The neoliberal revolution saw a massive transfer of wealth from the people who create it to the owners of capital.
This didn’t ‘have to happen’. There were other options. The dramatic fall in wages as a % of GDP in New Zealand was not matched in Australia. They had stronger unions and more distributed political power than in FPP New Zealand. There neoliberal crazies didn’t get carte blanche as they did here.
It was at this time that the wage gap opened up. In part, because of slice of cake going to workers got relatively smaller in New Zealand. In part, because the economic destruction wrought by the neoliberal’s low wage/low skill/strip it down/sell it off mentality saw New Zealand’s productive capacity stagnate while Australia surged away from us.
The wage gap is about 70% due to the smaller economic output of New Zealand. 30% due to the fact that Australian workers get a larger share of their output in wages than we do.
One of the effects of the decline in workers’ share of GDP was that a few got richer and the rest of us had wages that stayed the same or went backwards. Trying to ‘keep up with the Joneses’, many here and in other countries blighted by neoliberalism took advantage of the cheap and easy credit offered by the deregulated finance sector. We know how that worked out.
The last Labour government got some way to reversing that trend (even as workers’ share of GDP in Australia fell under Howard). That progress has already started to reverse under National.
I’m looking forward to seeing policy from Labour today that will help to return workers’ share of the wealth that we generate back to the levels we used to enjoy. And, in doing so, give young Kiwis more reason to stay here rather than chasing higher pay in Aussie.