etc.

    All the R+D in the world is going to do is substitute raw materials. All feasable in this renewable energy concept. But sustainable?

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  108. The point to the US Debt is that it is money taken from future generations ONE WAY OR ANOTHER and that it isn’t solely the US from whom it is taken.

    I think not much effect on us, but debt is the mask they wear when they are stealing.

    BJ

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  109. It isn’t equality of itself that lowers negative statistics it is a general change in mindset that society is in a state where people are getting a fair reward at one end (not greedy and over the top) and that everyone is doing their bit according to their ability at the other. It won’t come only with changes to renumeration of those at the top as there needs to be a change in the mindset of those at the bottom. Until there is an attitudinal change from those who feel innately entitled there wont be a drop in negative statistics?

    Like or Dislike: Thumb up 0 Thumb down 1 (-1)

  110. At least we need to look beyond equality as the cause and look at what behavioural changes are conditional and why. Is this covered in The Spirit Level?

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  111. I would include people who have children with little thought of providing for them (other than the state) amongst “negative statistics”.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  112. An interesting assessment on Nat Radio earlier today that the world population growth is coming to an end and will peak at the 9B it is forecast to grow to.

    On the issue of US debt, it’s noteworthy they have most of their reserves in gold – so as their dollar falls in value their reserves increase in value.

    Like or Dislike: Thumb up 0 Thumb down 1 (-1)

  113. Also the key figure is cost of debt per GDP – Japan’s debt is funded internally at very low interest rates, the USA having the dollar as a reserve currency has its debt cheaper than it would otherwise.

    The IMF thinks our currency is over-valued by 25% (relative to waht I wonder given the fluctuations down of the Euro and pound) – currency value impacts on the extent of foreign debt (PUBLIC AND PRIVATE) to GDP – they are probably noting our high private debt and large invisibles deficit.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  114. If you divide the debt by the gold reserves you get an astonishing $ per oz. … and eventually that will be where it goes, but the US $ is not backed by Gold, the price is seriously gamed and the banksters are fighting tooth and nail to keep people from realizing those things.

    Eventually is likely to be quite a while in coming.

    respectfully
    BJ

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  115. BJ,

    Your wage calculations, what assumptions are you using?

    When you say you ascribe a 5 to these highly-productive individuals, is that 5 times your wage or 5 times the median/mean wage? I would assume that you are using a logarithmic rather than linear progression?

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  116. bjchip – why do people invest in their own and our own (public subsidy) education, why do companies invest in R and D to acquire patents?

    The ability to operate in the economy with that “knowledge” as the means to maximise a share of wealth and contribute to increasing wealth, but not part of the sum of wealth itself?

    So back to the original question, is there peak wealth.

    “Knowledge facilitates it… but is not the thing itself. It can help us to cut up the pie with less waste and may help us to grow the pie (there are thermodynamic limits to this), but it is not pie.”

    If knowledge allows us to grow the pie, is there peak wealth?

    I said not, you say that knowledge may help us grow the pie. I will agree.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  117. SPC,

    If the pie weighs one kilo and there are ten people then each gets 100 grams. If the pie grows by 100 grams per day but the number of people grows by 2 per day then the pie is growing but the average share of each person is decreasing.

    1) 1000 grams, 10 people = 100 each
    2) 1100 grams, 12 people = 91.7 each
    3) 1200 grams, 14 people = 85.7 each

    Like or Dislike: Thumb up 2 Thumb down 1 (+1)

  118. Yes but relevance?

    Knowledge grows the wealth, whether it will do so by as much as the population increase (6.8B to 9B by 2040) is unknown.

    However after population peaks, wealth per person should increase.

    The question on wealth will then be what will be the adverse impact of finite resource depletion (one will be re-using minerals/scrap for new purposes) compared to positive impact of improved knowledge in using renewable energy and being more energy efficient.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  119. SPC,

    Forgive me if the following does not make much sense; I am presently experiencing substantial parsing difficulty.

    Knowledge grows. Knowledge relevant to a given application need not.

    I think BJ’s equation says it well: Wealth in a given system is equivalent to the total of available resources in the given system multiplied by the legal maximum efficiency of conversion multiplied by the percentage of that maximum legal efficiency obtainable with the average applied level of knowledge in the given system. Wealth per person in the given system is equivalent to wealth in the given system divided by the number of people in the given system.

    Our system is not closed. We are constantly gaining energy from the sun and loosing energy to the ether.

    Energy is the most important thing. Everything that we rely on is energy. All the transformations that underly human society, and life itself, are based in energy. Our ability to gain wealth is based on our ability to utilize gained energy to transform one energetic form into another energetic form. Even if we were to gain sufficient knowledge to make transformations 99% efficient, we would still need to rely on additional energy. Without energy our knowledge is useless.

    Underlying peak wealth (from my view) there is thus one of several assumptions. The first being that the energy cost of acquiring the material to be transformed (be it from raw materials or recycled) is increasing at a rate greater than the technology can compensate. The second being that the cost of acquiring the energy to transform the material to be transformed is increasing at a rate greater than technology may compensate. The third being that the combined increase in costs is greater than technology can compensate for.

    To address the first point, corporates operate by the low hanging fruit principle; that which is the cheapest to extract will be extracted first. That is to say, as time goes on the cost of acquiring raw materials -be they from the ground or recycling- goes up as it becomes relatively more energy intensive to extract the materials as a result of location, purity, etc.. I can not say if the price of extracting minerals, etc. is going up at rate greater than our efficiency in extracting and using those minerals goes up; I should leave that to the engineers. I can point out, however, that there is a good reason copper piping is now more expensive and is often gutted from buildings.

    To address the second point, our society is based on cheap energy. Energy stored in the earth over the millenia. Oil. We are depleting this resource rapidly and with it our most readily available energy resource. All the others are rather more expensive, especially in terms of energy input to energy output. New technologies will probably step in, but if energy will ever be as cheap as today is somewhat questionable.

    I would suggest that peak personal wealth is a possibility, at least in relation to population. Though, we could perhaps avoid this through space-based expansion.

    Assuming that population peaks (big assumption) then wealth per person will increase as the population decreases assuming a constant energy input and utilization. Unless the population decreases to about the size it is now and we have some absolutely massive renewable generation, including space satellites, I doubt the wealth per person will be the equivalent of what we have today. You would need a massive energy input.

    Like or Dislike: Thumb up 3 Thumb down 0 (+3)

  120. Just the sort of post one would expect from someone doing post graduate study. The issue of peak wealth (and peak wealth per person) is one humanity is destined to explore. We will want to know what is possible. I suspect that someone will work out an equation relating peak wealth to energy input at some point.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  121. To attempt to calculate a figure that represents acceptable wealth ascribed to one person is very much against the forces of nature.

    One persons life becomes another mans mushrooms.

    To suggest that there should be a maximum permissible income of 5 times (or 8 times whatever) the “average” wage is odd.

    If there is going to be any attempt at “fairness” then the first thing that needs to be done is to remove private property rights with regard to land.

    How can anyone quibble about income levels when some people have zero chance of accessing enough land to grow food for their family?

    If I invent a super widget that makes me 25 million dollars I would prefer to keep pretty much all of that money and I wouldn’t feel guilty.

    Especially given that I am too poor to own a house, yet bj clearly does.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  122. SPC,

    Just the sort of post one would expect from someone doing post graduate study.

    Is that a derogatory statement aimed at belitteling what Sapient said?

    As Sapient has quite rightly pointed out. Knowledge does not increase wealth. It is the APPLICATION of knowledge that increases wealth.

    For example we know that nuclear energy is the cheaper form of energy available versus coal.

    http://www.theoildrum.com/node/2323

    However this knowledge does nothing to improve wealth. Only the application of the knowledge will.

    Once you try and implement the application you run against the finite resource problem of needing materials to achieve the objective (as outlined in my above comment on renewable wind generation technology).

    Like or Dislike: Thumb up 1 Thumb down 1 (0)

  123. Greengeek,

    I doubt that you will find as much opposition here, regarding land, as you seem to seek. I think almost all of us, certainly myself, are pro-land tax, etc..

    Regarding BJ, I believe he is a renter.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  124. jh, it was the author of Population Crash who was on National Radio this morning. He pointed out that population growth was now occuring in areas of low resource consumption – the main driver of increasing consumption is of development growth in East Asia and the sub-continent (where the population has stabilised).

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  125. gerrit

    Sure I said – just the sort of post one would expect from someone doing post graduate study. I said this because it was. Didn’t you think so?

    I then said. The issue of peak wealth (and peak wealth per person) is one humanity is destined to explore. We will want to know what is possible. I suspect that someone will work out an equation relating peak wealth to energy input at some point.

    For academics will be placing some focus on the issues he covered in his post.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  126. gerrit

    You began the topic on peak wealth by posting this “we have reached PEAK WEALTH in the world. Much like peak oil, peak wealth creates the inequalities.”

    I responded by posting this. “There is no such thing as peak wealth as wealth is generated in part by knowledge and knowledge growth continues. (Which is why good business involves R and D tax credits).”

    You now say that “Knowledge does not increase wealth. It is the APPLICATION of knowledge that increases wealth.”

    So as knowledge and the application of knowledge has not ended do you still hold to your claim that we have reached peak wealth?

    with “once you try and implement the application you run against the finite resource problem of needing materials to achieve the objective (as outlined in my above comment on renewable wind generation technology)” you have only rasised a constraint on wealth generation – not shown a peak has been reached.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  127. GG

    I don’t own a house… yet. The prices will come down somewhat in the next few months though. I am fairly confident of that and in a years time I may… I’ve seen this before and I would rather high interest on a lower price than the other way around because the interest rate can be changed but the price you sign up for is a mortgage… which I think is something from the latin about a debt beyond death or some such :-)

    I just say “I won’t pay a stupid price just to own a house”. Most of the prices and houses I see make that decision for me.

    I have a fair notion that ownership of land is a nonsense… I am not concerned with impossible goals at the moment, but plausible principles.

    One of which is to do with how much difference there is in the productivity of the very best and the very average. Five times 50k is 250k, which is quite a chunk on a yearly basis. That’s all the difference that is necessary to pay people fairly. I grew weary of all the carping about how to define “rich”.

    I don’t see why I would consider a log function sapient, but I am willing to listen. This is more of a definition than anything else. KISS

    To attempt to calculate a figure that represents acceptable wealth ascribed to one person is very much against the forces of nature.

    “Forces of nature” ? The forces of NATURE tell us that accumulated “wealth” naturally turns to cr@p. That’s thermodynamics. The rules followed by the banksters economic tyranny, which is in force in every civilized country and through which we have all been enslaved… THOSE rules cause accumulated piles of wealth to grow bigger. Even without work by the fortunate owners. Nature has nothing to do with it.

    To suggest that there should be a maximum permissible income of 5 times (or 8 times whatever) the “average” wage is odd.

    Good. However, I didn’t say it was permissible did I? If so I misspoke. Justifiable would be the correct term… and more is an indication that something in the system that causes that pay to occur is broken or not quite honest… because EARNING more than that is I think, flatly impossible. The puzzle is to figure out how many people are being cheated out of how much through what mechanism. Sometimes it is easy. Other times subtle.

    If I invent a super widget that makes me 25 million dollars I would prefer to keep pretty much all of that money and I wouldn’t feel guilty.

    How does the widget make YOU 25 Million?

    I am inventive enough… have my name on a couple of patents… no royalties. Another in the works… but inventiveness isn’t production. People who use the invention to produce may be more productive and I may have improved people’s lives but I personally haven’t produced stuff for them. If I produce the widgets and they buy those, I expect I’ll make a profit on the widgets but I can personally only produce a limited number of the things, else I have to hire people and buy materials.

    If someone ELSE buys the idea from me the value is not and cannot be set in the millions (unless this turns into a New Zimbabwe inflationary tornado). Working out a fair value for an idea has to come down to, what would be a fair profit should I have done it myself… and we see that 5x multiple.

    I’m not all that big a fan of “intellectual property” as practiced in the USA or here, not any more than “private property rights” on real-estate. We don’t own land. We come from it, borrow it, use it for a while, then we die and we become part of it again. The land owns us.

    Remember that knowledge is multiplied against thermodynamic efficiency and neither factor is ever greater than 1. It grows wealth according to the function outlined… but if the resources are diminishing or the population is increasing then net wealth is diminishing. Even if the knowledge is increasing rapidly it can be overwhelmed by the other factors in the equation.

    If knowledge allows us to grow the pie, is there peak wealth?

    As the equation points out, there is a limit to how much knowledge can grow the pie.

    I doubt seriously that 9 billion people in the year 2040 will be wealthier in terms of their control of resources, than we have been. After the climate changes start to bite and the resource depletion in the fossil fuels and the massive defaults of debt and inaccessibility of industrial metals…

    Although it could be considered that what we borrow from the future isn’t really ours it is still resources controlled by us. What it isn’t is earned. The correct word is stolen.

    Got more work… still.. even now.

    respectfully
    BJ

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  128. bjchip, yes another constraint on future growth in wealth is the potential wealth we have compromised by our past and continuing actions to maximise wealth in the short-term for ourselves.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

The ability to post further comments on this blog will return after the election.