web analytics

Inequalities of the 10 percenters

Written By: - Date published: 9:29 am, April 12th, 2014 - 28 comments
Categories: assets, bill english, class war, cost of living, david cunliffe, david parker, election 2014, john key, labour, national, poverty, spin - Tags:

All inequality measures are not equal.  The GINI Coefficient is widely used to measure inequality, enabling the production of some clear graphs and comparisons between countries, as well as comparisons over time within countries.  However, it has its limitations, and doesn’t necessarily show the impact of vast increases in inequality between the most and least well off sections of the population.  Focusing solely on one way of measuring income inequality, can divert from the fact that too many Kiwis are experiencing hardship: and focusing solely on income inequality can mask the vast inequalities in wealth and asset ownership.

These are some of the things I learned this yesterday following Pete George’s comment on open mike yesterday.  Pete’s post was about the latest article on the new Politicheck website looking at differences between the way Labour and National MPs talk about inequality, especially as represented in a recent exchange in the House. As political fact checking goes, this is a pretty mediocre effort, looking at limited and selective evidence and providing some shallow analysis.   Furthermore, the Politicheck article focuses too much on David Parker’s reference to a NZ Herald Digipoll in which the majority of those polled stated they thought that income inequality in NZ is rising.  Clearly, when looking at statements by the Davids Cunliffe and Parker over the last year, they are using other statistics as evidence for their conclusions.

Some of the most recent press releases from David Parker refer to a significant mix of income inequality and asset inequality.  On 30 January 2014, in the House David Parker asked Bill English points to the way income inequality (even if not rising in itself, can result in rising asset inequalities.

This NZ Herald article of 28 January 2014, the author Adam Bennett concludes that both Cunliffe and Key’s claims on inequality in their state of the Nation speeches, are not supported by the evidence.  Then there is this statement about the kinds of evidence Cunliffe and Parker draw on:

With no clear trend, the ministry analysis doesn’t support Labour’s view that inequality is increasing but Labour argues that work doesn’t tell the full story. It argues the data it is based on doesn’t include much of the income more well-off New Zealanders get from realising assets.

There have been other previous analysis and reports of NZ’s income inequalities: ones that used statistics such as those provided by the GINI and that provided a more in depth and more reliable an analysis than that on the Politicheck site.  For instance, there was this post and discussion on the NZ StatsChat website, last December.  And the CTU did a fairly in depth analysis in August 2012, drawing on a range of statistical measures, including the NZ Household Economic Survey and the GINI index.  Among other things, it showed greater inequalities in market income, before redistrubitive measures are accounted for; such measures as occurring via taxation and Working For Families which go a long way to reduce inequalities.

One of the main conclusions of the CTU report includes consideration of changing levels of hardship experienced. Hardship covers things like access to essentials like having enough food to eat. The report also makes comparisons between those on the top and bottom levels of income.

The changes in income were not evenly spread: the top third of households by income saw increasing incomes. The bottom two-thirds had falling incomes –some falling steeply.

The most significant, and clearest indication from NZ’s results on the GINI, is that income inequality rose markedly in the late 1980s and the 1900s, and that it has remained high ever since.  This strongly indicates that the “neoliberal” consensus in play since the late 1980s, has been a significant driver in the heightened level of inequality.  Labour and National can debate whether it was more or less high under each of their watches.  But the clear indication is a need to move away from the neoliberal consensus.  Measures are needed to counter the high levels of hardship and inequalities in income, wealth and asset distribution amongst the most and least well off.

Too much reliance on the GINI measure of income inequality can mask increases in the severity of hardship people experience and/or the numbers of people experiencing such hardship.  This is included in the Wikipedia outline of the limitations of the GINI.  It’s also included in the World Bank overview of different ways of measuring inequality and poverty.

Share of income/consumption of the poorest x%: A disadvantage of both the Gini coefficients and the Theil indices is that they vary when the distribution varies, no matter if the change occurs at the top or at the bottom or in the middle (any transfer of income between two individuals has an impact on the indices, irrespective of whether it takes place among the rich, among the poor or between the rich and the poor).

They state that measuring the top and bottom 10% or 20% would be more reliable. Today’s NZ Herald provides further evidence of the increase in inequalities between the top and bottom 10 % in NZ.

The pay gap between the highest and lowest earners is getting wider. It’s a trend that, says one researcher, can be traced back to the 1980s.

The OECD report, Society at a Glance 2014, says the highest-paid 10 per cent of workers in New Zealand earn 32 times more than the poorest 10 per cent – a 32-to-one pay ratio.

There’s figures point to real impacts on real people’s lives – where too many people in NZ are experiencing hardship. This is an extremely important election issue.

28 comments on “Inequalities of the 10 percenters ”

  1. Colonial Viper 1

    Good points karol.

    As for the concrete, raise all main line benefits by $30 p.w., widen eligibility to them, slash benefit abatement rates, (or perhaps dump all that complexity and just go to a UBI), increase the minimum working wage to $16/hr, and have a full employment scheme for 25s and under. Get state housing and utility pricing sorted.

    NZ poverty = virtually gone in 18 months.

    I notice no NZ political party has anything remotely similar proposed, preferring instead to dance around the issue of poverty like its some intractable monstrosity.

    • greywarbler 1.1

      Yeah pollies like a core of welfare problems festering away in a pile throwing out heat that they can warm their hands on and then to keep it going, actively create more welfare problems to toss on the fire.
      Its sustainable, renewal energy to feed their political rhetoric and get the voters ablaze with horror and disgust.

      Makes sense, from their point of view. And they can paint themselves as poor blighted blighters who have such a hard job ahead of them coping with all these intractable layabouts, miscreants, fecund fools, fertile flirts, uneducated morons, testorone-driven dickheads, violent vexatious vermin – what can we do, they say quizzically?

      But leave it to us we have broad shoulders and can act on your behalf, doing the hard yards to get things better and stop them spreading the plague and their head lice, and hepatitis and mad dogs that bite children.

      Set out like this and seeing how the scenario fits with the political rhetoric and activity with living and working conditions, lack of jobs, and lack of respect and fair resources for those outside ‘the system’, it is obvious that poor quality welfare delivery is a rich vein that pollies can inject into for good personal highs.

    • Draco T Bastard 1.2

      I notice no NZ political party has anything remotely similar proposed, preferring instead to dance around the issue of poverty like its some intractable monstrosity.

      They don’t want to address the fact that the reason why we have poverty is because we have rich people.

  2. Bill 2

    How can the gap between the wealthiest and the poorest not increase when a whole heap of people spend all of their money getting from one week through to the next while others are able to invest surplus money in assets? Seems logical that the gap can only increase at an accelerating rate under those circumstances.

    Even if a much higher tax rate on higher earnings was put in place, the gap would continue to increase at an accelerating rate, simply because there would still be people in a position to use their money to make money while others used all of their money to buy necessities.

    Or am I missing something?

    • geoff 2.1

      nailed it, bill.

    • Colonial Viper 2.2

      Ahhh, the wonders of unbridled capitalism and unfettered free markets – where every man, woman and child is a tradeable commodity to be monetized for the benefit of large shareholders.

    • Draco T Bastard 2.3

      Nope, that’s it. As I’ve said time and time again – the problem is the rich.

  3. greywarbler 3

    A discussion with Kim this morning and a USA wise-doctor and experienced medical observer and executive resulted at one stage in a comment about how the USA has very little rheumatic fever, and they have closed down much of the resource involved in dealing with it.

    Unlike here.

    http://www.radionz.co.nz/national/programmes/saturday
    10:05 Catherine DeAngelis
    Dr. Catherine DeAngelis is University Distinguished Service Professor, Emerita, and Professor of Pediatrics, Emerita, at Johns Hopkins University School of Medicine, and was the first woman editor-in-chief of the Journal of the American Medical Association, from 2000 to 2011. Dr DeAngelis is visiting Seelye Fellow at the University of Auckland, and delivered the public lecture, Patient Care and Professionalism, and university talk, So You Want to be an Author?

    This is audio note: Catherine DeAngelis ( 50′ 2″ )
    10:07 Catherine DeAngelis: policing pharma Emeritus professor at Johns Hopkins University School of Medicine, the first woman editor-in-chief of the Journal of the American Medical Association, and visiting Seelye Fellow at the University of Auckland.

    • Colonial Viper 3.1

      a USA wise-doctor and experienced medical observer and executive resulted at one stage in a comment about how the USA has very little rheumatic fever, and they have closed down much of the resource involved in dealing with it.

      Now, I didn’t hear this piece, but the comment strikes me as a load of fetid dingo’s kidneys.

      With 48M Americans surviving on food stamps, 2M-3M people experiencing homelessness at some time during a year, and over 50,000 homes foreclosed on per month, I’d simply say that they aren’t looking in the right places.

      Of course, if the doctor was talking about nice places like Fairfax, Arlington or Nassau counties (all with median household incomes of over US$90K), then yeah, not much acute rheumatic fever there.

      If you are talking about places like the Ohio Valley – well there, even adults come down with acute rheumatic fever and it is frequently left untreated. But in the “richest country” in the world, who wants to talk about detail like that.

      • greywarbler 3.1.1

        CV
        Your surprise at the ‘data’ I put up sounds justified when you consider the amount of poverty in the USA. I thought I heard this comment about the drop in Rh fever. Perhaps she was talking about just one state. That could be it. Anyway the link is there to get you near to the audio.

      • BEATINGTHEBOKS 3.1.2

        Rheumatic fever is an immune mediated disease that would be more common in Europeans if they were as genetically susceptible to it as Polynesians. Basically it is a result of Polynesians genetic susceptibility to it, not the proportion of individuals colonized with the bug which is found in about 20% of most adults. These scientific facts make comparisons between the rates of RF in various ethnic groups like comparing apples and oranges. Although housing overcrowding and fewer Dr visits increase the risks of the disease in Polynesians, once seen Drs are well aware of these increased risks , and the disease and will be treated according to this increased risk which is documented and reflected in current ministry of health guidelines, ( go to MOH sore throat guide lines). That’s in NZ though, each state in the US probably has their own guidelines. Rheumatic fever in Europeans is rare and this is in fact due to their immunological susceptibility to it and is a confounding variable when comparing rates between ethnic groups.

  4. JanM 4

    I got sent this link today from the Guardian which speaks grimly of the situation in Britain: http://www.theguardian.com/society/patrick-butler-cuts-blog/2014/apr/10/wonga-or-worse-debt-millions-close-to-the-edge
    It’s not just us

    • greywarbler 4.1

      I wonder if Britons would like to introduce MMP if they knew about it. It doesn’t save you from having avoidable economic pressures or avaricious and inept politicians, but does give another view of what politicos should be thinking about.

      Over in Brit they would probably have a hard right anti immigration group, and an environment party, and a People’s Future party as well as the alternative centre one is it Liberal, who would be able to present some alternatives to the present smug TINA s.its who are so downy they don’t need cushions.

      • karol 4.1.1

        My Brit friends are against alliances between parties – they have been put off MMP type approaches by Nick Clegg’s sell out of the Liberal Party.

        They have little understanding of how proportional representation works.

        • greywarbler 4.1.1.1

          Some proportional representation seems to have more possibility of moral hazard., ie prioritising through all the parties. It is hard for those used to FPP to get their heads around and then fans of one or the other type cause extra confusion. Also some people think it will solve everything and hearing that it won’t, vote for apathetic clinging to the present failed system.

      • Bill 4.1.2

        There are already various proportional voting scenarios used in the UK. (eg, Welsh Assembly, Scottish Parliament and the Northern Ireland Assembly) FPP seems to only be used for the UK general election.

  5. Tracey 5

    country to country comparrisons are not helpful amongst those nations deemed least poor because politicians and shallow thinkers like slylans say

    nz is number one in oecd so no poverty here…

    which is not what being number one means

    • greywarbler 5.1

      Not as stinky as number twos. Which is more useful for growing useful things than getting accolades for having the best non-violent revolution in the world.

      Our revolution was virtually bloodless. We stood with our mouths open and let the little red white and blue men land and squeak ‘One small step for man but one giant step for global capitalism’. Now there is a whole large building in the land of our master race, devoted to space for trainee economists working out charts, questionnaires, and measuring tools also computer games that show our progress in heroic, exciting ways with upbeat voiceover to go with positive press releases.

  6. Raa 6

    Why Labour is the underdog in this election.

    National has selected a field of young candidates for the 2014 election, allowing them to paint Labour as being wedded to outdated concepts such as social justice, common good, and environmentalism in contrast to pursuit of self-interest.

    De-funding the Problem Gambling Foundation might have been influenced by the organised gambling industry. Independent Commissions of Inquiry into Election Funding and the Gambling Industry are long overdue.

    Low turnout, due to lack of compulsory voting as in other jurisdictions favours incumbent governments. National won’t rock this boat.

    Failure of NZ Labour to connect with grassroot voters. When did you last see Cunliffe, Richardson, or Jones with their sleeves rolled up at the local market, pub, installfest, garden show, or street fair .. ?

    Failure to capitalise on National weaknesses, inability to provide a viable constructive alternative, inability to counter Keysian pandering to the lowest common denominator.

    • karol 6.1

      Labour MPs are out there connecting with people on the ground.

      Scroll down through Cunliffe’s twitter feed to see who and where he’s been visiting.

      Of course most others don’t know this unless it gets widespread media attention.

      • Populuxe1 6.1.1

        “Of course most others don’t know this unless it gets widespread media attention.”

        Actually I expect more people follow Cunliffe and other politicians on twitter and facebook than get their political news from newspapers, television or radio.

    • Tracey 6.2

      can you list the names and ages of the national mps

  7. papa tuanuku 7

    This article is too long. It needs to be longer than a teeet, but personally I found it difficult to see what point it’s trying to make

  8. My podcasts #11 and #12 at http://www.stevehart.co may be of interest re pay disparity in NZ and the UK.

  9. tricledrown 9

    Thomas Picketty economist
    Has looked at economic data going back 200 years.
    He has arrived at the conclusions that free market capitalism is failing most of us exvept the 0.1% who are gutting the worlds economies for their greedy selfindugent power.
    The rise of communism caused western capitalism to be more compationate but now since communism decline neoliberal capitalism has gone back to the days of the robber barrons beggers and debtors jaols.

  10. tricledrown 10

    NZ’s worst bene bludgers
    John Key bailed out by US taxpayer by millions$
    SCF investors all National voters Bill English widened the Labour govts bank guarantee scheme to cover dodgy finance companies total cost $2 billion plus.So National could keep its majority in cantabury electorates.
    Rio Tinto $500 million of taxpayers money foregone so national can keep its majorities in clutha southland electorates.

    • Melb 10.1

      And if the Govt left SCF and Tiwai point to their own devices then your comment instead would be ranting about National not caring about families with savings in SCF, not caring about hardworking Kiwis in Southland, leaving the provinces to wither away etc etc.

  11. Fip 11

    The Gini co-effiecient typically used only measures income differences based on data collected about individual incomes because that is all that is available. You could improve it by collecting better data.

    Benefits are largely distributed based on families. Note a discrepancy. One among many in the system. You are taxed on individual incomes, but paid (benefits) on collective responsibilities (working for families). A bit of consistency would be good start. Either grant benefits on individual income levels (like a UBI) or tax on family commitments/dependencies.(like income splitting).

    Just like improving the Gini coefficient would be a start. It’s a step in the right direction not the whole answer. An asset tax to help fund a UBI is another step in that direction. Assets make a huge difference to a person’s disposable income by either increasing their income (income earning assets) or saving expenses (owning a home means you do not have to pay rent and end up with a valuable asset when the mortgage is paid).

    There is no perfect solution. Only steps towards better. We are able to measure and use inflation and interest rates, GDP, unemployment rates and any other of numerous flawed measures for economic management. Well a Gini coefficient is another flawed measure that can be used which would change direction of economic management if it was to be reduced. In doing so it would indicate a greater equality of income distribution which is better for all.

Recent Comments

Recent Posts

  • Celebrating the Entry Into Force of the Treaty on the Prohibition of Nuclear Weapons
    [Opening comments, welcome and thank you to Auckland University etc] It is a great pleasure to be here this afternoon to celebrate such an historic occasion - the entry into force of the Treaty on the Prohibition of Nuclear Weapons. This is a moment many feared would never come, but ...
    BeehiveBy beehive.govt.nz
    12 hours ago
  • Supporting disabled people to stay connected
    The Government is providing $3 million in one-off seed funding to help disabled people around New Zealand stay connected and access support in their communities, Minister for Disability Issues, Carmel Sepuloni announced today. The funding will allow disability service providers to develop digital and community-based solutions over the next two ...
    BeehiveBy beehive.govt.nz
    16 hours ago
  • Voluntary saliva testing offered to quarantine workers from Monday
    Border workers in quarantine facilities will be offered voluntary daily COVID-19 saliva tests in addition to their regular weekly testing, COVID-19 Response Minister Chris Hipkins said today. This additional option will be rolled out at the Jet Park Quarantine facility in Auckland starting on Monday 25 January, and then to ...
    BeehiveBy beehive.govt.nz
    19 hours ago
  • Next steps in firearms buy-back
    The next steps in the Government’s ambitious firearms reform programme to include a three-month buy-back have been announced by Police Minister Poto Williams today.  “The last buy-back and amnesty was unprecedented for New Zealand and was successful in collecting 60,297 firearms, modifying a further 5,630 firearms, and collecting 299,837 prohibited ...
    BeehiveBy beehive.govt.nz
    20 hours ago
  • New Public Housing Plan announced
    The Government has released its Public Housing Plan 2021-2024 which outlines the intention of where 8,000 additional public and transitional housing places announced in Budget 2020, will go. “The Government is committed to continuing its public house build programme at pace and scale. The extra 8,000 homes – 6000 public ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Prime Minister congratulates President Joe Biden on his inauguration
    Prime Minister Jacinda Ardern has congratulated President Joe Biden on his inauguration as the 46th President of the United States of America. “I look forward to building a close relationship with President Biden and working with him on issues that matter to both our countries,” Jacinda Ardern said. “New Zealand ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Jobs for Nature funding will create training and employment opportunities
    A major investment to tackle wilding pines in Mt Richmond will create jobs and help protect the area’s unique ecosystems, Biosecurity Minister Damien O’Connor says. The Mt Richmond Forest Park has unique ecosystems developed on mineral-rich geology, including taonga plant species found nowhere else in the country. “These special plant ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Pre-departure testing extended to all passengers to New Zealand
    To further protect New Zealand from COVID-19, the Government is extending pre-departure testing to all passengers to New Zealand except from Australia, Antarctica and most Pacific Islands, COVID-19 Response Minister Chris Hipkins said today. “The change will come into force for all flights arriving in New Zealand after 11:59pm (NZT) on Monday ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Bay Cadets learn skills to protect environment
    Bay Conservation Cadets launched with first intake Supported with $3.5 million grant Part of $1.245b Jobs for Nature programme to accelerate recover from Covid Cadets will learn skills to protect and enhance environment Environment Minister David Parker today welcomed the first intake of cadets at the launch of the Bay ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Cook Islanders to resume travel to New Zealand
    The Prime Minister of New Zealand Jacinda Ardern and the Prime Minister of the Cook Islands Mark Brown have announced passengers from the Cook Islands can resume quarantine-free travel into New Zealand from 21 January, enabling access to essential services such as health. “Following confirmation of the Cook Islands’ COVID ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Supporting communities and landowners to grow employment opportunities
    Jobs for Nature funding is being made available to conservation groups and landowners to employ staff and contractors in a move aimed at boosting local biodiversity-focused projects, Conservation Minister Kiritapu Allan has announced. It is estimated some 400-plus jobs will be created with employment opportunities in ecology, restoration, trapping, ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Border exception for some returning international tertiary students
    The Government has approved an exception class for 1000 international tertiary students, degree level and above, who began their study in New Zealand but were caught offshore when border restrictions began. The exception will allow students to return to New Zealand in stages from April 2021. “Our top priority continues ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Tiwai deal gives time for managed transition
    Today’s deal between Meridian and Rio Tinto for the Tiwai smelter to remain open another four years provides time for a managed transition for Southland. “The deal provides welcome certainty to the Southland community by protecting jobs and incomes as the region plans for the future. The Government is committed ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • New member for APEC Business Advisory Council
    Prime Minister Jacinda Ardern has appointed Anna Curzon to the APEC Business Advisory Council (ABAC). The leader of each APEC economy appoints three private sector representatives to ABAC. ABAC provides advice to leaders annually on business priorities. “ABAC helps ensure that APEC’s work programme is informed by business community perspectives ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Govt’s careful economic management recognised
    The Government’s prudent fiscal management and strong policy programme in the face of the COVID-19 global pandemic have been acknowledged by the credit rating agency Fitch. Fitch has today affirmed New Zealand’s local currency rating at AA+ with a stable outlook and foreign currency rating at AA with a positive ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Additional actions to keep COVID-19 out of NZ
    The Government is putting in place a suite of additional actions to protect New Zealand from COVID-19, including new emerging variants, COVID-19 Response Minister Chris Hipkins said today. “Given the high rates of infection in many countries and evidence of the global spread of more transmissible variants, it’s clear that ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • 19 projects will clean up and protect waterways
    $36 million of Government funding alongside councils and others for 19 projects Investment will clean up and protect waterways and create local jobs Boots on the ground expected in Q2 of 2021 Funding part of the Jobs for Nature policy package A package of 19 projects will help clean up ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • New Zealand Government acknowledges 175th anniversary of Battle of Ruapekapeka
    The commemoration of the 175th anniversary of the Battle of Ruapekapeka represents an opportunity for all New Zealanders to reflect on the role these conflicts have had in creating our modern nation, says Associate Minister for Arts, Culture and Heritage Kiri Allan. “The Battle at Te Ruapekapeka Pā, which took ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Better care for babies with tongue-tie
    Babies born with tongue-tie will be assessed and treated consistently under new guidelines released by the Ministry of Health, Associate Minister of Health Dr Ayesha Verrall announced today. Around 5% to 10% of babies are born with a tongue-tie, or ankyloglossia, in New Zealand each year. At least half can ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Prisoner disorder event at Waikeria Prison over
    The prisoner disorder event at Waikeria Prison is over, with all remaining prisoners now safely and securely detained, Corrections Minister Kelvin Davis says. The majority of those involved in the event are members of the Mongols and Comancheros. Five of the men are deportees from Australia, with three subject to ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Pre-departure COVID-19 test for travellers from the UK and the US from 15 January
    Travellers from the United Kingdom or the United States bound for New Zealand will be required to get a negative test result for COVID-19 before departing, and work is underway to extend the requirement to other long haul flights to New Zealand, COVID-19 Response Minister Chris Hipkins confirmed today. “The new PCR test requirement, foreshadowed last ...
    BeehiveBy beehive.govt.nz
    3 weeks ago