NBR Rich List highlights inequality

It is hard to find reason to celebrate the latest NBR rich list while one quarter of all New Zealand children are living below the poverty line.

The NBR’s annual publication, out yesterday, reports an increase from 2012 of $3.5 billion in total minimum net worth among Rich Listers a total minimum net worth of members is now at $47.9 billion.

This year’s increase in wealth has come primarily from the stockmarket.

The growth in wealth of these New Zealanders doesn’t mean they are better than anyone else or necessarily working harder or smarter than anyone else. The system is currently skewed to the advantage of the wealthiest and perpetuates values that most of us don’t share.

In the book, Inequality- A New Zealand Crisis, Max Rashbrooke writes, “Using the concept of “social return on investment” (the broader benefits to society created by a particular activity) British researchers have suggested that high-paid investment bankers by engaging in predatory lending and contributing to financial crises, destroy 7£ of wider social, economic and environmental value for every 1£ value they create.”

In contrast low paid childcare centre staff help nurture the workers of the future and generate between 7 and 9.5£ in value for each pound they are paid.

Many people are working multiple jobs/long hours in very demanding work. Rest home workers, small business owners as examples. It’s just they’re not getting the benefit.

Many people are very smart, and innovative – academics, community workers, social entrepreneurs, rest home workers. I’m not sure if you did comparative intelligence tests the rich list would come out top. Though there is a ‘competitive advantage’ if you’ve been to the right schools, had a great education etc. etc. It has to be asked though how was that possible. I know for myself my educational achievements and luck in life have significantly been a result of our shared national resources i.e parents had two good public sector jobs, child benefit, it was a time of full employment and state housing so they could afford to buy a house. I know many others who haven’t been as lucky who haven’t had the same opportunities as me.

The top 1% owns three times as much wealth as the poorest 50% in New Zealand.

This degree of inequality hasn’t always been part of our landscape and it doesn’t have to be. I don’t want to return us to the past although I do want a future though where our shared interests are better acknowledged.

While we look to those who have achieved great wealth we are also brutally aware of families living in damp, cold houses and children are going to school without food or shoes.

An Organisation for Economic Cooperation and Development (OECD) report in June found that in New Zealand “income inequality is higher than the OECD average” and that “the system of taxes and transfers reduces inequality less than in most OECD countries”, leading the OECD to recommend New Zealand adopts a capital gains tax.

There is a growing conversation among New Zealanders about income inequality and the gap that exists under the current Government.

Lower incomes are getting squeezed, with the median wage going down for the second consecutive year.

We now have a Living Wage movement that is drawing attention to low wages in New Zealand.

The “Gatsby effect” is alive and well with Inter generational earnings mobility remaining lower in high inequality countries. These effects accumulate over time and across generations. There is a clear link between today’s inequalities and opportunities over time.

As RH Tawny says, “A good society is not just one in which people can rise, but also one in which ‘they should be able to lead a life of dignity, whether they rise or not.”

New policies like extending the child payment to families on a benefit, raising the minimum wage to a living wage, and taxing capital gains would help families and make us a more equal society.

6 Comments Posted

  1. Actually the effective marginal tax rate goes DOWN as you roll over the 90k income level. Below that the government assistance is take away rather rapidly as you go up in income. It makes the middle a more of a plateau.

    Then, because the taxes are paid differently by those who pay accountants to arrange their investments than they are by people who actually work for a living, the effective marginal tax will go down.

    Those are the people fed by National. Not most of us either. Much more than half the National party is simply wishful fools voting for greater advantage to the people who pick their pockets every single year. Fools who haven’t figured out that they aren’t advantaged by the still more disadvantaged others being showcased as “bludgers” or the advantages they vote to the wealthy in their ignorance.

    If you alter the median but not the inequality there is going to be no change to the moving line. Sort of irrelevant to this discussion… isn’t it?

    In the end this is still all about the neo-liberal agenda of inequality being better than “gasp” communism. Even though a more equal income isn’t at all the same as communism. Ownership does not and CAN not confer the sort of privilege it enjoys today. Putting property rights ahead of all others is not “Capitalism”. Adam Smith would not recognize this distortion and the end result isn’t a society that anyone wants to actually live in.

    But the people who vote National into power aren’t actually aware of the difference between them and the people they are allowing to take advantage of them. They are too enamored of the difference between them and the poorest of us.

    Something to be ashamed of in my book… but there they are.

  2. The reluctant slight increases of min. wages will not help much with the situation when the real problem is the non-regulated/uncontrollable increases (= much more profits grabbing for big corporations after deregulations in many industries ) in major expenses for families…
    the power price, the petrol price. the house prices (mortgage or rent), the rates/insurance costs etc. have all gone up more than double in 10 to 15 years…

    But the work conditions have deteriated, the wages haven’t improved much (except for those super high paid CEOs and too many consultants)
    This govt tries its best to depower unions even further, so workers become even more vulnerable…
    I don’t know how many benefitiaries will survive another so called welfare reform; all I know is this govt will get punished severely in the coming election if not sooner.

  3. …while one quarter of all New Zealand children are living below the poverty line.

    Ok, lets assume the median household income is about $80K per annum. I use my magic wand, and double everyone’s income, so the the median household income is now $160K. What percentage of NZ kids are now living below the poverty line?

    Yeah, its still 25%. That wave of the wand didn’t do the trick, did it, so lets have another go. Lets raise the median household income to… one meelion dollaars. Now whats the percentage of kids living below the poverty line?

    Heck, most of these kids can buy an LCD telly a week with their pocket money, and yet a quarter of them are still living below the poverty line. Whats gone wrong, Batman?

    (One can cheat, and look up the answer in “Household Incomes in New Zealand: Trends in Indicators of Inequality and Hardship 1982 to 2011” from the MSD)

  4. I suspect efforts to improve income equality through progressive taxation / Working for Families have actually exacerbated inequality. Why? The market charges as much as can be afforded. If you enhance purchasing power people can afford to pay more and the ‘rich’, or those who already own assets, get richer. Meanwhile it becomes harder to move up the scale due to marginal tax rates. Can’t have your cake and eat it too…

  5. I agree Jan, that the rich list is hardly a ‘red-letter day’ for the majority of kiwis who live week to week.
    I’m sure this N-Act Govt. will be giving 3 cheers for all their mates who are on the list ?! (“BOOO” say I)

    There was a time in my memory, when Aotearoa/NZ was considered a place were ALL kiwis got a FAIR-GO.. but now we just see this shift to the right & survival of the fittest/richest mentality dominating the way many think !


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