Inequality in Aotearoa: inequality and social mobility

You can’t move from rags to riches when there’s a yawning gap between rich and poor.

Much of the post-Budget debate has been focused on whether John Key and Bill English’s prescription for the country’s finances will increase or decrease the gap between rich and poor.

Despite assuring us that he cares about inequality, Mr English reckons the gap will stay about the same. But many – including the Green Party – disagree, arguing that the combination of a GST increase that hits low-income families proportionately hardest and a tax cut that delivers the most benefit to those on high incomes will certainly widen the income chasm.

This is important, because New Zealand is one of the most unequal countries in the developed world, according to both the OECD and the UN.

It’s also important because there’s very strong evidence to suggest that the bigger the gap between rich and poor, the worse off we are in all income brackets. The starkest example of this is life expectancy: even someone in the highest income bracket in a country with a high degree of inequality can expect to die earlier than their counterpart in a more equal society.

Clearly, growing inequality is something we should all be concerned about.

However, an alternative take on issues of inequality has emerged, explored by Colin James in the Dominion Post. This view argues that having a big gap between rich and poor doesn’t matter per se, as long as people (or their children) have the opportunity to bridge that gap and move up the social and economic ladder.

This is a common refrain, most famously encapsulated overseas in ‘the American dream’ – the idea that US citizens of every rank can achieve a better, richer, and happier life.

There is no doubt that social mobility is vitally important. If people can’t overcome adverse circumstances, our most vulnerable citizens are condemned to a bleak existence with no hope of a better future for themselves and their families.

But we must not ignore the growing gap between rich and poor in the belief that social mobility will make up for it – quite the opposite.

The evidence shows that having a bigger gap between rich and poor actually reduces social mobility.

This was the conclusion of an OECD report in February, and last year economists from Harvard and the Australian National University concluded that “moving from rags to riches is harder in more unequal countries”.

In their groundbreaking book on inequality The Spirit Level, British researchers Wilkinson and Pickett devote a whole chapter to showing the different ways that entrenched inequality reduces social mobility.

And studies comparing the US to more egalitarian European and Scandinavian countries have found conclusively that the US has both the highest level of inequality and the lowest level of social mobility of all the countries studied.

Sadly, it seems ‘the American dream’ no longer has any basis in reality.

Everyone loves a good rags to riches story: John Key, the state-house kid turned millionaire and now Prime Minister; Paula Bennett, one-time DPB mum, now welfare-reforming Social Development Minister. Even my own journey to Parliament has elements of this popular narrative: I was a solo mum on the DPB before I took advantage of open access to university and started my law degree.

But it’s important to look at the conditions which enabled these high-profile examples of social mobility. John, Paula and I have all benefitted from the world-class social safety net that New Zealand has, or at least, used to have.

John and Paula, whose own social mobility was enabled by sound state housing and welfare provisions, are busy kicking out the ladder behind them: slashing the budget for state housing, cracking down on beneficiaries, shifting the tax burden onto low-income New Zealanders, and generally making it harder for others to emulate their success.

Is this the kind of social mobility we really want? The kind that says I’ll take what I can get, thanks, and too bad for everyone else?

There is another version of social mobility, which is about making sure that everyone has access to the basics, and giving everyone a fair go.

The same OECD research which found social mobility was lower in countries with a big gap between rich and poor also found that progressive tax and benefit policies aimed at providing income support and access to education for disadvantaged families can promote greater social mobility.

It is precisely by moving to close the gap between rich and poor that we can move towards the egalitarian ideal we New Zealanders prize.

As you know, we have released an eight-point plan to combat growing inequality in New Zealand entitled ‘Mind the Gap’. Implementing the solutions it proposes would go a long way towards both closing the growing gap between rich and poor, and enabling greater, fairer social mobility in the process.

91 thoughts on “Inequality in Aotearoa: inequality and social mobility

  1. Matiria; When you say that John and Pauline are kicking the ladder beneath them I find that seems to be common among the extreme right liberals like Mr. Douglas and Mr. Prebble.

    Roger Douglas’ father was also in the Labour Party but very much a labour man.

    The next generations that benefit from free education, health, dentistry and even free milk in the mornings at school don’t seem to be too thankfull and want to tear that system down.

    I know that the neighbourhood may have been rough and tough, but where would these people be if those social services were not available?

    Certainly not in parliament!!

  2. If income inequality inhibits social mobility; then of course you can draw the conclusion that income inequality = bad (as you have done) however surely there is more ‘room to move’ per se in such a country, than a country with low income inequality, where such ‘social mobility’ is less relevant.

    Basically what I mean is if you have a large gap, there’s more space to move(and more desire perhaps?) whilst low income inequality countries may find it’s easier to move from one end of the spectrum to the other since they don’t have as far to go.
    “moving from rags to riches is harder in more unequal countries” the issue is the rags, not the riches. Would we consider there was a ‘social mobility’ issue were we all poor?

    We need some inequality, (jealousy works as a great motivator given all fields are level in terms of access to health and education) – the green party would do well to be seen not as a party who want to ‘rob from the well off to give to the impoverished’ but as the party who motivates those who work hard whilst ensuring there is no poverty.

    Having said all that – (increasing) GST is essentially a Poor Tax (increase) and John Key and his elitist wanker mates can all go get fucked.

  3. Basically what I mean is if you have a large gap, there’s more space to move(and more desire perhaps?) whilst low income inequality countries may find it’s easier to move from one end of the spectrum to the other since they don’t have as far to go.

    Comprehension fail.

  4. Thanks Metiria – that’s a pretty good response to the ‘social mobility ruse’.

    It’s particularly interesting to see you argue again against the rise in the GST rate to 15%. So perhaps you can clear up the matter of what rate of GST the Greens currently advocate? Will you be campaigning to reverse the increase? Your “Mind the Gap” package seems to suggest otherwise – that the Greens now accept the inequitable 15% GST. I’ve written a blog post explaining this here:
    http://liberation.typepad.com/liberation/2010/05/greens-now-favour-15-gst.html

    Can you clarify whether I’ve got this wrong? And if so, what exactly have I got wrong? If not, it would seem that you guys are being just as duplicitous and disingenuous as Labour are over the GST rise.

  5. There has to be dignity in working in a range of important jobs. We have people working for minimum wages in essential occupations like, childcare, teacher aiding and home support who have their work devalued by the pay they receive. The message from this government is that jobs like these are “low priority” spending and people who do this work should be looking for something else. It appears the only productive work is that which helps grow the economy.

  6. that the Greens now accept the inequitable 15% GST

    that the Greens now accept the inevitable 15% GST

  7. Aside from the legions of STATE caused reasons for many people being poorer than they need be the prime one is the failure of them to use that thing on top of their shoulders.

    A good look in the mirror would also help confirm what the real cause of many peoples situtations really is.

  8. “failure of them to use that thing on top of their shoulders.”

    Dandruff?
    I guess that ‘look in the mirror’ would reveal the problem!
    Sometimes James, you can be quite perceptive!

  9. If only people realized that a good look in the mirror, and pulling their socks up would allow them to achieve anything. Those 3000 people who queued for the supermarket jobs just need more sock tugging practice.

    Either that or a good shampoo.

  10. “Nothing doth more hurt in a state than that cunning men pass for wise.”:
    Sir Francis Bacon

  11. I think that 15% GST would be more acceptable if it came with a corresponding first 10k tax free. Then it would be consistent with shifting tax of wages and onto consumption.

    Implimenting both these policies concurrently would be more equitable since those on higher incomes consume more, therefore will pay more GST, and those on lower incomes would benefit more, since a greater proportion of their incomes is tax free.

    As it stands, those on lower incomes are disproportionately affected through the increase in the price of essentials, since those on higher incomes have the option to cut back on discretionary spending.

    Hence the calls now for further interventions to take GST of food, however this will create further distortions through incentives to firms to meet the GST free criteria.

  12. kia ora, thanks for all the supportive comments over this blog series.

    The Drop – so is it that you follow the logic of John Key (we mustnt be envious of the charitable rich) and Roger Douglas (rich people are more productive)? Both concepts are fallacies of course. High income is not an indicator of productivity. Those on low incomes do not work less hard or strive less hard as you suggest. That is an elitist fantasy used to deny the reality of real and entrenched poverty. It turns out as we have said from the research, that the bigger the gap the less the mobility. Problem we have now is that not only is the gap widening but mobility is severely constrained through the reduction in Education spending.

    Bryce, sorry you are wrong. We have to assume the GST rise in our Mind the Gap because we have to deal with the most likely current economic scenario. Yes, if we could ditch the GST rise tomorrow we would. But we also want much more significant tax reform, including resource rentals and a capital gains tax among other measures.

    Sprout, hear hear. I still, after all this time remain surprised by the prejudice against working people. cheers, meyt

  13. One of the great scams of the Captains of Industry is that they pay virtually no Tax – (after re-imbursed expenses).
    In fact when I was a Fat-Cat the Mantra was – “If you are in Business and Pay Tax, Sack your Accountant!”
    A great scandal in Oz when it was revealed that their (then) richest Man – one Kerry Packer, paid, on average, 2c in the dollar tax.
    Could be time to table a few people’s financial records under FOI – put a hungry cat amongst the proverbial pidgeons eh? eh?
    (actually – no, I like pidgeons)

  14. MORE TAX NOT LESS !!!!

    Unfortunately we all live in a finite world: When Mr. Key was making those election promises of cutting tax to the middle earners (38c to the $ down to 34c?)he knew that he was sticking his neck out.

    So they are embarking on some pretty sneaky ways of clawing the money back by extra GST, motorbike registration and now they are upping the charge on drivers licences.

    What is the difference in Motorbike rego, and licence charges and tax?

    I think that the lower income groups are going to be paying more tax and the gap between the have’s and the have not’s has to widen with NAT/ACT policies.

  15. it is pretty rich anyone on a $130,000 plus perks talking about gaps between rich and poor. makes me sick to be honest as i scrape together enough money to pay my rates bill while there are use people in parliament who could pay my entire debts with a couple of weeks grift…

    and as for equality, its not about the money and how much tax rich people pay. its about BASIC equity and status as human beings given a fair go in this society.

    Why are some 400,000 of us us 3rd class citizens (cananbis criminals) and no one in parliament spotting that the real inequality, inequity and underclass is becausee of criminalisation which is completely contrary to principles of harm minimisation and good governance.

    especially while cannabis reform is a policy that everyone in NZ identifies as Green Party Policy

    still chicken and pandering to the conservative element in your support base, you guys????

    get real, Meteria. how could you have ever been an ALCP candidate without any semblance of belief in the cause?

    regards
    Kevin

  16. Key’s/English’s claim that everyone is better off from the budget is ludicrous. Even if their calculations are correct (and others think not), how does a gain of a few dollars (or cents) for a few make them better off, when everyone else “gains” more (in some cases, thousands more)? That is the logic of a dream. When did widening the gap make everyone better off?

  17. “Hence the calls now for further interventions to take GST of food, however this will create further distortions through incentives to firms to meet the GST free criteria.”

    McTap, that is not your only problem – you end up with some really massive problems with boundary issues if you start taking GST off certain items. In Britain, for instance, the House of Lords had to decide whether Jafa Cakes were a cake (and thus charged VAT) or a biscuit (and thus VAT free).

  18. This is all a bit of a red herring. France has poor social mobility, yet is a relatively equal society, and Australia is listed as being a top performer with very high social mobility, yet is far more unequal than France – even higher inequality than us.

    What the report does say is that the major factor for climbing the social ladder is education (surprise surprise).

    Any system that punishes people who work hard and rewards those who are lazy will doom an economy.

    We need good chances and opportunities for everyone who wants to work hard – fair reward for effort – not fair reward despite effort.

  19. While Oz has greater income inequality than us, it has more progressive taxation. While France has both progressive taxation and generous welfare.

    The fact is, our relative performance as an economy has declined over the past 30 years and over that period our income equality grew more than any other OECD economy.

    We under-invested in education and R and D, and we failed to retain 1/3rd of the graduates we did have.

    As to incentives – even if our taxes were zero on income – wages would still be higher overseas. Even if company taxes were zero employers would still pay low wages if they could.

  20. When did widening the gap make everyone better off?

    When the person deciding that everyone is better off decided not to correctly count inflation.

    BJ

  21. photonz1,

    Any system that punishes people who work hard and rewards those who are lazy will doom an economy.

    This seems to imply that the only way to get on is to work hard. Some people work hard and earn very little, whilst some people hardly need to lift a finger for a massive return.

    The economy is doomed anyway, since it relies on the unsustainable; maintaining economic growth. But I’ve heard the mantra, above, many times, whilst inequality deepens.

  22. The economy can continue to grow long term, if the growth is driven by efficiency gains, about half of economic growth since 1970 has been by this process… Eventually though we will be forced to have steady state economics…

    The point is that why would anyone be against the following:

    20% of the forests harvested is wasted in cut offs, etc, if this waste was refined into bio diesel and a new factory was built out of recycled materials building very efficient bio diesel cars out of recycled steel… Why would anyone oppose that economic growth..?

    Opposing economic growth for the sake of it is as stupid as chasing economic growth at any cost…

  23. Tony, please tell me how you can hardly lift a finger and get paid a fortune without first working hard.(I’d really like to know)

    SPC – I don’t get your as you contradict yourself – you say,
    “Australia has greater income equality than us” and
    “While Oz has greater income inequality than us..:

    There is a greater gap between the top and bottom 20% in Australia than there is here.

    France is listed as one of the places it’s hard to get ahead despite generous welfare and progressive taxation. (should that be BECAUSE of progressive taxation and generous welfare).

    The point is the main factor that determines being able to get ahead or not, is education – not inequality.

  24. I didn’t say “fortune”, but you can inherit, you can be a non-executive director on multiple boards, you can win the lottery or make a good bet on the markets, you can run a big company that runs itself (via the people who do the real work), you can bre fortunate and have in-demand skills that pay a lot, and on and on. Do you really suppose that every single one of those people whose income exceeds, say, $100,000, has worked very hard for that money? I have earned much more than that at various periods in my life and I can say that, most of the time, I didn’t work as hard as, say, a nurse (indeed, on occasions I worked very lightly). So I stand by my statement that hard work doesn’t guarantee a high income and a high income doesn’t always mean hard work.

  25. photonz, progressive taxation and generous welfare don’t make it harder to get ahead, they reduce income inequality.

    You have to look at France and not make ideological presumptions why those on lower incomes don’t get ahead. The immigrants have remained in the underclass, they have high levels of unemployment. It’s not so much a social mobility issue as effective economic assimilation of immigrants.

    Lack of access to quality education is part of the inequality as is access to health care and healthy homes.

  26. Tony – I know quite a few people who earn very good money, and without exception, every one of them works very hard, and has done for many years to get where they are.

    I don’t know a single person who earns a high income and to use your words, hardly lifts a finger for it.

    If it was an easy thing to step into a high paying low work situation, then everyone would be doing it. The fact is that there are not many people getting paid a very high income, and the vast majority of those that do, work very hard, or have done in the past to get where they are.

    As they say, the harder I work, the luckier I get.

  27. photonz1, I’m not sure why you keep misrepresenting my posts.

    I didn’t say it was easy to step into high paying low work jobs; I said that they exist. I said that hard work doesn’t ensure high pay and high pay is not always the result of hard work. That you don’t know anyone who has a high income but is not a hard worker is hardly proof that such people don’t exist. I gave a list of the types of people who can gain a high income without doing much to earn it (though some may be playing on past hard work). Are you saying no such people exist? Are you saying I must have work very hard for the high income periods that I’ve had in the past, despite the fact that I say I didn’t?

    You say that there aren’t many people who have attained a high income and assert that most of them worked very hard to achieve that income. That may be the case, I don’t know (and neither do you) but it isn’t universally true that high income means hard work, nor that hard work means high income.

    Earlier, you said fair reward for effort. That seems reasonable and should be true despite ability or opportunity (though it also depends on the type of work). However, it is certainly not true today, and less so than it has ever been. For example, is anyone worth several million dollars per year (remember that that is way more than the average person will earn in all of their working lives)? Is it right that a big company boss can earn two or more orders of magnitude more than the people he or she employs to produce the goods or services?

  28. Tony, my assertion is that if you want to get ahead you do that through hard work, and you should be rewarded for it.

    You originally said “This seems to imply that the only way to get on is to work hard. Some people work hard and earn very little, whilst some people hardly need to lift a finger for a massive return.”

    The point is your example of other ways to get ahead isn’t something that is open to many people. There are very very few positions where you can step into a job where you “hardly need to lift a finger for a massive return”.

    Which comes back to my original point – if you want to get ahead (for the overwhelming majority of people) that means hard work. It probably means making some smart decisions as well.

    Or maybe just obvious decisions. You can work hard cleaning offices but it’s probably not going to lead very far up the ladder. If you take the risk and work hard on a medical or business management degree or in your own business, there’s a better chance of getting further up the ladder.

    However I do agree that some high salaried positions are over the top. I saw recently some companies were changing to a salary scale that was based on a full week on the lowest rate in the company, with the CEO at 20x this level (a fraction of the previous rate).

    I think the example had lowest workers on around $30g and the CEO on $600g – down from millions. It’s still a huge amount but it seems a reasonable idea if you can find the right person to do the job.

  29. You’re still doing it, photonz1.

    I didn’t say that they were examples of how to get ahead, just examples of people obtaining high incomes for very little work.

    I agree that, if your aim is to get a high income, then you’d better be very smart, very lucky or prepared to work hard. Having said that, it’s impossible for many (certainly not the majority) of people to gain a high income. The more that achieve a high income, the higher the average goes and the less likely that the previously high income will be considered high. That is, if most people are on, say, $100,000/year, then being on $100,000 will not be considered any more than average.

    We need a better measurement of contribution, not just what you can demand from the market. What makes one job worth more than another? Certainly not its value to society, only what you can convince your employer to pay you. So we end up with, oh, I don’t know, a Prime Minister, doing nothing for society but getting paid hundreds of thousands of dollars, while many unpaid volunteers do a great amount of work for their communities.

  30. Oh photonz – how hard is it to do up a house and flick it on for an untaxed CG profit. Even in a depressed market, the labour adds enough value to derive income in the CG form – and it’s all untaxed.

    While we lack a CG tax of course there is easy money to be made – and money which is untaxed.

    I have little doubt the ability to make untaxed CG is one reason why there has been a lack of support for essential R and D (funding and tax credits) over the past 2 or 3 decades – because people with capital had easier ways to make money. But these ways do not produce economic growth or wage income growth, just a return on the capital of the haves. That results in growing income and wealth inequality.

  31. Do not overlook inflation!!!!

    Gentlemen, the fly in this ointment is the constant “growth” in the money supply and the constant “growth” it requires in either inflation or actual production. The result of bankers control over the issuance of fractional-reserve fiat currency, has given them control of governments, immense (even absurd ) wealth, and immunity. They REQUIRE inflation and ever expanding economies.

    The cost to society is immense and unsustainable. The inflation robs the poor more effectively than it affects the wealthy, because the wealthy DO have greater access to “Capital Gains” and offshore hedges and ownership of “stuff” that mitigates and even profits from the inflation.

    Here… again….

    http://www.kitco.com/ind/Gerbino/jun032010.html

    Hard work is part of earning a decent living. It has very little to do with the acquisition of great wealth, the pay of a CEO or the bonuses to Goldman-Sachs. Those are all examples of legal thefts and frauds as a rule.

    BJ

  32. SPC says “Oh photonz – how hard is it to do up a house and flick it on for an untaxed CG profit.”

    If what you say is true, and it’s as all as easy as you say, then that is fantastic- EVERYBODY can EASILY climb the social ladder.

    In truth we have a housing bubble, and a system that encourages it (as you correctly state). But doing up houses and flicking them doesn’t work everywhere. It may work in parts of Auckland but it can and does fail spectacularly in other places.

    I live in the south, and recently a neighbouring house got bought for $240g, they spent $150g doing it up, and highest offer was $300g – they’ve thrown away over $100g (in fact it’s probably dropped further since then).

    However I agree that if people are doing up houses for their income, then the capital gains should be taxed as income.

    I do know people who do up houses for their living and have done quite well in the past, but contrary to what you say, they actually work very hard.

  33. Oh photonz, some/many people don’t have the spare capital to buy a house let alone invest in upgrades (which means savings to live off while labour on the property occurs). Others who do might feel too old for the work.

    And no matter how hard people work, if they are not paying tax on their income ……

  34. SPC,

    You believe in a myth that property developers dont pay taxes. Simply not true. Developers pay taxes on income.

    People like me who have owned and now sold a rental property dont pay taxes because we are not developers, but are rightly called property investors.

    Like the difference the IRD has between sharemarket traders and investors. Traders pay taxes on income recieved from trading stock. Investors pay taxes on the revenue stream derived from dividends.

    We just sold a rental property we have owned for over 10 years (and made a 90% capital gain) but paid taxes on the income derived from rents, as is good and proper.

    A developer pays taxes on the income derived from the sale of a property (not the rents received) while a investor pays taxes on the rental income stream.

    We as an investor have to repay the depreciation claimed back over that 10 years (some $20,0000) as it is regarded as income and taxed accordingly.

    A developer cannot claim depreciation on property as he does not own it for a long enough period (they can get into claiming the GST back on the proposed sale price and rort the system that way but that is a completely another story _ and with a rise to 15% see that as a bigger incentive to get into proprty development rather then investment).

    Strangely enough the IRD wont let you sell a rental property for the original price (effect depreciation or something – any tax experts in the house?) so one cannot help but take the capital gain.

    I think any capital gains tax has an effect on depreciation clawback so may well be the lesser of two taxation income streams.

    Remebering that the depreciation is recorded and itemised so the IRD has a notion of what revenue is outstanding at any one time.

    With a capital gains tax it is totally at the whim of the market and the number of sellers. No substantive or known income stream (except previous years sales volume and value).

  35. Correction. The edit function was too fast for these fat fingers at this time of the morning.

    We have to pay the income tax on the depreciation claimed. The tax is near $20,000, not the depreciation claimed back.

    We have a good accountant who kept depreciation claims to a minimum level knowing full well the taxation to be paid at sale time.

    A wonder how many property investors have claimed maximum depreciation and will be stung by a very large income tax bill at sales time.

  36. photonz1,

    I do know people who do up houses for their living and have done quite well in the past, but contrary to what you say, they actually work very hard.

    Maybe, but isn’t that an argument for unlimited income? If you work hard then any income you get is justified. Is that right?

  37. Research on social mobility is fascinating; yet I think it cannot be addressed using the macro-economic perspective (e.g. the OECD study.). A common metric is the correlation between one’s income and one’s parent’s income: The higher the correlation, the lower social mobility. But this of course ignores that transition from low to high income is not effortless. Even with all the opportunity in the world (which quite frankly we have in NZ), it takes bloody hard work to move from the bottom to the top.

    So ask yourself: Can every teenager in NZ become a doctor/lawyer/accountant if they are willing to put in the effort? Regardless of their parents income? I know many that have. And I I know many that have chosen not to. And who would blame them – because you work like a slave if you are a doctor/lawyer/accountant.

    Hense in many cases, people may choose the non-monetary rewards of life over the monetary; for example, raising and seeing one’s family every night. One shouldn’t pity people that choose that path, nor label them as the victims of society.

  38. Research on social mobility is fascinating; yet I think it cannot be addressed using the macro-economic perspective (e.g. the OECD study.). A common metric is the correlation between one’s income and one’s parent’s income: The higher the correlation, the lower social mobility. But this of course ignores that transition from low to high income is not effortless. Even with all the opportunity in the world (which quite frankly we have in NZ), it takes bloody hard work to move from the bottom to the top.

    So ask yourself: Can every teenager in NZ become a doctor/lawyer/accountant if they are willing to put in the effort? Regardless of their parents income? I know many that have. And I I know many that have chosen not to. And who would blame them – because you work like a slave if you are a doctor/lawyer/accountant.

    Hence in many cases, people may choose the non-monetary rewards of life over the monetary; for example, raising and seeing one’s family every night. One shouldn’t pity people that choose that path, nor label them as the victims of society.

  39. Metiria – in an earlier response you stated that:

    “Those on low incomes do not work less hard or strive less hard as you suggest.”

    In my experience professions with high incomes do involve very “hard” work – if hours worked per day is an indicator of “hardness”. Doctors/Lawyers/Accountants often work 12 hour days as a matter of routine. Would a more equitable tax system then be based on taxation of income per hour worked? (As opposed to income per year, as in the current regime.)

  40. Gerrit

    As long as the inflation in prices was going strong, it was overwhelming the tax hit and the lack of CGT made it all incredibly attractive which of course, made it important to buy at any price because it could only go up… fueling the inflation.

    That rocket has used up all its fuel. There is effectively no more capital in NZ to be used to push the prices higher so it sputtered and died, leaving a fair number of folks as bag-holders and you with a bemused look on your face because you weren’t really involved in the frenzy. :-)

    However, the prices are sticky and those holding the bag do NOT want to eat the losses. I can’t blame them, but I do not have any sympathy with people who go for the “get-rich-quick” schemes and buy the claims by their accountants that they can “have the house for free”. Which was basically what one radio advert by an accounting firm here was claiming.

    The question is what is a fair price for a NZ built home? I have an answer that won’t be approached in the market participant’s worst nightmares. I know I will pay more than I like to get what I want, but I refuse to go in until I see some of the decline that is due…. very soon I think.

    respectfully
    BJ

  41. BJ,

    The point i’m trying to make is that the IRD gets some tax back on rental properties when they are sold by investors if they have claimed depreciation.

    What would be interesting if a tax expert can run a scenerio where there was a CGT and if people did not claim depreciation. Would the IRD and the state bank account be better off?

    The cost of a new house is always cost plus. It does not follow market trends.

    Problem as I see it is that land is so scarce and so expensive you will not build a new house under $400K.

    Add another 2.5% for GST and the cost keeps going up.

    If the price of secondhand houses drops marketly (and people buy them rather then a new house) expect new home consruction to cease until prices catch up again to the cost plus level of a new house.

    You may well end up in a position where it is more cost effective to do up an old house then buy new.

    People here have bought up the 50 year old housing stock in places like Otara and Mangere simply because the houses are on larger sections.

    One can see a Ponsonby happening in Auckland again where the lower income earners are driven from their properties because of the lower value of their property. What people are looking for is a do up house on a larger section (600-1000 sq metres). The cost of these properties is less then a new house crammed together like they are at Botany.

    I cannot believe that detached houses can be build next to each other with eaves almost touching and people pay $400K to $600K for them.

    I would imagine that in Wellington there are similar areas where a rebirth of a kind is taking place due to the size and value of sections in the “poor” parts of town being bought by people being put off by the price of a new house and the size of the sections.

  42. Gerrit –

    I can still build a GOOD new house for a lot closer to 300K than 400, in a fairly decent development. The land will be only slightly less as getting to a lock-up shell plus plumbing. Agree on the “cost plus” aspect of the new house of course. The only place I save is where I do stuff.

    The real problem now IS the land. The way the councils abandoned their own planning and development arrangements and now appear to require developers to jump through hoops AND find ways to get back their investments on the initial sale (while councils could do it over time using the rates mechanisms and WILL collect rates for the next 100 years), well, I don’t have that much sympathy for developers but I do have some given the situation.

    There seem to me to be some real distortions of responsibility and authority. We’ll know better how it all goes in about a year.

    …and I know that in general the IRD is supposed to get it all back as an income tax. The accountant had some quite clever ways to get around that but the most important one was that it somehow became income to a corporation, not to me, for tax purposes. So despite making a heap of money, I would save a heap of tax. The specifics of the rort were explained to me almost 5 years ago… and my recollection is that I seriously considered it and decided basically that it was a lot of trouble to go to, to become in my own eyes, unethical.

    Mugging people on the street is a more honestly dishonest occupation.

    Which isn’t the same as saying that all property investment is a rort of that nature. Just that there was exactly that sort of cheating going on.

    Meh… we will know better how the loopholes look in a year.

    respectfully
    BJ

  43. Gerrit

    No I don’t believe in some myth that “property developers” (usually companies which get involved in sub-division and new home building) don’t pay taxes.

    Buying a house and doing it up is not real property development. Those doing it claim to be property investors intending to rent out the property, but sell it on before doing so. Thus they flick it on at a CG tax free and don’t claim depreciation before they do so.

  44. Gerrit,

    What depreciation claw back – this years budget ended it. We are now only referring to past property investment in that matter.

  45. The way to implement a CGT which has secure revenue flows – is to link it to a 1% land tax. The land tax paid being deducted against the CGT liability at the time of sale – leaving a balance to pay or not.

  46. A CGT is based on taxing both developers and investors equally, and all forms of income equally.

    The idea that investments (land, property or shares) should not attract a CGT is unique to New Zealand – they are standard taxes in the rest of the OECD.

    A change would help direct more capital into property development and business development and away from investment in existing assets for CG.

  47. SPC,

    The question then becomes at what rate will you tax capital gain?

    Your land tax of 1% would significantly have an affect on land owners such as Maori tribes who will pay taxes but never sell the land to get the tax back against any CGT. Similarly for property handed down the generations. Similarly for church or community owned properties, are they going to be paying 1% land tax?

    If it only applies to individuals then the start of a Ngata Tauiwi tribe where land ownership is placed into the hand of the Tauiwi tribe could well be on the cards.

    Are you proposing death duties as well? Again death duties for Maori or Tauiwi tribes are not an easily implemented course of action.

    Of some interest is this

    http://www.stuff.co.nz/national/politics/3779934/Tax-ruling-shifts-law

    I think the situation regarding taxation is fast becoming an unsustainable monster. Does the government actually want people to work here?

  48. Gerrit, why do you seem to be opposing taxing all income equally so we can finance government better and don’t have to borrow to do so – or at lower tax rates?

    I don’t think charities or other untaxed groups would be liable for land tax or CGT either. As for those who don’t sell property (family farms or trust farms or company famrs) – they would still pay land tax each year. Something they can easily finance by borrowing against the rising value of the property.

  49. I would tax CG at the company tax rate – the issue of level is really over accounting for inflation.

  50. The only connection between a CGT and death duties is that people inherit from an estate after liabilities are met and if that included sold property, a CGT assessement would determine whether the 1% land tax paid each year covered any CGT liability. However a CGT regime could well exclude the most common asset the residential household.

  51. “Matiria; When you say that John and Pauline are kicking the ladder beneath them I find that seems to be common among the extreme right liberals like Mr. Douglas and Mr. Prebble.”

    Funny thing to say when you lefties support minimum wage laws that pull the bottom rung of the jobs ladder out of the reach of the most desperate…

  52. Ryan,

    Can every teenager in NZ become a doctor/lawyer/accountant if they are willing to put in the effort?

    No. If that were true, and happened, we’d be a nation of doctors, lawyers and accountants, which is, clearly, impossible.

    Our society is built on inequality. In our society, it’s impossible for everyone to earn the same (or a similarly) high wage, no matter how hard they worked. If everyone did, we wouldn’t have this society, we’d have another kind of society (which would probably be a lot better), but don’t count on those who benefit from inequality giving up their advantages without a fight.

  53. Jeremy,

    If you want the economy to grow until it can’t, why do you want that? Why not work towards a no-growth economy now, whilst we have, possibly, some extra resources to perhaps build a sustainable society?

    Might it be better to use the waste in harvesting forests (if we have to harvest forests), to build soil, rather than refine into bio-diesel?

    Also, why do you think recycling can drive economic growth? Recycling, which will never be 100% efficient and takes resources, can’t fuel economic growth; that has to be done by consuming newly extracted resources, to some degree.

    I don’t oppose economic growth for the sake of it; I oppose it because it is unsustainable, which you, at least, do acknowledge.

  54. Tony,

    I said: “Can every teenager in NZ become a doctor/lawyer/accountant if they are willing to put in the effort?”

    To which you replied: “No. If that were true, and happened, we’d be a nation of doctors, lawyers and accountants, which is, clearly, impossible.”

    My point is that “making money” is not the sole goal of everyone’s life. Given that there is a substantial non-monetary cost associated with being a doctor/lawyer/accountant (namely, that you work long hours, don’t see your family, etc.), there will be many who choose not to work in these professions.

    So I disagree with you. In a society in which every teenager could become a professional if they so wished, many would choose not to because many want more out of life than just making money. We would not be a nation of accountants/lawyers/doctors.

  55. “One and a quarter million teenagers become pregnant each year in the rich OECD countries and about three quarters of a million go on to become teenage mothers. The differences in teen birth rates between countries are striking. In the USA the teenage birth rate is 52.1 per 1000 women aged 15-19, more than ten times higher than Japan, which has a rate of 4.6.

    Babies born to teenage mothers are more likely to have low birth weight, to be born prematurely, to be at higher risk of dying in infancy and, as they grow up, to be at greater risk of educational failure, juvenile crime and becoming teenage parents themselves. Girls who give birth as teenagers are more likely to be poor and uneducated. Teenage motherhood is part of the inter-generational cycle of deprivation and social exclusion. ”

    http://www.equalitytrust.org.uk/why/evidence/teenage-births
    —-
    This could be explained by the fact that there is no incentive (DPB) in Japan and if a teen gets pregnant they have an abortion.

  56. Ryan,

    But it’s impossible for everyone to attain those kinds of positions because there aren’t enough such positions available, nor will there ever be, because our society currently needs all kinds of specialist and generalist skills, at all levels of remuneration. It’s a lie to say every teenager can get such positions if they work hard – the best that can be said is that many teenagers can attain those positions but they’ll probably have to work hard to do so.

    You disagreed with me and then agreed with me by saying that many will not choose those professions, i.e. not every teenager can end up in those professions.

  57. it is pretty rich anyone on a $130,000 plus perks talking about gaps between rich and poor.

    Kevin would prefer that no one in Parliament supported the poor.

    and as for equality, its not about the money and how much tax rich people pay. its about BASIC equity and status as human beings given a fair go in this society.

    Income equality is about just that. More generally, equality is about many things, not one single issue.

    get real, Meteria. how could you have ever been an ALCP candidate without any semblance of belief in the cause?

    Get real Metiria? The Greens could promote cannabis reform more, it’s true. And this is you’re strategy to make that happen? Deny the reality of every other good cause, while slagging those that support your cause the most of anyone in Parliament?

    And you’re the leader of the ALCP? You’re doing more damage to your cause than anyone who cares could.

  58. Tony,

    “You disagreed with me and then agreed with me by saying that many will not choose those professions, i.e. not every teenager can end up in those professions.”

    I did not agree with you.

    There is a marked difference between ability and choice, i.e., a difference between “can” and “choose” in the above comment. This distinction is crucial in a debate over social mobility. Metiria’s position is that those with lower incomes have no ability to move up the income scale. I disagree with that opinion (at least for the case of NZ.)

  59. Ryan, OK. What I should have said is that you agree that not everyone will end up in professions such as those. I go further in that it is absolutely certain, without a shadow of a doubt, that not every teenager can attain those professions because that means there would be no other professions, or work of any kind – which is impossible.

    It may seem a truism to say this but when I read such phrases (“everyone who wants to do X, can do X, they just have to work at it”), I just think it is nonsense because it doesn’t use the proviso, “provided the number of people who want it doesn’t exceed the number of people who can work in those professions”. In other words, if too many people aspire to professions that can attract hight salaries, some will be sadly disappointed. Or, to put it yet another way, our society relies on inequality of income, so we shouldn’t pretend that everyone can attain those hights.

  60. Tony,

    Fair enough. But remember that ‘social mobility’ is what is under debate here; and some degree of income inequality is a necessary condition for social mobility to exist. If there is only one rung on the ladder, then there is nothing to climb.

    Anyway, you raise an interesting point. If everyone studied to be a professional, yes, then some people would be disappointed and would have to resort to the other low-paying jobs that functioning societies require. Yet in this thought experiment, I would expect professional’s wages to decrease, given the flood of professionals looking for jobs, and the wages of non-professionals to increase, given that no-one is looking for to those professions. So while I admit an egalitarian society would not result, a reduction in income inequality would. Thoughts?

  61. I would have thought improved social mobility, or improving ones lot from a position of relative destitution is a mix of individual effort, community suppiort, public sector involvement and the market. Certainly it is not possible from individual effort alone despite the rhetoric above about rich folk becoming rich [solely] because they work harder than poor folk. Community support is needed, for example: localised help, such as how the local school might work to ensure income differentials do not impact on access to curricula and extra curricula activities without having the poor child prove they or their parents are “deserving poor”. Public sector involvement can includes investment in education, be it ECE, the Training Incentive Allowance (or access to second-chance or even first-chance adult education) or general access to tertiary education while the market is rather like Adam Smith’s black-box (or perhaps people like Sir Mad Butcher) putting their money into decent employment systems.
    I do not believe John has any real intention of reducing the incomes gap with our Australian cousins – or at least not for the vast majority although he might have a concern for merchant bankers salries – else why reduce the public investment in education (be it ECE or the entire tertiary sector) as surely it is this investment that is crucial to improving our individual and collective “human capital”.
    Social mobility will stagnate even more than is indicated by the income differentials in NZ. That NACT are concerned is….

  62. New Zealand has great opportunities for social mobility, but only for those who can be bothered.

  63. Making the mistake of equating the ability to become a professional engineer, or MD or Lawyer or something else with simple access to education is a bit of damnfool nonsense. Those people get paid to be smarter than average.

    This is not Lake Wobegon. Not everyone can be smarter than average. Most of the population could be trained to think better, but that by no means makes those professions an option for most people… and it is largely irrelevant to the inequality that this government promotes and Labour turned a blind eye to for so long.

    Fundamentally the people who make (not earn, professionals EARN) a lot of money are making it because they own stuff. They are getting paid for owning, not doing, and their “compensation” is well north of 200K. Making most of income outside the PAYE regime they pay what their accountants figure they can get away with. They won’t “profit” so much from the tax break, they never paid the 38% anyway, but they won’t be paying anything like a fair cut out of their income.

    So arguments about equality have to go back to some basic understanding of what it means to WORK for a living as opposed to being part of the ownership class of the society.

    BJ

  64. “New Zealand has great opportunities for social mobility, but only for those who can be bothered.”

    Yup, that’s it.

    Some countries – those with more equitable access to public education, more progressive taxes, less entrenched business old-boys networks – have more social mobility.

    But that’s just complete coincidence. Because really people in such countries just happen to be the ones who can be bothered to go out and improve their life.

    Just like we all know that people are just unemployed because they’re lazy. So drops in financial markets must create waves of laziness. Maybe via orbital mind-control lasers.

  65. Icehawk,

    less entrenched business old-boys networks

    Ah, that myth called the old boys network. Any evidence that there is such a thing or you just repeating hearsay?

  66. BJ,

    Surely another myth

    Fundamentally the people who make (not earn, professionals EARN) a lot of money are making it because they own stuff.

    New Zealand society is full of people who have made it from very humble beginning.

    Just three business examples, Sir Peter Leitch, Michael Hill, Peter Jackson.

    And there are plenty others, from sports for example we have Grant Dalton, Scott Dixon, Steve Williams.

    Just add John Key to the list as well.

    The number of myths being perpetuated here is staggering.

  67. Ryan,

    Yes, I suppose an increase in supply would lower the salaries. However, the supply would be limited by ability, as BJ suggests, and desire, as you suggest. That desire would also be lessened, if the expected salary levels are reduced; people seem to demand differentials.

  68. Icehawk says “Some countries – those with more equitable access to public education, more progressive taxes, less entrenched business old-boys networks – have more social mobility. ”

    And some that have those characteristics, hase LESS social mobility.

    15% of people who started on the dole in 1999 were still on it ten years later.

    And during that period I’ve had neices and nephews who have got jobs to support their studies EVERY single time they’ve wanted work. The jobs weren’t great – road worker, waiting, apple picking, labouring, painting, grape picking and pruning, etc – but when they are prepared to do anything – there has ALWAYS been work available.

    It’s pretty obvious that if you can’t be bothered, you’re never going to climb the social ladder.

    Some people want to be able to climb it by doing nothing.

  69. Gerrit

    That I am not troubled by those who EARN their wealth should be no surprise.

    What I am pointing out is that the taxes paid do not reflect their greater income except in the inverse.

    As for the undeserving underserving board members… one has to consider how, on balance, the myth has proven true. People who do not produce are running and “owning” companies which they have scant understanding of, else those companies might survive.

    Instead New Zealanders lose money almost at every turn, and the fortunate ceo and board members take their compensation and run. You can cite the exceptions, but this

    http://www.parliament.nz/en-NZ/PB/SC/About/Media/5/2/3/00SCCO_MediaRelease20090820_1-Inquiry-into-finance-company-failures.htm

    http://www.nzherald.co.nz/wages-and-salaries/news/article.cfm?c_id=277&objectid=10465165

    http://www.3news.co.nz/Telecom-CEOs-salary-package-17-times-bigger-than-PMs/tabid/369/articleID/118387/Default.aspx

    …seems to bely the hard-working honest and poorly compensated corporate board member myth.

    That doesn’t mean that some people aren’t working for their company. Rakon comes to mind as a reasonably well run company with no madness in the compensation of the CEO.

    No joke Gerrit, I regard it as impossible for anyone to actually EARN more than about 8 times the average wage. Where a higher compensation appears, it indicates some manner of legal or illegal monetary transfer that is not earned. I believe in additional tax brackets and some pretty stiff tax for those at the top, and a CGT rather than a larger GST.

    We are a nation of sheep, and the shearing season started long before we elected THIS government. They aren’t however, helping us to get a better GINI coefficient, and the result for us is pretty negative.

    BJ

  70. BJ – one of your comments is obviously wrong. When you have one of the countries top CEOs paying over $2.5 million in tax, their tax bill is clearly in line with their salary – not the inverse as you claim.

    However I agree that some salaries are just too much. The problem with the idea of very high levels of tax on very high salaries is that you will chase away all the rich people from New Zealand – exactly the sort of people who run companies and employ people.

    So if you do that you can expect higher unemployment, more tax needed from those who are left, and you’d need to drastically cut goverment spending, benefits, healthcare etc.

  71. Icehawk –

    “Some countries – those with more equitable access to public education, more progressive taxes, less entrenched business old-boys networks – have more social mobility.”

    How do progressive taxes encourage social mobility?

    As for your other two points. NZ has progressive funding of it school system. Lower decile schools that are underperforming academically receive more funding. Moreover, it is important to note that the funding is not tied to zip-code. Remuera taxes do not fund Remuera schools. As for tertiary education, the taxpayer funds 75% of the costs. When I was at uni, I was paying 4-5 grand a year, which left me with a debt I could pay off within three years of graduating. I don’t see how NZ education could be more equitable.

    As for the old boys network. In my experience I have not found any evidence of this. I have friends that went to private schools their entire lives, yet strangely, none got jobs through their parents. In fact many underperformed relative to public school university grads.

  72. Photon

    The notion that the guy running Telecom is someone who employs people and creates jobs is so absurd as to be hysterically funny. Paying 2.5 million tax on what income? At that level I’d expect to see 60 cents tax on the dollar, much as they do in Sweden. You know, that benighted country that can’t manufacture jet airplanes or ships or anything else worth having? Oh, they do? Fancy that.

    Rich people don’t in general do cr@p for a country. Productive people become wealthy without ever crossing over into this weird dimension of multimillion dollar compensation packages… and taxing someone so that he gets a take-home of only 2 million after being paid 7 might give some of these mobs a bit of realism about what they are paying for.

    No Photon, YOU can expect higher unemployment. I expect that we’d drive off the leeches and get to keep more of OUR money to benefit and invest in the companies and industries where we work.

    BJ

  73. I was actually talking about people who own businesses, and those who invest their money in businesses here.

    Like what has happened in Sweden –
    – Swedens richest women left Sweden for a lower tax country, as did her company – the Swedish world giant food and packaging company Tetra Pak, who moved it’s headquarters OUT of Sweden.
    – Swedens richest men left Sweden for a lower tax country, as did his company – the Swedish world giant furniture company IKEA, who moved it’s headquarters OUT of Sweden.

    You talk of Sweeden then unemployment? The trade unions there are currently complaining that the real unemployment rate if you include forced retirement, work schemes etc, is actually 20% – not the 10% on the government books.

  74. And Photonz, in Sweden in winter it is cold and dark, I’d leave too.

    The equation of improved social mobility and more taxpayer funded services than here is fairly simple. The recipient of the taxes is able to fund certain needed services so as to improve the lives of the vast majority. Improved life is social mobility. While not every citizen in these countries like what all their governments do the majority are willing to accept high taxes for generous compemsation in the social wage, be it annual leave, parental leave, ECE, access to tertiary education, better health systems with virtually no third world diseases present, better quality homes, more sensible public transport…. need I go on.
    I won’t go on about the millionaires I know, the guy who did time for rape (that he did not commit but the crime was commited), the illiterate hard-working labvourer because those I know do not win arguments.
    Comparative politics simply proves less social/income inequality leads to better lives for the majority by almost all socio-economic measure you want to look at.
    But debate away NACTers. Treasury admited to an incoming government here two decades ago that the adopted policies would lead to a “lost generation”. The sad thing is, the current government could be getting the same advice now.

  75. BJ,

    You may have no issue with those who EARN their wealth, however, it is impossible to objectively say what portion of income is “earned”, as opposed to simply paid.

    Some might say that’s the beauty of the free market system whilst others will say that’s the problem with it. Two people can work equally as hard, can be equally as intelligent but through opportunity, specific skills, and luck, one might “earn” a pittance compared to the other. In extreme case, one might be paid in a year (or less) more than the other will be paid in their entire life.

    It’s impossible to justify any salary (other than in market terms) and it riles me when people try to do so (not that you have; I’m writing generally).

  76. Graham – the companies left Sweeden percisely because of high tax rates.

    The problem in NZ is we have generated a group of people who are completely dependent on the state and have no inclination to ever provide for themselves.

    Making it easier to be dependent, and harder to get ahead by working hard, will only entrench these people further, and increase the size of the group.

  77. Photonz1, yes you indicated Sweden’s “richest men” and “richest women” left because of the tax (which as far I know have not changed in recent years) have now morphed into a company… but one or two or even six or seven hardly make a flood of emmigrants…It hardly disputes the arguments about overall standard of living and social mobility butnnever mind.
    As for “completely dependent”, I know of no one in that state, and that is from working as a benefit rights advocate, although some in a oxygen tank or life support may in this state of affairs. All my clients have friends, social networks…. and there are many a business dependent on them individually and collectively. I recall the rise in unemployment in 1991/2 as a result of the cuts in benefits due to the worsening on the depression we were plunged into then… to say nothing of the rise in foodbanks. Did you donate? Or did Mummy and Daddy, how nice!
    As for “no inclination” I know of some who are effectively unemployable but that does not mean they do not make contributions as best they can given their levels of physical, mental or intellectual impairment, but no inclination, what strange bedfellows you have.
    I also know high paid workers in both the public and private sector who are nothing more than white collar criminals but the tar on them need not be brushed on all such folk.
    We are discussing social mobility and the mix of government policies and social systems/interdendencies/networks that facilitate this, not sods and odds.
    Judge with care photonz1 and others else someone may say you depended on may out you – even if the dependency was for a smile – and that may harm your abundancy to judge.

  78. As long as companies and wealthy individuals can find and play off different country’s tax arrangements against one another with impunity, those countries will find themselves in a race-to-the-bottom with respect to tax.

    However, the tax issues with companies and with individuals are quite different.

    The problem becomes the competitive arrangements being manipulated by governments to “attract” business, reducing taxes to the point where it is necessary to borrow to cover the shortfalls. This puts the economy of more “honest” nations (closer to balanced budgets) at the mercy of those who would “buy” prosperity at the expense of their children and their children. That is both unsustainable and IMHO, unconscionable. Again the browser is acting up, spelling will suffer and I can’t see what the heck is coming out of the thing. More later.

    respectfully
    BJ

  79. Graham Howell – english please.

    The Swedish point was the size of companies that left with their owners because of tax. Ikea, the world’s largest furniture companies turns over $40 BILLION annually, and now Sweden misses out on all the tax from this company. Ditto Tetra Pak.

    There are tens of thousands of people who are completely dependent on the state for their income, yet you claim you know no one like that despite being a benefit rights advocate? Bizarre.

    Perhaps the people you were dealing with weren’t really beneficiaries?

  80. Participating in a race to the bottom at the expense of future generations is an interesting thing to be advocating, but you won’t find any Greens supporting it. It is strictly a National and ACT and Chicago-school of economics bit of lunacy that will eventually be regarded as criminally negligent if not simply criminal.

    BJ

  81. I guess we could regulate so incomes do not go above a certain ratio of the average wage as well, and nationalise all property. What fun? No!

  82. There’s an article here about inequality in the U.K from New Geography. It doesn’t seem far off the mark (except for blaming unaffordable housing on urban boundaries).

    “Tony Blair’s “cool Britannia,”epitomized by hedge fund managers, Russian oligarchs and media stars, offered little to the working and middle classes. Despite its proletarian roots, New Labour, as London Mayor Boris Johnson acidly notes, has presided over that which has become the most socially immobile society in Europe.

    This occurred despite a huge expansion of Britain’s welfare state, which now accounts for nearly one-third of government spending. For one thing the expansion of the welfare state apparatus may have done more for high-skilled professionals, who ended up nearly twice as likely to benefit from public employment than the average worker. Nearly one-fifth of young people ages 16 to 24 were out of education, work or training in 1997; after a decade of economic growth that proportion remained the same.

    Some people, such as The Times’ Camilla Cavendish, even blame the expanding welfare state for helping to create an overlooked generation of “useless, jobless men–the social blight of our age.” These males generally do not include immigrants, who by some estimates took more than 70% of the jobs created between 1997 and 2007 in the U.K.

    Immigrants, notes Steve Norris, a former member of Parliament from northeastern London and onetime chairman of the Conservative Party, tend to be more economically active than working-class white Britons, who often fear employment might cut into their benefits. “It is mainly U.K. citizens who sit at home watching daytime television complaining about immigrants doing their jobs,” asserts Norris, a native of Liverpool.”
    http://www.newgeography.com/content/001598-the-future-of-americas-working-class

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