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How to tell you have a Tory govt

Written By: - Date published: 5:01 pm, April 16th, 2011 - 7 comments
Categories: class war, cost of living, Economy, equality, john key, national/act government - Tags:

Brian Fallow is one of the Heralds more understated columnists. Brian and I probably vote differently, but I find his articles usually worth the read. But there is understatement, and then there is deliberate obfuscation. His column today starts out workmanlike enough, repeating the PM’s case how average wages/salaries have increased in real terms around 6% over the last two years.

Then he turns to the median wages/salary figures released by Statistics NZ and shows how over the same two year period they have fallen 6%. That’s right… in real terms, the poorest 50% of New Zealanders are at least $80 per week worse off under National. This is how you can tell you have a Tory govt.

And then Brian concludes with a rather facile:

So depending on your point of view and which data you select, you can claim that people are 6 per cent better off or 6 per cent worse off.

What this really means of course is that the average and median income figures have diverged by around 12% in just two years. The only way this can happen is for the wealthiest New Zealanders to have gained dramatically at the expense of the rest of us. Logically this must represent a dramatic increase in income inequality in this country, a rather startling and damming conclusion Fallow studiously avoids making.

He almost gets there at one point: In statistician speak, “the distribution of earnings is asymmetrical, with a bulge at the low end and a tail at the high end”…. yet fails to drill into the implication of this. That in order for this long thin tail at the high end to have increased the average income by 6%, their actual incomes must have increased a great deal more than this. Again mute on a crucial point.

Those who actually read The Spirit Level will have noted how New Zealand already had one of the higher income inequalities in the developed world at the time the book was written two years ago, and how correspondingly poorly we performed on so many social health indicators. Now it turns out this govt has taken this already too high gap… and made it worse. In anticipation of the usual right wing tactic of blaming everything on the previous Labour govt, here is some data tracking several inequality measures for NZ since 1984.

Now I guess most of the regulars here at The Standard are none too surprised by this; especially those who’ve repeatedly pointed to Key’s astounding pre-2008 election comment about wanting to see wages drop. I have to confess that for a long time I was a tad sceptical that Key would have made that remark in the way it was reported. Well I’m thinking now I was wrong… that the numbers tell the story and Key did indeed mean what he said.

Because when you think that this govt cannot even build a decent cycleway in a timely fashion… you have to be impressed at exactly how effectively, how rapidly, this govt has made life better for their rich mates, while shamelessly paying for it from the pockets of ordinary working people.

All of which rather reminds me of Jared Diamond’s excellent book Collapse. In the course of the book he touches on a dozen or so long-vanished civilisations/cultures.. but dwells in depth on several. Perhaps the most poignantly recognisable were the Norse settlers in medieval Greenland who had carved a precarious niche in several coastal fiords of that otherwise uninhabitable land. In tracking the numerous factors that inevitably lead to their demise it’s quite remarkable how badly these otherwise intelligent and capable people responded to the external environmental and political changes impacting them.

Diamond points to evidence showing that due to the extreme shortage of desirable micro-climates, only a few farmholdings (the fundamental unit of their political structure) could hope to attain to prosperity and power… and thus inequality in this society was both extreme and unchanging. Which meant that the political/cultural decision makers, insulated from the suffering of ordinary Norse in poorer locations, stubbornly resisted the most obviously necessary changes (even simple things such as adopting more fish into their diet), protected their entrenched privileges and remained obtusely in denial of the limitations of their religious, cultural paradigms right up to the end.

But for nothing. As Diamond bluntly put it, “All their wealth purchased them, was the privilege of being the last to starve to death”.

7 comments on “How to tell you have a Tory govt”

  1. todd 1

    You’ve got to wonder what lemmings perceive New Zealand as being the least corrupt country in the World. Throw corporate crime into the recent crime rate mix and it is easy to see the spin from the right, which is completely removed from reality. It’s not just that the divide has markedly increased under National, it’s that the right-wing are hacking away at any bridges that used to span the divide as well. Those on the edge of the cliff, will surely fall under a second term.

  2. Bright Red 2

    good post but the difference between the numbers is a little different than you portray.
    National’s favoured figures are only the average for ordinary time pay for full time workers. This is the measure that superannuation is set against but it has no wider significance. It’s influenced both by high outliers – Paul Reynold’s big tax cuts, for example. And it doesn’t count the incomes of about 50% of adults at all. It also doesn’t count the GST hike.
    The median household income counts all incomes of all adults and is a median so isn’t affected by changes to outliers, which means Reynolds and Key’s tax cuts don’t influence things but neither does the fact a lot more families are trying to get by without a breadwinner than 3 years ago. It’s a much better measure than the average fulltime ordinary wage, but it only comes out every year, rather than every quarter.
    I don’t want to get all ‘Lanth’ on you 🙂 but the drop in the median income doesn’t mean “the poorest 50% of New Zealanders are at least $80 per week worse off under National.” All it actually means is that the median (gross) income is down by that much. But the median is like the ‘typical’ income, so probably represents what has happened to most families’ incomes – but incomes lower have probably dropped more and high incomes have probably risen thanks to the tax cuts
    Fallow is wrong that we can’t estimate the effects of tax cuts on the household income. Treasury does it by assuming that two thirds of the income comes from one earner and a third from another. When I applied this using the tax rates in force when National took office and the current ones plus took into account inflation, the after-tax household median income is down about $2,900 a year, or 5.3%.
    whew, maybe there’s a guest post in that. actually, I just saw the lotto draw and got a different idea for one

    • RedLogix 2.1

      I don’t want to get all ‘Lanth’ on you but the drop in the median income doesn’t mean “the poorest 50% of New Zealanders are at least $80 per week worse off under National.”

      Yes fair cop. I accept that the statement is technically loose, but in general terms I think it’s ‘near enough to be good enough’.

  3. peterlepaysan 3

    A National victory at next election will ensure there is no cliff to fall off.
    It will have been destroyed.
    There will be only the wealthy.  Third world here we come.
    No longer will the wealthy have to travel overseas to witness poverty and its effects.
    It will be right here on our doorsteps (if we have a doorstep).

  4. Graham 4

    If a significant chunk of people in NZ are pushed into poverty, will they keep tolerating this bullshit?
    If push comes to shove, will these corporate @%*&wits (and their supporters) get angry mobs beating on their doors?

    • Vicky32 4.1

      If push comes to shove, will these corporate @%*&wits (and their supporters) get angry mobs beating on their doors?

      Sadly, I don’t think so… no matter how good a thing it would be!

  5. LeeFluff 5

    Very interesting.
    I am wondering now what the actual break point is in the statistics.
    i.e. at what population have no perceived benefit (zero net gain) from National’s taxation strategy?

    I’m not a stats bod, but is this an easy answer?
    …only that it seems that at least 50% of people shouldn’t vote pro Nats on the basis of their tax promise, but also that the percentage of the population might well be much greater than 50% whom have received no real benefit from the changes…

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