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Poverty Watch 41

Written By: - Date published: 12:31 pm, July 27th, 2013 - 2 comments
Categories: national, poverty, uncategorized - Tags:

This week the NBR published their “rich list”. Bryce Edwards wrote a typically thorough round-up of the coverage:

The rich get richer (and more powerful)

The political power and wealth of New Zealand’s business elite is on display in two important media publications this week – the NBR’s 2013 Rich List and the New Zealand Herald’s ‘Mood of the Boardroom’ survey of CEOs.

Both publications illustrate the immense power and wealth that is concentrated amongst a miniscule group of businesspeople. According to the NBR, ‘The rich continue to get richer’. Editor Nevil Gibson says ‘This year’s Rich List is bigger and richer than ever before, with the total minimum net worth of members now at $47.8 billion, an increase of $3.5 billion on last year’s list. Add the small group of New Zealand-based international billionaires and the figure climbs to $60.4 billion, an all-time record’ – see: How to be a millionaire – NBR Rich List.

This enrichment is because, Gibson says, ‘The past year has been a good one financially’, with record profitability: ‘The surge in wealth is mainly due to the substantial gains of most investment classes; the New Zealand equity market returned 25.9% last year’ …

Further evidence of growing wealth and profitability in New Zealand was also seen earlier this week via Hamish McNicol’s Luxury car sales leave rest behind and Christopher Adams’ Banks’ profit jumps 12.9pc, nears $1b.

Of course not everyone is celebrating the achievements of New Zealand’s wealthy – see my own analysis of the latest list: A View of who runs New Zealand, which also has plenty of images and cartoons about the wealthy in New Zealand. See also, Max Rashbrooke’s blogpost, The Key graph for understanding the Rich List, which draws attention to growing inequality in New Zealand and shows ‘how the NBR Rich List’s wealth has increased dramatically since the mid-1980s’.

Unionist Robert Reid has spoken out against the NBR list, saying that ‘The top one per cent owns three times as much wealth as the poorest 50 percent, and low wages are one of the biggest drivers of poverty in New Zealand’ – see Newswire’s Rich list nothing to celebrate, union says. And the NBR reports the views of Labour MP Andrew Little – who the newspaper says is ‘one of the more business-friendly Labour MPs’. According to Niko Kloeten’s article, NBR Rich List highlights inequality, claims Andrew Little, Little ‘says he does not have an issue with the Rich List celebrating those who have created wealth but the plight of the less well-off should not be forgotten’. Little points out that the median wage has gone down for two years in a row now.  For the polar opposite point of view, see Mark Hubbard’s blog response, Inequality … No, No, No – Don’t Go there.  …

Like most people I don’t have any problem with folk getting rich – good for them. What I do have a problem with is folk getting rich and refusing to give anything back to the society that made them rich. The scale of tax fraud and evasion in this country is disgusting, and totally dwarfs (in financial terms) the issue of benefit fraud:

tax evasion vs benefit fraud

The continued enrichment of the 1% is also disgusting in the context of ongoing poverty in NZ. As well as the links in Edwards’ piece, some other relevant recent reading includes:
Child poverty ‘shows no sign of improvement’
Rich List won’t be celebrated everywhere – union
Government told there’s no excuse for child poverty
Welfare group warns thousands will suffer after changes

In short the idea of “trickle down” wealth is long discredited bullshit. If we want to help lift people out of poverty, if we want a more egalitarian society, it will require political will and political mechanisms to achieve it.

trickle-down-laughing


Here’s the standard footnote. Poverty (and inequality) were falling (albeit too slowly) under the last Labour government.   Now they are on the rise again, in fact a Waikato University professor says that poverty is our biggest growth industry.

Before the last election Labour called for a cross party working group on poverty. Key turned the offer down.  Report after report after report has condemned the rate of poverty in this country, and called on the government to act. Meanwhile 40,000 kids are fed by charities and up to 80,000 are going to school hungry. National has responded with complete denial of the issues, saying that the government is already doing enough to help families feed their kids. Organisations working with the poor say that Key is in poverty ‘la la land’.

The Nats refuse to even measure the problem (though they certainly believe in measurement and goals when it suits them to bash beneficiaries). In a 2012 summary of the government’s targets and goals John Armstrong wrote: “Glaringly absent is a target for reducing child poverty”…

The costs of child poverty are in the range of $6-8 Billion per year, but the Nats refuse to spend the $2 Billion that would be needed to really make a difference. Even in purely economic terms National’s attitude makes no sense.

2 comments on “Poverty Watch 41”

  1. locus 1

    Unlike “most people”, I do have a problem with people being super-rich. Why?
    Nobody needs personal wealth of billions. Nobody deserves personal wealth of billions.

    Even if a rich-lister, sweats their guts out at work daily (they don’t), they wouldn’t deserve to earn a thousand times as much as people working just as hard. Maybe a fair wage ratio from top to bottom in a business would be around ten to one.

    Apologists for the super-rich might say “what about fair rewards from years of investment and work in your own business, don’t you deserve to enjoy the profit?” Well yes, you do deserve some profit, but so do all the employees that have put their lives into the business with you over the years.

    How many companies provide a fair profit-sharing scheme for all of their employees? For that matter, how many of those successful businesses pay their lowest paid workers a living wage? How many provide a secure, healthy and safe work-place, protect and insure their workers, pay into pension schemes, pay fair compensation for workplace accidents, etc. etc.?

    However, let’s get back to the Super-Rich. These people are not the hard-working people that are making a success of their business. Nor are they the hard-working professional who has an income of a say 200 thousand a year and a million dollar home – mortgage free by the time they retire. No, the super-rich are many levels up on the entrenched wealth ladder.
    The super-rich don’t actually ‘earn’ their money any more, it just rolls in on trucks from their investments around the world.

    Another argument made by defenders of the super-rich is that they take risks with the money they’ve invested and should be rewarded for that, and for the fact that their investments create work for employees of the companies they’ve invested in.

    Well here’s the answer to that spurious argument… the super-rich who are ‘taking risks’ with their wealth aren’t taking risks. They spread their investments, buy the best tax advisers and accountants to massively reduce or totally remove tax liabilities.

    They super-rich don’t give a damn about the working conditions of the employees in the businesses earning them millions. They don’t give a damn that they are being rewarded massively for other people’s hard-days work. They’ll whip their money out the moment they can get a better return somewhere else. They use their money to exploit, lobby, influence and manipulate, so they can make even bigger truckloads of money.

    And, with the exception of a tiny number of truly genuine philanthropists, the super-rich don’t give a damn about poverty, only giving their money away when they can be ‘seen’ to be generous – and get a tax break by doing so.

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