Inequality has been very much in the news following the release of the OECD report. Friday saw the publication of two really excellent pieces that between them provide a comprehensive overview. Here’s Gordon Campbell on Scoop:
Gordon Campbell on income inequality…
…Yet on Wednesday, there was Finance Minister Bill English trying to tell RNZ that the OECD was (a) wrong (b) using old data and (c) somehow anti-growth and in any case (d) New Zealand allegedly already had a strongly re-distributive tax system, and the only way forward was to trust that National’s current economic policies would (somehow) eventually lift everyone’s boat, despite clear evidence in the OECD report to the contrary. According to English, it wasn’t that his current economic settings were making a bad situation (i.e. bad for society and bad for economic growth) even worse, but that we just needed to keep the faith and press ever onwards. It has, after all, only been 30 years since Roger Douglas first told us that free market economics would soon deliver unto us, a miracle.
On every one of those points above, English was demonstrably wrong. (Old data ? Given the OECD’s conservative estimate of a five year time lag in its ability to measure the feedback loop between economic policies and inequality outcomes, 2005 was actually the latest measurable period.) Rob Salmond has also once again, destroyed English’s repeated erroneous claims about who pays how much tax. And given that the wealthy got the biggest rewards from the 2010 tax cuts package, the income inequality/growth relationship will have only got worse since 2010. Not to mention that if 2005 really was such old news, why was English himself harking back to the early 1990s for proof that his policies would work? One thing was very clear: in a world where trickle down economics now has few people still worshipping in its pews, the Man From Dipton can still be counted as a true believer.
As For John Key …. who needs Cameron Slater, when you’ve got the mainstream media to recycle Beehive spin?…
That’s just the start – head on over to Scoop for much more. The second piece to read is Max Rashbrooke in The Guardian:
How New Zealand’s rich-poor divide killed its egalitarian paradise
…many New Zealanders, might have got a shock this week when the OECD published a landmark report, showing that economies the world over are being hamstrung by growing inequality – and that New Zealand was the worst affected. A stark rich-poor divide, the OECD argued, had taken over a third off the country’s economic growth rate in the last 20 years. But how could this be?
The simple answer is that in the two decades from 1985 onwards, New Zealand had the biggest increase in income gaps of any developed country. Incomes for the richest Kiwis doubled, while those of the poorest stagnated. Middle income earners didn’t do too well, either.
Because New Zealand had previously been so egalitarian, that world-beating increase still wasn’t enough to rocket the country right to the top of the inequality league table, but it is now doing just as badly on some measures as Britain. In both countries, the top fifth get about 40% of after-tax income; the bottom fifth get just 8%. New Zealand is now just as divided as the country that many of its citizens’ ancestors left in order to find a more equal society.
How has this happened? … Embracing reforms known elsewhere as Thatchernomics and Reaganomics with unprecedented enthusiasm, New Zealand halved its top tax rate, cut benefits by up to a quarter of their value, and dramatically reduced the bargaining power – and therefore the share of national income – of ordinary workers. …
Once again, go read the full piece in The Guardian.
Both articles make for depressing reading. But the only good we can take from these past mistakes is to learn from them.
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