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Guest post - Date published:
8:00 am, January 29th, 2018 - 172 comments
Categories: class, class war, culture, poverty, Social issues -
Tags: children, fixes, poverty
So a few days ago I got caught in the rain. Not a usual shower, it bloody bucketed down. My raincoat which normally does okay in the rain was soaked through. I was sodden to the skin, and required a complete change of clothes.
I, however, am fortunate. I had fresh, warm, dry clothes to change into. I had better wet weather gear at home. I had several pairs of dry shoes to wear instead of the saturated, squelching lumps my favourite shoes had become. A quick change, a few swearwords, and my day was largely back on track.
Lack of household income is the reason that 8% of New Zealand kids don’t have two pairs of shoes in good condition. This isn’t a “poverty rate” or even a material hardship rate by any academic measure. When people refer to tens of thousands of kids in poverty, that might not include many kids who would have sodden feet or be barefoot for the next couple of days because it rained and $30 for a pair of shoes was too much for their parents to spring for.
These kids might not even be regarded as experiencing “material hardship”. Sure, they lack dry footwear, but maybe they only have a few enforced lacks rather than reaching a score people bother using as a benchmark.
And sure, compared to kids in developing nations, some of these kids without a pair of dry shoes (because it rained yesterday) might look pretty well-off. The difference is that we face no practical or geopolitical barriers to addressing poverty in NZ.
But bureaucrats, academics, and international comparisons aside, most normal people would regard having a sock full of water (because you can’t afford better shoes) as a pretty clear sign you’re “poor” and experiencing some level of “material hardship”. And in this land of plenty, that’s inexcusable, child or adult.
How do we fix this?
On the plus side, we seem to have a government that actually cares about poverty. Yes, especially child poverty, but I think that “child poverty reduction” will be a gateway drug into “total poverty reduction”. The main classes of proposed solutions to poverty (with a relatively new-to-me idea at the end) seem to be:
– Economic growth
– Employment growth
– Benefit growth
– Universal Basic Income (UBI)
– Universal Basic Services (UBS)
Economic and employment growth are favourites of tories – an increase in the crude gauge of GDP results in more people getting jobs and leaving poverty this way. It might have worked once, but these days between what counts as a “job” (1hr/wk – pfft) and the conflicting factor of rapid automation make it yesterday’s magic wand. And the Non-Accerelating Inflation Rate of Unemployment ideology ensures unemployment will always exist because every time GDP takes off and people start to get jobs, the Reserve bank raises its lending rate to throttle the economy. And then the government ends up paying companies to employ the structurally unemployed at sub-living wages. Like a doctor bleeding a patient for “hysteria”, we should know better now.
Increasing benefit amounts and access would certainly solve the problem. Poverty is, after all, almost the only problem that can literally be solved by throwing money at it. Downsides are that the tories are pretty good at chopping it back every time they get into government. But there might be other arguments for and against…
UBI. Ah, UBI. Ever since I first heard about it, it’s had me for it, then agin it and back again. On the one hand it could be inevitable when almost all work is done by robots. We have already partially implemented it: the old age pension. The massive cost will be offset by procedural savings and sustained economic activity. On the flipside, the actual math inevitably falls into hand-waving territory and assurances it will work. It is very expensive to pay 4 million people a basic income at living wage level, and what about differences between people that might make some need more than the basics? Any discussion on this will likely have me thinking one way then t’other again…
Bill got me thinking on Universal basic services with his post about a vending machine network for the homeless in the UK. The concept was a good idea, but it was twisted with the grasping nature of current thinking: if it’s free to everyone, people will just abuse it, and only the deserving poor should get something for free. So access was restricted to people who had dutifully seen their social services weekly. But we’re only talking about the basics, and with no marketing attached to make people want the products. So why not just have vending machines with life’s little essentials on street corners, in case people need pads or water or even light anoraks or a blanket? How will that get abused – people wanting to stockpile 50 blankets because they’re cool? Who are you going to sell them to, if everyone can get them for free? And people will still buy their own stuff – not everybody goes to opshops for their clothing. But if it’s the middle of the night, or cold, or wet, everyone has access to the basics. We already have it for some healthcare, where we get the service or product with zero cash down (albeit after a waiting list, these days). Housing is another area where this was already partially implemented, then rolled back. But if the government can supply the basics, why bother giving people money to buy them? Cutting out the profiteer in the middle is a very tempting idea. What do people think about free vanding machines, and what would they put in them?
So let’s put aside for a moment the technical definitions of “poverty” and discuss in general how to resolve it – and it can be resolved, so no fatalism, please, unless you can back it up with something more than a youtube vid you agree with (and summarise any links in your own words, just to be a dear).
~ McFlock
How do we solve poverty? The same way we solved it in our recent past. For the 50 years from 1936 – 1986, our social democratic society was based on 5 building blocks:
1) A full employment economy paying living, (not minimum) wages
2) Free education up to tertiary level
3) Affordable housing, whether to rent or to buy
4) Affordable health care
5) Financial security in times of adversity or old age
During those 50 years, the Government controlled the commanding heights of the economy, (finance, telecommunications, energy, transport, health, education, superannuation & social security) so that the economy worked for everyone’s benefit. In addition, we had both progressive rates of income tax, & capital taxes, (death duties, gift duty, etc.) to redistribute the enormous wealth which social democratic economies generate
My generation, the boomers, were the beneficiaries of these 50 years – we were the best educated, best feed, best housed & healthiest generation NZ had ever seen. We had opportunities which our parents had only dreamed of & what was our response to our good fortune? We imposed shitty neo liberalism on our children & grand children!
Thank God we’ve seen the back of the vile Key – English government. It’s time to start rebuilding a fair & decent society & the sooner the better!
Full employment might be a hard ask as AI automation comes in.
But also, there’s a deeper question about whether “affordability” is the issue or maybe we can just take it out of the cash realm altogether? At the delivery end, anyway.
We pay people to do what we value them to do.
Looked at like this, unemployment is really nothing more than a poverty of values.
My raincoat which normally does okay in the rain was soaked through. I was sodden to the skin, and required a complete change of clothes.
What I like to call ‘perfect tramping weather’ 🙂
(And yes I do get your point, real poverty is about not having the option to escape. It’s was the critical component of George Orwell’s Down and Out in Two Cities, which lent it a credibility few others could match.)
🙂
“We pay people to do what we value them to do”…… Really?
What about friendships?….. love? Free work for charities and clubs?
We also buy things produced as hobbies. Often the maker/painter did not know it would be valued.
Poverty is being unable to take part in your own society, and not having a fair share of life’s necessities.
Sharing is key.
It reminds me of what I read in David Graeber’s book “Debt”. There was a native American culture where they had a big storehouse. If you were a basket weaver say, you would put your surplus baskets in there and people who needed a basket could take one. You might take out other goods you needed. It seems a great system. Very different to capitalism.
The idea of socially provided basic services appears in practically every science fiction future illustrating a stable society, not a post-apocalyptic disaster.
Yes Anna red on Ursula Guin’s “Dispossessed” is a great example.
I mean Annares stupid auto correct.
The character of modern states is polycultural – lots of unrelated elements existing at the same time – oligarchy, feudalism, democracy, even traces of theocracy. Economies are similarly mixed, and it is the lower end that has been allowed to deteriorate. Prior to the 1980s, NZ featured a system of cooperatives that supported new entrant businesses in their field. The dairy and fishing cooperatives at least are now substantially extinct, and the one result is that the entry cost to these industries is now prohibitive.
Rewi Alley, to whom NZ owes more of its positive relationship with China than is generally recognized, created a cooperative small enterprise generator to rebuild in the wake of the Japanese retreat, called Gung Ho. https://www.nzonscreen.com/title/gung-ho—rewi-alley-of-china-1979 It shared some features with Yunus’s Grameen Bank, especially in trying to push opportunity downward to the social strata with greatest lack of opportunity.
The kind of capacity support once provided by cooperatives, the kind of funding support created by Gung Ho or Yunus, the infrastructural support Asian regional developers provide by building markets for local produce. And possibly a rainmaking exercise along the lines of Saemaul Undong, a new community movement that at its best was an exercise in forward looking local democracy directed at needs rather than monolithic white elephants like stadia or convention centres that dominate the thinking of some local bodies.
Thanks for the Rewi Alley link.
Absolutely fantastic what he facilitated.
It’s like a fairy tale in that it seems unthinkable that the Gung Ho philosophy would be accepted, let alone practiced in these neo liberal times.
Perish the thought that a government should follow a proven formula 😉
“So let’s put aside for a moment the technical definitions of “poverty” and discuss in general how to resolve it ”
Its an interesting one isn’t it, poverty, the dictionary definition is:
“the state or condition of having little or no money, goods, or means of support; condition of being poor.”
I think though there does need to be a definitive definition of poverty as it relates to NZ, which would then mean help could be better focused
For example the definition of 60% of the median income is far too broad and easily argued against , this definition is better: https://www.stuff.co.nz/national/87503400/How-to-tell-which-Kiwi-children-are-living-in-poverty
but the stats can also used for or against
Growing up I probably lived in what considered poverty by todays standards (as did a lot of people) but I never felt in poverty so maybe cross party consensus of defining poverty could be a start
I’m a bureaucrat. Often I would kill for standardised measures that enable benchmarking of different demographic groups.
But that’s not what this post is about.
If a child has to go without shoes for two days because their only pair got rained on and their family can’t afford a $15 or $30 pair from the Warehouse, that child is experiencing hardship. That child is, for practical human purposes, “poor”. 8% of our kids are poor to the point of “wet feet” hardship.
I think that in our country, with it’s sparse population and abundant natural resources, that is a wrong that needs to be righted.
So if you want to argue definitions of poverty, go somewhere else, please. And if you have ideas on how to get to the point where no child in NZ is the helpess subject of wet feet, try to make them good ones.
Ok I guess then you’d have to look at why the shoes (or whatever) costs as much as they do and then work back from there
Does the government give extra money for clothing or would specific item vouchers for retailers such as The Warehouse (due to range of items and general proximity) work better?
Or legislation to bring wages and benefits back to a reasonable level. That must’ve slipped your mind or something.
Sure right up until prices for goods are increased to due increased benefits, like whats happening with rents in Wellington
vouchers or benefits raised, it’s still increasing demand for products.
So what can we do? In housing we can depress demand by having a state supplier. Can we do that with non-perishable essentials?
I get the feeling that if the government did supply something (for example shoes) the shoes would be pretty ugly and cheap or would quickly fall apart and have the potential for people wearing the items to be stigmatised
Or not
If the National Party were managing the work, it’d just be yet another company for Steven Joyce to run into the ground, a complete trainwreck a la Novopay and Solid Energy and Mediaworks.
So yeah, we know you can’t do it and would fail.
Ok well lets see what Labour will do then
Steven Joyce’s shoes would have 11 billion dollar holes in them. 😛
😆
Stigmatised more than being without footwear appropriate to the weather?
state houses were pretty darn good quality. Why should state shoes be any different?
I’d guess that times have changed since then so whoever gets the contract will cut as many corners as they can will still fulfilling the basic contract
Personally speaking it seems like The Warehouse has most of everything covered:
Range of goods
Locations across the country
Transport
Bulk buying
If this something to look at I’d be looking at using The Warehouse
whoever gets the contract
a state supplier
One of these things is not like the other. Are you so frightened of the second concept it just failed to register or something?
heh. Yeah – slight conceptual difficulty for you there, pr
Which probably means that we simply shouldn’t use the private sector as they simply cannot be trusted to do the job well.
My bad, I was assuming it’d be a private public partnership
But fair enough, how would you then make sure that whatever government department runs it doesn’t end up like the Railways or MOT, with far more people than needed and a reputation for being either lazy or shoddy?
Sue the National Party on behalf of the workers and beneficiaries they defame?
I suspect that your perceived problem would be solved when employment becomes accepted as the exception rather than the expectation.
?
My understanding from some state workers in the pre-84 days was that some government departments were inefficient because they were used to keep people in work, not just as a provider of their primary service.
Over the next ten to twenty years we’re going to continue to see growing numbers of industries wiped out by automation rather than exported jobs, and at an accelerated pace.
>90% employment rates will simply be unsustainable. The production capacity will exceed even the most artificially inflated demand.
So any solution to poverty needs to recognise that likelihood, as well as the current situation.
Perhaps you could have said in the post that we should aim our solutions at a weird imaginary techno utopia with 90%+ unemployment. If that is your scenario then our real-world-based comments are not going to help you much
A.
I figured that most readers were smart enough to figure out likely ramifications of driverless vehicles (there goes most of your drivers and your sailors are reduced to cargo minders until the figure out a robot that can add additional tie-downs in a gale, and if we become used to driverless cars why would we still want human pilots?).
In case you hadn’t noticed, we already have automated barges, AI carsd being tested, even customer service droids in their early steps. Not to mention automated checkouts, loan assessment, logistics networks, production lines… there’s a line where the efficiency of production will exceed the demand for humans to produce things even to satisfy the most inflated human consumption. We’re fast approaching it – it’s decades away, not centuries.
Elimination of poverty didn’t just mean “for the next few years”. I meant a permanent-as-possible elimination of poverty.
If you thought the post was about how to end yesterday’s poverty, you’re thinking behind the times. How can we eliminate it. And that requires us to look at the likely conditions in the future – AGW, AI, we need solutions that can help deal with all of that stuff.
This is science fiction, I’ll leave you to it
Meanwhile, the first court case involving a self-driving car is proceeding.
Check the news: there is huge demand for Wellington flats. If you’ve rote-learned any basic economic concepts you may recall something about the effects of increased demand on price.
Nice try though. Why don’t you ask for a better scriptwriter?
Yes correct there is a huge demand for flats, helped in part by the government wanting more people to study by offering a free years tuition and increased living costs means that landlords can raise the rent because people have more money, is it really a surprise that the amount landlords appear to be raising happens to match the amount being given out?
You put your finger on the problem right there – the housing market is so tight now that a single sector can extract all of a rise in income for a portion of the population, with zero lag – preemptively, even.
Not, say, unibooks, unipubs, supermarkets etc all tweaking their prices up as well, to cumulatively get the increased income. One sector of suppliers is in a position to take it all, right now.
So it needs heavier regulating, now.
+111
The normal result of capitalism in fact.
If it was that simple OAB to:
“legislation to bring wages and benefits back to a reasonable level”
Then why is the current Government only increasing the minimum wage by 75cents this year? And taking the best part of the next 3 years to hit $20 hr?
Why don’t they just legislate for say $25 hr minimum wage and lift all benefits by 100% effected from next week?
I suggest you compare NZ with Seattle. I did the calcs a while back and if we copied their recent minimum wage increase in percentage terms, it’d be $25 by 2020. So clearly there’s room to do more.
Funny though, in an amazing coincidence, a bunch of completely ignorant dupes in the USA raised exactly the same objections as you and were humiliated and proven 100% wrong.
It’s almost as though the Republican Party has eaten your brain too.
I am aware of the Seattle minimum wage increases.
“Angela Stowell, an owner and the chief executive of Ethan Stowell Restaurants, which has about 300 employees in 14 restaurants around the city, said it was too early to judge the effect of the minimum-wage law because it was still being phased in. But she said the chain had not reduced hiring because of the higher employee costs, though it has increased some menu prices and instituted a 20 percent service fee.”
“Of the 20 restaurateurs I am close friends with in Seattle,” she said, “none have told me they are hiring fewer staff due to the increased minimum wage.”
https://www.nytimes.com/2017/06/26/business/economy/seattle-minimum-wage.html
I note you did not answer my question…why not just increase to $20 or even $25 come April 2018?
BTW: I did not raise any objections to increasing the minimum wage in my post above…you have taken license to put those words in my mouth OAB.
Why not indeed? Seattle’s experience of a 58% increase in twenty months certainly provides confidence (based on the evidence, not anecdotes) that it’ll work.
I daresay there’s a level beyond which it would cause problems. 58% in twenty months though. Can you imagine what that witless gimp Steven Joyce would say? 😆
Or the government could build a factory that automatically made shoes from our own abundant resources and made them freely available at corner automated dispensaries.
Unless they’re one-size-fits-all crocs, shoes etc might be a logistical challenge for vending machines. It’s called “the Warehouse”, not “the Cupboard” lol
Which brings to mind what other distribution networks would be needed for more bespoke basic items like shoes and tshirts.
https://thestandard.org.nz/3d-manufacturing/
Have the shoes made on site and on-demand. They’d even be the perfect size every time and people could supply their own designs.
That’s an idea, as the tech matures (still takes too bloody long, and the plastic most of them use is a bit shit for footwear, from what I’ve seen).
Wouldn’t user-supply designs though – that’d be inviting hacking.
There are multiple types of plastics used in 3D manufacture some of which are more than suitable for shoes. And the process is already getting faster as more R&D goes into it.
R&D into 3D manufacturing is something that the government should be doing else we’re going to get left behind and in deeper poverty.
And if the distribution site is connected to the internet, which it will have to be, then people are going to try to hack it. Just need to strengthen it as much as possible while also making hacking it worthless.
Starting price $9. Plus transport/delivery.
The problem isn’t cost, even if they are made by political prisoners or sweatshop children.
The solution isn’t bing on hold to a call center then queuing for an appointment next week.
The problem is that some parents don’t have even a few bucks aside for any adverse event. Not because they gamble or whatever, but because their income is less than the cost of living.
So again, what solutions do you have for this problem?
Very cool post McFlock.
cheers 🙂
“Increasing benefit amounts and access would certainly solve the problem. Poverty is, after all, almost the only problem that can literally be solved by throwing money at it. Downsides are that the tories are pretty good at chopping it back every time they get into government.”
Labour’s pretty good at chopping things back every time they get into government, too. That’s because at the heart of the problem are beliefs and values. Attacking benefits hasn’t really been a National/Labour thing at all. It’s been a climate of opinion thing.
As of right social security has been sacrosanct across both parties from introduction in 1938 pretty much until the 1980s when Labour began chipping away at it with things like the two-week stand down etc. That did two things: it opened the way for both parties to continue to do it, but importantly it began to alter the thinking of the general population, dividing people on the basis of who’s deserving.
The real damage to the national psyche when it came to benefits was done by the nats in the 1990s, but only because Labour opened the door. The point, though, is that we’ve never recovered from that battering. One of the most important things we need to do is to rebuild people’s belief in the need for a compassionate and caring society. Until we do that every next government will just keep “chopping it back”.
Ok, that’s what we need to do. How do we do it?
My two cents (I have a few to give with some comments above but that will be a marathon post and I don’t have time). “How do we do it” – challenging ideology, challenging discourse, and consciousness raising – people (even those affected by poverty) need to understand the systemic causes of poverty (even the poor blame themselves for being poor) – we need to break down the stereotypical, beneficiary bashing discourse that prevails – that would be a good start.
/Be/ compassionate and caring, show people how good it is? /Actually/ roll back neoliberalism instead of just commiting to not adding to it?
I for one would like to see some actual practical outcomes, instead of an idealogical shift followed by “yeah but money tho” and no actual change. There’s little changes we could do now that don’t even have to cost as much money as an all weather horse racing track, e.g. force WINZ to helpfully explain to people what they’re entitled to and provide helpful practical advice – including assist people to fill in forms where nessicary – instead of rudely discouraging everyone from even trying to get out of poverty. Take even /some/ of the hoops out of the circus.
Yes, I agree the winz culture needs to be overhauled.
OK, so let’s assume that the current lot are unwilling to push winz that far, or don’t have the leverage/power.
How do we make winz help people willingly?
Who do we need to contact?
Is it a miscommunication, or is the office floor supposed to handle that now reduced to one overfrazzled public servant with an impossible workload (they exist, I’ve met them)?
Do we talk with someone responsible, or do we protest? Is it a regional protest, or a day of action? It there a current group willing to accept help to organise, or has that into a turf war, too?
Do people start by getting background off the record perspectives from advocates?
What skillsets can you offer? What skills are needed?
What can be done by members of the public to make change in winz inevitable?
To be clear I have no real personal experience dealing with WINZ, only fairly limited anecdotal information about their culture (outside of what’s publically availble in blogs etc).
In order:
– I don’t know. Advocacy from specific groups and knowledgable individuals seems to help them begrudgingly help case by case, not sure if that would help shift culture though.
– I don’t know.
– The stories I’ve heard include a bigot case manager who pulled their head in after a letter from an advocacy group (whom she was already known to), and a case manager who spent an hour trying to deny something they were required to provide and ended up having to give in – but there’s also a lot of blaming the call centre for wrong information and refusal to help sort out forms. The pessimist in me says there appears to be a cohesive effort to deny people, but I know there are other case managers who just sail people through no problem.
– I favour talking first, personnally, but I can you now I won’t be leading this charge so it won’t be up to me.
– Educating volunteers to inform and advocate, and sending them out to WINZ offices across the country sounds interesting to me – really show WINZ and their clients what helping people could look like. Otherwise no idea, my usual form of protest is ignoring a thing or whining on the internet.
– I know there are advocacy groups, specifically for WINZ and broader focus like citizens advice. I’d don’t know if there are groups specifically aimed at political change.
– If I was actually going to take this up I would, since I have no idea what I’m doing.
– None. Organisation & communication at the least I’d imagine.
– Can that even be done? I literally cannot imagine the general public being overly sympathetic to beneficiaries. Hmm, given the strong hold unions have on Labour, a push for unions to push the issue – sell it as workers right to support should the worst happen – might help. But, as I understand unions tend to help smooth over WINZ transitions, so they may not want to rock their own apple cart… maybe WINZ needs a union?
WINZ needs a union like the police needs one. They should all be fired and given a Universal Basic Income. And then we will see how dedicated they are to the humanities… My assumption is not very fucking dedicated.
No I meant the clients, though no idea how that would work.
All means all. Big fucken yawn.
The current union movement should take up the cause for beneficiaries. The split between employed and unemployed workers is a false one and helps to uphold the sterotype. The labour movement must surely be about the pool of labour, and not a distinction between the employed and unemployed. Both share the same foe, which is capitalism and its consequences.
Well, there is one over-riding political factor – capitalism cannot work without poverty. And, on top of that, it will always create and increase poverty.
In other words, the real problem of addressing poverty is getting rid of capitalism.
Ok. How?
Bear in mind that I’ll probably be repeating that comment many times, not to be a jerk but because there’s many a slip ‘twixt dress and that particular set of drawers, and each one has its own “how”.
That is the question.
Many people believe that capitalism is good because that’s what they’ve been taught and changing from that system scares them as it’s what they’re comfortable with.
So there’s at least two aspects:
1. Teaching people that capitalism doesn’t actually work and thus creating movement away from the status quo and
2. Getting the change happening in such a way that doesn’t get people digging their heel in from fear of the change.
Do you see progress in the current teaching methods? Is there something from left field (heh) that hasn’t been tried and might spread without mainstream financial and media support?
Because the capitalist media will try as hard as fuckery to create the fear you mention in 2.
The problem with current teaching is that it simply teaches that capitalism is the only way. That’s what people are taught at school and at tertiary. No other ideas are taught and none entertained.
That needs to be changed but how I don’t know.
And, yes, the capitalist owned MSM are also a problem.
So you mean teaching people in schools that capitalism doesn’t work?
That might be achievable, within initial constraints. It takes a curriculum change. Maybe not plug it as “capitalism doesn’t work”, but more balanced perspectives on the downsides of it might be achievable.
I don’t know how a curriculum change is made – someone has to, though.
+1
So that’s one starting point – find out how school curriculae are set
From where I’m sitting, the main upward driver of poverty since 2000 seems to have been the housing market.
So, then:
– try to stop the housing bubble from swelling any further
– don’t drive up rents
– don’t drive up interest rates.
A.
OK. How?
If the kiwibuild plan comes to fruition, will it have an effect on any or all of those?
Given the contraints of the RBA, how can the government keep interest rates down?
> Given the contraints of the RBA, how can the government keep interest rates down?
Avoid inflationary spending, particularly wage and benefit increases?
A.
So one way to eliminate poverty is to limit the income of the poorest people?
That seems counter-intuitive. Please, continue.
You see my point though? Wage rises are inflationary – (a) because services cost more to pay for the higher wages, (b) because people who earn more, can spend more, which increases demand and hence prices. What is the response to inflation? It is to raise interest rates. What does raising interest rates do? It makes it more expensive to own (and hence to rent) property.
Am I missing something?
A.
Yes. Providing a solution.
For example, I believe that currently (or until recently) the sole factor considered by the Reserve Bank in setting OCR was inflation. What about expanding that to include full employment?
Alternatively, rather than lending to banks (that have access to foreign capital anyway), why not make the government the first borrower of choice? Pump the money outthrough the regions directly?
And is it even a problem at the levels required? The inflation in housing rentals is the result of ongoing market mismanagement turning the accommodation portion of a benefit into a subsidy-on-demand for landlords. How long would it take for a living wage minimum wage to trickle up into pay rises for the majority of workers?
> Yes. Providing a solution.
It is to go easy on trying to hand out money to everyone, e.g. through minimum wage rises.
> I believe that currently (or until recently) the sole factor considered by the Reserve Bank in setting OCR was inflation. What about expanding that to include full employment?
Then you get inflation, which isn’t good for people on fixed incomes or anyone who didn’t get a pay rise.
> rather than lending to banks (that have access to foreign capital anyway), why not make the government the first borrower of choice?
Urgh
> And is it [ie increasing interest rates] even a problem at the levels required?
I think so! Bear in mind that not everyone is a worker, or in a household with a worker, so living wage / minimum wage rises won’t help everyone. But just about every poor person who has a home is exposed to interest rates, I think.
A.
But really this interest rates thing is a second order issue. The main thing is that Twyford beat the housing crisis…
A.
Actually, the main thing is do you have any practical ideas on how to eliminate poverty.
Sorry if my post was unclear on that.
What subset of “poor people” have their own homes?
State houses aren’t subject to interest rates.
Non-leveraged rentals aren’t subject to interest rates.
Oh, and “urgh” is not an argument :p
Basically, if the lag between the extra income or cash injection into the economy is longer than the implementation time, then you can get a smaller splash over a longer period, and other inflation-control measures can be used.
E.g. increase benefits, monitor the effect, and tweak interest rates if inflation becomes an issue. How would that effect things? Poor people have more money, property speculators have less, and some of them might overlap for zero change.
Yes. Providing a solution.
Antoine has a problem for every solution.
Presumably wage / benefit rises can be applied while taking from elsewhere – so net spending relative to real goods and services could remain similar. i.e. more spending on housing and services, and less on super yachts and tax lawyers perhaps.
Nice article, McFlock..
Myths need to be deconstructed openly to dispel ‘monetary scarcity’…
Once that barrier has been cleared and the mythical constraint permanently removed, solutions become unlimited, unconstrained only by imagination…
Root cause constraint = ‘money’
Remove it, then progress will accelerate
OK, I’ll bite. Remove money – fair enough. How?
‘Remove money’ as a perceived blocker to providing solutions [all/any social/INF etc]..
Once the ‘scarcity myth’ has been dispelled, it simplifies the path to solutions being possible, by sidelining the ‘too costly’ ney-sayers…
At that moment, ‘any’ social contract failings become solveable…and would only require the options to be agreed upon..
Free from monetary constraint, and those who believe it actually is a constraint…
That doesn’t explain how you intend to remove money in the first place, which was the question. If you have zero clue how to do it please just say so.
what OAB said. How will you remove money?
The psychological constraint…
Budget Surplus
Fiscal responsibility
‘We can’t afford it’
Start by talking ‘truth’…a misunderstood concept, but an unavoidable concept to be ‘resurrected’…
What comes after ‘truth’, will be genuine improvements in issues such as poverty…
So, if I understand you adequately, we argue for budget deficits, against balanced or non-inflationary budgets, and demand spending without taxation?
How do we persuade people that these aren’t completely stupid ideas?
Point out the reality that it’s presently the private banks creating the money and that they then benefit by charging interest on the money. Doing so makes it impossible to pay off the debt and so will collapse the economy.
That the only solution is for the government to be the sole creator of money and that the government spends it into the economy via productive uses such as building houses.
with respect, people have been arguing against fractional reserve banking for ages, with little headway (if any).
If that is the answer, how do we do it successfully?
The arguments against fractional reserve banking have, IMO, been gaining ground recently. Partially because people are better educated and so can more readily understand the faulty logic that backs it. Partially because the internet means that it’s easier to get that information out and partially because research is showing that sovereign money is a workable solution.
Fair enough. It needs to gain a lot more ground before the media start dropping large amounts of shit against it (a sure sign of popular support 🙂 ).
But if you’re making progress, more power to you.
“Point out the reality that it’s presently the private banks creating the money and that they then benefit by charging interest on the money.”
Banks / institutions take a margin on the interest they charge verse the interest they pay depositors.
Private banks / institutions account for maybe 70 to 80% of money creation the balance is via RBNZ.
So why does the RBNZ allow banks to create money?
To create credit, which by enabling the funding of investment, contributes to the economy’s ability to grow.
So what you are suggesting is that all banks close down. The RBNZ then enters the retail / commercial market and opens up branches across NZ?
What can go wrong with that 😉
Well, have a think about it..
If the only institution that could create credit was the State, or a state owned entity, then the profits of creating the credit would go to the State. That’s what we pay taxes to in order to receive the benefits of our civilisation.
So if the State is making all the money out of the credit that’s driving our economy then hard working individuals and businesses won’t have to pay as much, and maybe any, tax.
What could go wrong with that.
😆
You think you speak the truth, aye, yet money hasn’t disappeared, and you still haven’t explained step two.
1. Speak the truth.
2. ???
3. Money disappears, as does poverty.
Surely you have some clue?
He’s not saying to remove money but to remove the constraints that have been placed upon it for the benefit of the private banks.
More specifically, you have only the government creating money and spending it into the economy. That removes the artificial constraint that been built up over time that the government has to tax to get money. They become the source for it instead.
ok, how do you achieve that goal?
I really am in the sort of “physio to learn to walk again” mode: it’s a big goal for massive change, so what steps do we need to achieve it, and how do we make the first step without falling over?
1. Ban the private banks from creating money in any form. They can only loan out what they have on deposit for that purpose.
2. The government creates money and spends it into the economy via government services.
3. Government makes 0% interest loans available to businesses
4. Adjust taxes to try to keep inflation low.
5. Ban the use of foreign money in NZ for any purpose.
So 100% reserve banking and eliminate the reserve bank.
How do we achieve that?
Actually, it’s 0% reserve banking as there’d be no money left in reserve to cover money being taken out by the customer. If the money is loaned out the customer wouldn’t be able to withdraw it.
And I didn’t say anything about the elimination of the RBNZ. It’s more that it would be changed from it’s present state that allows the private system to almost work to one that makes money available to the government upon demand while also adjusting taxes to maintain low inflation.
RBNZ currently controls the money supply and does banking regs. If the money supply is being controlled directly by the government, that’s a large chunk of RBNZ work no longer being done.
Sounds all nice in theory DTB.
The reality is that New Zealand would become another Zimbabwe or Venezuela.
Zimbabwe has the problem of corruption at the top.
Chuck, pissing on ideas is easy.
Is there any chance you have any ideas on eliminating poverty and deprivation in our plentiful country?
Didn’t quite mean it as pissing on DTB idea…but get the point!
I see it as both an economic and social issue…for people/families struggling in NZ.
Housing is too expensive, the measures announced by both the last Government and this current one will help to address that. The large increase in the accommodation supplement, for example, will directly help those most in need.
Housing supply and the barriers to development along with building costs need to be addressed.
Employment – jobs and increasing everyone’s incomes (especially at the lower end). Yes OAB increase the minimum wage…but carefully so not to have unintended outcomes.
Drugs, alcohol, gambling, tobacco these are present throughout society…but hit the poor the hardest. This leads to bad decisions…help needs to be provided to stop people abusing those substances.
And finally, you need to have buy-in by the majority of NZ ers to make it work. Both ends of the political spectrum.
Why not develop the state housing stock rather than leaving it for private developers to do, seeing as they back off when the property market reduces its profitability?
We need to get back to a sheep shearing model of development, not a buffalo slaughtering model.
“Why not develop the state housing stock rather than leaving it for private developers to do, seeing as they back off when the property market reduces its profitability?”
Of course, yes state housing is vital. I guess it comes down to which side of the fence your political views are…as allow social housing providers to run part of the state housing stock or it all needs to be run by the Government of the day.
I think a combination of state housing and private developers will keep each other on their toes. Government monopolies in the whole turn out to waste resource and not deliver the full potential of what could be achieved.
The flipside is that comparison with private sector providers tends to encourage governments to regard state providers along profit-gaining lines rather than e.g. whether all people actually have homes.
This is probably true – scoundrels like Bill English can no more be entrusted with money creation than he could with Solid Energy. He’d wreck and hock off even more of NZ.
Hi Chuck
There were specific circumstances in both Zimbabwe (Mugabe reforms destroyed economic output) and Venezuela (economy dependent on single commodity), that resulted in hyper-inflation, not their monetary policy (which was more a result than a cause).
The below talk gives some really good insight, I recommend it to anyone interested in monetary policy!
https://www.radionz.co.nz/national/programmes/sunday/audio/201852897/there-s-no-such-thing-as-fair-austerity
Cheers, Draco…you’re solid on this subject…
McFlock, the simple answer is that ‘truth’ must be spoken, loudly, publicly and repeatedly about ‘money’…
Why it needs not be ‘either or’, when society can have ALL core social requirements fully funded, without debt…
The taxation discussion is a little different, except to say that funding does not require taxation or debt…not one cent..
Until truthful dialogue is being pushed into the mainstream consciousness repeatedly, until it is accepted for the ‘fact’ that it already is…
The crucial subjects you raise, cannot have the meaningful solutions they should have, and must have…
RBNZ is the only legal issuer of NZD…so why is there 100bn of government debt…
It is the biggest scam in human history…and is the root cause of almost all major problems faced by humanity…
Thing is, if you think you’re speaking the truth, I have bad news for you – you’re not getting your message across to this audience member, anyway.
So it’s not just whether the truth is spoken, how it is spoken is also important.
Proclamations from on high are not usually persuasive by themselves, they need patient logic and a certain amount of coherence.
Agree..
It is highly improbable that other MP’s (past, present) will talk openly about about it…even if they do understand
So pressure needs to build from ground up, I would say…
Which makes your comment so important…how to structure delivery of the ‘money’ explanation…in such a way which will enable that message to gain the appropriate traction…and then momentum…and then pressure…
The ‘scam’ is well understood and small pockets, however I would say that many, would not be aware of it…
*NZ has sovereign currency…
*NZ can create fund for any requirement to be paid for in NZD…
*NZ does not need to borrow to fund social spending…
*NZ does not need to raise taxes to fund social spending…
Why Not….
How to shape that up appropriately…
without figuring out that first step, we won’t be able to walk the journey.
Absolutely..
A place to start would be to trawl social media to find some street level pockets of understanding…
There was a guy called Ian Parker who was pushing very hard for a number of years..
He met with Andrew Little a few years before he became leader to talk it through…
There were small groups who have ‘picketed’ outside the RBNZ over the years…
Shaping up the message is easy relative to finding a ‘face’ to front the delivery of it…
Places to start
It’s a rather interesting point that the 1st Labour government actually went there.
And this:
Also, if you want to eliminate poverty _in NZ_ then we need to stop taking so many refugees as they tend to be pretty poor.
(But maybe this is not really the goal?)
A.
given the low number of refugees we actually take, that’s probably not a big factor to affect the economy if we just throw more money their way
Maybe we could simply deport poor people – by similar logic that would also work.
Actually refugees normally do very well economically I believe.
We have a political and economic system that creates and maintains poverty – and could have one that didn’t do that, if we choose.
If you were to deport all poor people (or prevent poor refugees from coming to NZ) – the current system will simply create a new bunch of poor people.
Poverty cannot be eliminated by way of capitalist means. Various policies around redistribution can be put in place by a government that will ameliorate some levels or instances of poverty, but since poverty is a central product of capitalism due to it always concentrating wealth and resources…
So, to tackle things at the root, we’d need to escape the fetters of capitalism, yes? And since capitalism operates by way of market mechanisms, then if we abolished the market, we’d be on the way.
How to abolish the market? Stick your hands in your pocket. Cue the demise of capitalism and the power bases that rely on it.
Now that’s out of the way… we can come together and build democratic (and therefore non-market based) forms of production and distribution. Being democratic, we’re talking about systems and ways of organising that involve us all and that we all agree with.
Or we could, rather than simply having our hands in our pockets, begin experimenting and developing democratically ordered ways to produce and distribute while only keeping our hands in our pockets when asked to produce profit for a capitalist.
Or maybe we begin by only keeping our hands in our pockets when faced by capitalism on Tuesday afternoons. And we build on and from those Tuesday afternoon acts of solidarity. 🙂
Not so sure about that, Bill. Either about your description of the problem or your proposed solution – it’d be nice if enough people did that, but I don’t see a significant number of people willingly opting out from capitalism en masse as a likely eventuality, even for one day a week.
Sure, capitalism by its nature causes poverty and hardship. But state interventions aren’t capitalist interventions. So the state can put in a hard floor for poverty if it chooses to – benefits, etc.
Currently it chooses not to.
Didn’t mean to suggest that state intervention was capitalist. And yes, states have provided universal entitlements.
I’m definitely up for Tuesday btw…until Wednesday. Then I might give it a go on Thursday too. (Some day you’ll all join up with us gainfully unemployed b’stards) 🙂
Tuesday and wednesdays are when this wage slave needs to earn filthy lucre for food, and wednesday is pub night, too 🙂
That doesn’t follow. Take the crude measure of 60% of median household income: are you saying that it’s impossible to structure a mixed economy (such as this one) to make sure no household falls below that level?
Please note this is not a defence of Capitalism. It isn’t a defence of Liberalism. It isn’t a defence of the Labour Party, it is simply a question. Don’t read anything else into it other than that, and if in doubt, ask.
I said that poverty can be ameliorated. I said it can’t be eliminated. It can’t be eliminated within capitalism because it’s relative, not absolute, and capitalism concentrates resources and wealth. A command economy could maybe deal to that issue. But I’d say the price paid for taking that route is far too high.
Whether it can be eliminated depends on how it’s defined, but I don’t think it’s helpful to define poverty as “any situation where there’s a wealth gradient”.
Capitalism certainly concentrates resources and wealth, even in a mixed economy such as this one. We already redistribute to address that: a little more redistribution (via say, wages and/or taxation) that brings all households above 60% of the median income isn’t the same as putting a command economy in place.
No because capitalism doesn’t actually operate by way of market mechanisms but by way of ownership.
Did you buy a Blockbuster Video franchise?
Have you ever been engaged with capitalism Draco? I have, seems to work ok for me. I’ve been dirt poor many times. It’s always selling something that gets my nostrils up above the water-line again. Me and my lawnmower, or a necklace of semi precious stones made into 50 pendants.
Have you got a date in mind with regard the government making everything fabulous in your life Draco? If it’s to be, you’re going to have to make it happen bro.
So capitalism works ok for you. The fact that it’s intergenration for some people suggests it doesn’t work ok for everyone.
How do we eliminate poverty?
Yep, I look in the mirror and say ‘So blew all your money again huh? What’s the plan Clever?’
I don’t think it’s a rude question to be asking of people living with poverty but It’s considered an evasion of privacy, none of our business, demeaning.
If we’re having an honest discussion about the subject I think it’s something we need to visit: ‘Please tell us what steps you are currently taking to turn your family poverty situation around?’
I say this because every time I’ve been broken arse, it’s my answer to that question that has guided me up and out. I acknowledge that not everyone can do as I do but I do feel that it is only when it is established what the poverty stricken family can do and are doing about their situation that a govt dept and community can best assist.
Kiwis love helping people that are committed to and working towards positive outcomes.
Lucky for you that you have a resilient nature, and I suspect that isn’t the only role chance has played. Blaming poverty on poor people, and other forms of self-attribution bias fly in the face of the evidence.
In ascending level of importance:
The thing is that we will never know via the internet why person A is in need – but we have no right to, because that’s how privacy works.
While some enquiries to parse the exact circumstances might be genuine attempts to understand, even caseworkers in a face to face consultation might miss major causes of poverty that might be under the person’s control. Blog commenters will never know.
But then there are other losses that aren’t under personal control – like getting your car wing mirror bust off by some fuckwit overnight and it’s motorised so it’s another $400 you need to fucking find before the next wof. Even if you can afford insurance you still need the excess – or the no claims bonus.
And then there’s the entire thing about deserving vs underserving poor – all to often people parsing through a person’s life history come across as looking for excuses to not care.
But the main reason is: what good does it do if we can assign blame? Maybe the person will never have the nous to sort their shit out. Do dropkicks not deserve to live in dignity? Must their descendents pay for their mistakes unto seven generations?
I really don’t see how rationalising individual circumstances will solve a problem affecting 8% of our kids (by the soggy-foot measure of poverty)
And you still show no sign of understanding capitalism.
It’s not trade that makes capitalism but ownership.
Even Marx was still using a trading system. He just removed private ownership of the means of production.
Ha, I’m sure you’re right Draco, I can’t get it like you do, That’s why I like you.
If I’m going to trade something: Rockets or jubes, for such a system to work, don’t I need to own that something?
There’s a difference between owning the widget and owning the means to produce that widget. Capitalism is the latter.
You think that you should share in my jube profit Draco. I think your kids should via the schools my taxes build but if you want a slice of the confectionary avalanche you should be setting appointments with sweetie importers, like I did. W.W.
Ah, so you’ve become a ticket clipper and bludge off of the wealth created by others work.
Do your job interviews go well?
Please tell me you lie, pretend to be someone you’re not. I’d love to interview you….
“Well to be frank Mr Mac you represent everything I despise. I would rather have pygmies blow 1000 poisonous darts into my eyes than spend a nanosecond in your employ….how am I doing so far?”
guys, seriously? We were all doing so well.
Happy happy, nicey nicey, maybe?
I love Draco and he loves me
A topic about economics, may there be a lot more on the horizon.
I’m screwing this off subject, sorry.
I think many lose heart with helping others when those receiving assistance seem to have little stake in outcomes.
This is leaning towards Farrar talk, yeah I get that.
My view is well and good but it leads back to where McFlock is coming from ‘So what do we do about it?’
Opportunity, it’s always about opportunity. The chance to be the people we know we are, some breaks, some leg-ups, nurturing of fledgling talent. Throwing money is a short term feel-good. Throwing opportunity is forever.
That almost made me wana cri like a weeb. Mater a fact when ever I hear Farrar I cri.
There is always an opportunity cost is there not? Waiting for the perfect conditions to begin never happens. Starting now creates the perfect conditions.
Opportunity cost is one way to see it. If we saw it as an opportunity investment we could reach broader when it comes to what stands between people and their aspirations.
Yeah Sam, I’m a ‘So lets start bumbling through it tomorrow morning’ sort of guy too. Learn fast or die. It’s not for everyone.
If there’s a safety net, they can learn at their own pace.
And society is better off because fewer trapeze artists die, so the world is full of swooping grace.
Throwing money is throwing opportunity:
Free retraining.
Enough money to live in dignity and remain included in society.
Well fed, clothed and educated children
good healthcare to aid social participation
Keeping people as ready as possible for when the primary opportunity wanders along, nothing is stopping people from taking it.
And what’s wrong with throwing money at people every week for 60 years, if it lets them do what they want? For every one who does drugs to escape, there will be dozens of creators.
And capitalism destroys opportunity by shifting wealth into fewer and fewer hands.
Legislate for ‘trickle down’ with a targeted 1% wealth tax. At the start of each electoral cycle, redistribute 3% of the wealth of each top 10 percenter (no hiding – public register of assets?) evenly among the ‘bottom’ 30% of voters. Could ameliorate poverty (by most non-relative measures) overnight.
Or set the wealth tax rate high enough to abolish poverty. Yes, the redistribution could be ‘gamed’ by a few, but NZ taxation is already gamed…
https://thestandard.org.nz/nurses-ask-us-to-vote-for-our-health/#comment-1317498
Fair enough.
Legislative change, a wealth tax, possible public asset register, and cash for people who vote.
Do you think it could be achieved in a concurrent fashion, or would it be more likely to occur if each step were pursued in sequence?
It’s just a math fantasy, for sure; I don’t understand economics. Prefer concurrent implementation for more immediate gratification, but that’s impractical.
Likely need legislation to establish a reliable (non-gamed) asset register first; there were some comments about one (or more?) of the Nordic countries having such a register.
Once the register was established (no idea how long that would take – need to look at precedents), maybe put forward the wealth tax and redistribution as policy for roughly concurrent implementation in the next term (if elected).
Smacks of buying votes but think we’re already past that, even in little young NZ.
An asset register is an interesting idea for the sake of it.
Why voters? Is this arbitrary?
I assume the intention would be to get out the vote. even if it’s $20, it ain’t nothing to sniff at.
I’m idealogically opposed to that, votes should be freely given not sold, even if the particular who to vote /for/ isn’t specified [edit]though I suppose ballot spoiling is an option[/edit]. Say what you will about people who don’t vote, it’s a valid choice in a democracy. I’m also opposed since it seems to have no relation to the core point – redistributing wealth for the purpose of reducing/eliminating poverty – other than to add an abitrary hoop (possibly in the hopes of increasing certain parties votes, given the demographic targeted).
Kids come first, your kids, my kids, all the kids. Any poverty is not their fault.
Free school uniform every three years and when they start high school and free stationary/school books for kids in the public school system please and thankyou.
Food in schools/feed the kids please and thank you.
I read about the house of horrors, the 13 kids that were shackled and starved. Turned out one of them went to public school for a bit, was labelled the smelly kid and bullied for always wearing the same clothes. Child was smelly because they were shackled to the bed and often slept in their own pee, they were not allowed to was their hands above the wrist, horrific. Easy to bully the outcast, nothing is as it seems, one can only imagine the hell that was not their fault and went on for well over a decade.
Food in schools and free stationary/school uniforms for all who attend public schools please.
At least kids could feel like that had a normal life during school hours, they wouldn’t get ridiculed for not having any lunch/shoes/proper school gear etc etc etc. No more detentions for wearing the wrong shorts because ones parents simply can’t afford the correct uniform. Inclusion please.
That’s a good list.
I believe some local marae cook/ed school meals for kids in their areas – do you think some sort of grassroots organisations would demonstrate a real need and shame the government into biting the bullet?
I vaguely recall it as a major issue a while back – did the nats promise food in schools for all kids already and I missed it?
There was/is a town where the local bikie gang make sandwhiches for the local school, made national news but nothing much came of it. That was under a National govt though, perhaps a Labour govt would feel more shame?
I also suspect you’d get libertarians declaring private charity’s already doing it so why should the state take over.
Being politically nonchalant is already understood under John Keys in Christrchurch, Dunedin, Northland -just to name a few.
That might be what I was remembering – I’m damned sure I saw like a full catering kitchen on the tv news, though. I suppose that doesn’t preclude a gang – but of course in economically depressed areas demarcation between non-state organisations can be a bity messy, too. And it could be a labels game.
Anyway, one would hope Labour has a bit more human feeling than the nats, but I was thining of another project I was once involved in where a community organisation funded it for several years to demonstrate a need, and then it had a bad year and fell over. But by that time, the organisation that should have been doing it in the first place had taken over most of the roles simply to get in before we published our data (Yes Minister: the information is largely out of date, and we’ve since addresed the major concerns anyway” sort of thing), so my organisation’s project could die a natural death.
So they don’t necessarily need shame, just organisational nous beyond “tell so many lies nobody can keep up”.
If i remember correctly, when the nat’s voted down Hones feed the kids bill, the then opposition parties aka our new government voted for it. I really hope the new government picks it up again and makes it law.
http://www.newshub.co.nz/nznews/national-slammed-for-voting-down-feed-the-kids-bill-2015031907
Would love to see schools growing and serving food at lunch time. I know around these parts there are plenty of growers that have excess produce not suitable for export but just fine for eating. Kids could get involved in preparing lunches, learning valuable food knowledge in the process.
How awesome would it be for all the kids to find all their stationary sitting in a pack on their desk on the first day. Teachers would know that all the kids would have what they need to learn from day one.
Miss Thirteen starts high school this week, it’s cost about $600 so far for her uniform, sports uniform and shoes (sports and everyday), books etc, she already has a laptop. It’s the little things, like a white bra to go under a white blouse that also bumps up the cost.
In contrast, huge kudos to Miss Tens school, school books $20 and a new uniform top $25, they do their very best to keep costs down, they also do ‘breakfast club’, teachers start school early to make this happen and it brings the kids together.
I like Cinny’s list. Is there something in there about cheaper medical & dental care for kids as well. And getting the immunisations done.
Also more funding for special needs kids and their families.
And throw some money at early childhood hearing and speech problems as well, I think they are shockingly common in NZ (at all levels of society).
A.
TL/DR
Fine.
So how do we get the government to throw money in those directions?
I don’t think we can, as we are largely powerless.
A.
Antoine can’t do anything, and projects his incompetence onto everyone else.
If you have some control over the government, OAB, now is the time to reveal it.
A.
That’s the easy way out.
the last government didn’t suddenly discover the existence of child poverty by itself last august.
Those vending machines in the UK are just another form of control of Common people by neo liberal. How well you got to a machine to get your daily rashions it you comply with the bent system rules and requests you get food. This does not seem like a problem except the system corrupt one request could be to make false statements of any kind to help the systems to break someone of some organisation fighting for human rights or the rights of OUR mokos to a healthy clean environment you get the picture.
In a perfect Papatuanukue/world this would be excellent and so would DEMOCRACY.
But OUR WORLD SOCIETY is far far away from being perfect.
Ka kite ano