We know that poverty is the root of a good deal of society’s problems from crime, to poor educational outcomes, to poor health. Just the direct economic costs of these problems are in the billions per year, and we can’t forget the loss of human potential and happiness. The good news: we can easily afford to eliminate poverty.
New Zealand doesn’t have an official poverty measure but the usual measure internationally is that households with incomes below 60% of the median are in poverty. I used the Household Economic Survey to estimate the poverty line for different household sizes.
I came up with nearly 400,000 households comprising nearly 1 million people living in poverty – 22%. That’s probably a bit on the high side looking at other countries’ rates but close enough. Things like Working For Families don’t show up in the data and will reduce poverty quite a bit. I also had make some estimates that are on the generous side.
I then used the same data to calculate how much extra income these households would need to get their incomes up above 60% of the median income: $5 billion.
$5 billion a year as a high estimate to eliminate poverty from our society.
Too expensive? No, it’s not. The richest 1% of New Zealanders have a combined income of $11 billion. $5 billion is less than 3% of GDP. By re-distributing 3% of our national income to the poorest Kiwis, we can lift 22% of the population out of poverty. And, like I say, $5 billion is a high-side estimate.
We have the money to eliminate the blight of poverty, which has no place in a civilised society.
We have the mechanisms: a universal minimum income, a fair minimum wage, a full employment policy with government as employer of last resort.
But do we have the courage and intelligence to rid ourselves of poverty? Or will the elite continue to turn a blind eye to the masses of poor and the fact that they, the elite, too suffer when so many don’t have the means to a decent standard of living?