This report broadcast on Al Jazeera provides an overview of an unequal society under a regime of “austerity”. It claims that over 50% of Spain’s young people are unemployed, and 30% of children live in poverty.
Children go to school hungry and poorly clothed. They draw pictures of people scavenging for food in rubbish bins, and people shivering from the cold. Meanwhile the bankster-supporting economists talk of boom times coming, the media focus on tax evasion by the wealthy and corporate bribery of politicians, and people are more interested in major sporting contests than elections.
Spain has the 4th largest economy in the Eurozone, and the 2nd worst child poverty percentage in the EU (worst is Romania).
The wide inequalities that damage societies, as outlined by Wilkinson and Picket, are not just income inequalities. Income inequalities feed wealth inequalities (measured by financial and material assets like property). And wealth inequalities tend to be far larger than income inequalities, and harder to wind back, as argued by Thomas Piketty . As reported in the New York Times
This means that the income from wealth usually grows faster than wages. As returns from capital are reinvested, inherited wealth will grow faster than the economy, concentrating more and more into the hands of few. This will go on until capital owners decide to consume most of their income and stop reinvesting as much.
In an article in the Observer in March, Spirit Level authors Wilkinson and Pickett reflect on developments since their book was published. They restate the original thesis of the book:
As we looked at the data, it became clear that, as well as health and violence, almost all the problems that are more common at the bottom of the social ladder are more common in more unequal societies – including mental illness, drug addiction, obesity, loss of community life, imprisonment, unequal opportunities and poorer wellbeing for children. The effects of inequality are not confined to the poor. A growing body of research shows that inequality damages the social fabric of the whole society.
Since the book was published such inequalities have escalated.
In New Zealand, Closer Together suggests ways government can lessen such inequalities.
Lift wages for those on the lower incomes; Raise welfare benefits; A fairer tax system
10 Good Ideas To Reduce Inequality
1. Universal Child Allowance: $60 per child each week would lift most children out of the worst of poverty.
2. Raise welfare benefits to the same level as NZ Super: This would eliminate the worst of poverty for all those who cannot work, just as it already does for those aged over 65.
3. Raise the minimum wage above $16 per hour: The current minimum wage is too low and leaves many hard working people in poverty.
4. More affordable rental housing: income-related rents make the different between poverty and getting by for thousands of social housing tenants.
5. Adopt a living wage: firms and government choosing to pay all their employees above the Living wage rate of $18.80 per hour.
6. Financial transactions tax:
7. High Pay ratio of 8:1
8. High income tax bracket: starting at $150,000 income.
9. Capital Gains tax
10. Wealth Taxes: inheritance and death taxes
As too much investment in NZ goes into housing and other property, it is essential to increase the state and council housing stock. Alongside this, an increase in community housing will be helpful.
Closer Together suggests ways we can help reduce the inequality gap:
Help build a community of change
Tell people about inequality
Write letters and emails
Your vote counts
(work via) Your organisation
(Consider) Are you willing to pay more tax?
Wilkinson and Pickett interview on BFM this week.
I understand that TV3’s The Nation will be focusing on inequality this morning, and will interview Wilkinson and Pickett.
Update: TV3’s The Nation was focused on inequality this morning.
They looked at the Labour and National parties claims: National’s that there is no rise in income inequality; Labour’s that there is a rise in income and asset inequalities. Rob Salmond was interviewed. Mainly the evidence shows the big increase in income inequalities was in the late 80s and early 90s in NZ. The income inequalities have not decreased since then.
Brian Easton said that National was using the GINI coefficient, which does have problems. It measures the average difference in income. Another measure compares the spending power of rich and poor households spending power compared. Comparisons between the top and bottom 10% tend to show rising inequalities. Easton said this also needs to be treated with caution. Comparisons between the top and bottom 20% are better, but show little rise in inequalities.
Labour argues the Gini doesn’t include capital gains. Rob Salmond said the top earners are increasingly reliant on capital income rather than wage incomes. And this is hard to get stats on or measure, as there are fluctuations from year to year, and some evidence is not available.
A Salvation Army spokesperson said that the property boom has increased wealth inequality since about 2004/5. This will lead to greater inequalities in disposable income.
.. said the problem was more to do with unequal rises in pay of the top earners compared with those earning least. While progressive taxes could correct this, it was as important to make gross incomes more equal. Worker representation on boards, and via collective action are important to correcting this.
Craig sounded reasonable until he got into some red scare lines. Moroney put Labour’s case well.
Humour break: Interview of the guy from the Civillian by Gower: poor to pay more taxes, rich less; Llamas for poor children and ice cream for all.
Panel with Max Rashbrooke and Matthew Hooton, and Lisa Owen and Patrick Gower. Hooton ran spin lines about the politics of hate and envy. His arguments were countered well by Rashbrooke and Owen: he argued that The Spirit Level does not show causality and that poor social outcomes could cause inequalities – Rashbrooke said that the book shows the rise in inequalities precedes poor social outcomes; Hooton said the aim of being as equal as Scandanavian countries was flawed as the top corporate tax rate in Finland is lower than in NZ – Owen said the top personal tax rate was much higher than in NZ. Gower took the line that policies to decrease inequalities would make a party unelectable – politics as game. Such an approach ignores what is best for society, and for those struggling to live lives with few opportunities and poor life chances.
Note on pressure from the community: in the Bfm interview, Pickett said it is necessary for there to be a groundswell of public pressure for change. Change won’t begin with the government. On The Nation, she also talked about the need for people to learn more about the issues, because, generally people do not accept a large inequality gap. Most people are unaware of just how large that gap is currently.