Written By:
- Date published:
9:42 am, June 29th, 2016 - 56 comments
Categories: accountability, capitalism, class war, john key, national, poverty -
Tags: brighter future, child poverty, inequality, suck up, Te Puea Marae, tory charity, trickle down
We used to be told that wealth would “trickle down” from the top to those on the bottom. Hah hah! Wealth sucks-up instead:
NZ’s rich getting richer, new figures show
The richest Kiwis are getting richer, and the growing inequality across the world has led to the rise of Donald Trump and the Brexit vote, Labour says.
New Statistics New Zealand data shows the richest 10 percent have hoarded more than half the country’s wealth, with the bottom 40 percent scraping by with only 3 percent.
And the gap between rich and poor has widened in the past decade. …
Widened despite some slight closure of the gap when Labour introduced working for families. The headline figure:
NZ’s top 10 per cent hold more than half of the wealth
Wealth distribution in New Zealand is at its most uneven in more than a decade. Statistics New Zealand shows the top 10 per cent of people have almost 60 per cent of wealth. The figures are for the year to June last year.
Labour market and household statistics manager Diane Ramsay said it was the biggest divide between the rich and poor since 2003.
…
Labour’s finance spokesman Grant Robertson said inequality was getting worse under National.“Reducing inequality should be the number one priority of this Government. It is taking away opportunity and undermining the economic and social security of our country.
“The ramifications of inequality have become clear in recent days in the Brexit vote and also in the way the US presidential primaries have played out. One of the consequences of inequality is that it creates a large group of disenfranchised people who feel forgotten and alienated. They then become easy targets for peddlers of fear and hate.”
Mr Robertson said New Zealand’s inequality was worse than in the UK, Australia and Canada. Here, the net worth of the bottom 20 per cent was less than a quarter of the net worth of the top 20 per cent. …
The data from Statistics NZ is here (and media release).
So how does our National government respond to this news?
The Government is dismissing claims the rich are taking an increasing share of New Zealand’s wealth, saying there is “nothing out of the ordinary” with the existing gap.
Actually, there is something “out of the ordinary” about it. We have a housing affordability crisis, a record level of homelessness, working families sleeping in cars, foodbank use at record levels, families living in unhealthy and decaying state houses, the rise of so-called “third world” diseases, and so on, and so on. That cannot be allowed to be “ordinary” New Zealand. Fuck right off.
As the rich get richer, PM says wealthy are helping the less well off
New Zealanders at the bottom get plenty of help from those at the top, says Prime Minister John Key as the latest statistics on wealth show the rich are getting richer. …
While there are no doubt some wealthy individuals who are doing a lot to help – bravo and good on them for doing so – there aren’t enough of them, and as a class the wealthy are characterised by massive levels of tax avoidance and evasion. Taking care of the poor is the responsibility of all of us, of the state, it cannot be left to individual acts of charity. Quite apart from which, those that seem to be visibly helping the most at the moment are not the rich at all, case in point, Te Puea Marae (you can donate here).
In short, Key’s response is pathetic. We need to vote to end suck-up economics. We need to be a better country than this.
The important distinction here is that these figures are about wealth, not income.
The major wealth of this country is in property.
To create a more level playing field in terms of wealth, we will need to effectively redistribute tens of billions of property and housing wealth to the bottom 80% of society.
Unfortunately I can’t see any political proposals to do so.
Raising the minimum wage to a living wage etc. will do nothing to even out the holdings of property wealth in this country. A person who earns $15.25/hr cannot afford property in Auckland. A person who earns $20/hr cannot afford property in Auckland. A person who earns $40/hr cannot afford property in Auckland.
And property is where the wealth of this nation is.
+1
And it’s not about redistributing that wealth either. It’s about taking it back into the commons.
All the inequality calculators I’ve seen only mention income – even on the inequality site! Surely assets/debts must be taken into account to be at all meaningful.
http://www.inequality.org.nz/calculator/
Yep a sole focus on income inequality is a have. The top 1% to 2% of society focus solely on financial capital and growing that capital, not what they get week to week in a pay packet. That’s what makes them capitalists.
Conversely, poor people focus on their week to week pay packet. Doing anything more than saving up a couple of grand worth of financial capital – then blowing it on a holiday – is very difficult when you have no surplus income or investments.
Someone who makes $100K pa salary might be said to be well off. But if they don’t own their own home in Auckland, they are way poorer than someone making $50K pa who does own their own home.
I havent been here for a while.
But essentially
The very nature of Capitalism is that money flows upwards towards Capital. (Its even in the name).
Therefore in doing so it flows away from those who have none or very little and need it most.
The result is that in developed country that has reached the point that ours has more and more people are ending up in poverty.
By poverty I don’t mean X ercent of the median wage or any other BS like that.
Poverty is in my book the inability to meet one’s essential basic needs when needed.
Thats the problem.
The only way to take people out of poverty is to give them more money.
There is a set amount of money in the entire system at any point in time.
As we have a debt based monetary system the only way to increase the amount of money in the system is by introducing more debt. (debt to whom is the question that should be being asked at this point.)
The current mechanisms for giving people more money under the current system are limited to the following options.
1.Higher taxation and greater redistribution of wealth.
The flaw here is that with current graduated taxation the section of society that will have the increase in tax will always have an incentive to vote against it and in a relatively time we will naturally end up back where we are now or worse (not forgetting that more and more people will find themselves in poverty due to the nature of the system itself causing wealth to flow upwards)
2. Print more money
The problem with this is that it only devalues the currency and reduces the spending power that each dollar has so doesnt solve the problem either.
3. take on more debt.
Problem is that it has to be paid back and we already have the highest debt we have ever had in this country and already struggle to provide the essential services we do have so this isnt really a good option either. especially not if the goal is and should be to improve the system for future generations.
4. The final option. Get a Job.
this one has always been the preferred option. The problem is automation. We have been automating jobs for the past 30 years and we are set to automate 45% more in the next 10 years. The end result is that there simply will not be enough jobs for those who require them. There will also not be enough new jobs created with technological advancement to do this either.
Having people do jobs not because those jobs need doing, but simply so the person can earn money simply in order to survive in the current system is nonsense and a gross waste of resources in a time where we need far better management of resources in order to reduce our emission footprint nd overall impact on the planet.
We could do away with up to 65% of jobs in society. Thats 65% of people working now that wouldnt have to put gas in the tank and drive to work every single day just to earn the money they need to simply in order to survive.
Thats the Auckland traffic problem solved over night.
These are the 4 options our government has. None of them fix the problem.
The reality is we should never be afraid to let go of that which no longer serves us.
NZ in my book is about Rugby, Beaches, Nature and doing amazing things with limited resources. If we can find a way to make life easier we would do so and with limited resources to do it. We have a number 8 wire mentality and think outside the box as a result of our historical isolation.
If we could find a way for everyone to work less and have more free time and a better quality of life as a result for all New Zealanders I like to think we would jump at the chance and do so with whatever resources we have.
In this day and age technology is a resource and one that is used everywhere in our lives.
The three most important technologies have been developed.
The internet for freedom of information.
Product Hubs such as trademe, Ebay, Amazon, Alibaba to enable people to obtain products they need or want.
Service Hubs such as Uber, AirBNB and many more. to obtain the services they want or need.
As Human beings that’s what we all have. Needs and Wants.
Needs and wants are satisfied through products and services.
It’s all right there.
We just need to recognise that it is and use it better.
take out the charging model it isn’t required.
Actively automate what we can and still do the rest until we find ways to automate it.
give people back their time.
This can be done now and there’s so many ways to do it including interfacing with the rest of the world until they too are able to follow suit.
One way is as follows
Step 1. UBI coupled with FTT
Step 2. UBI using a non debt based monetary system enabling the increasing of UBI to enable all needs to be met and for the building of infrastructure projects.
Step 3. maximised automation and a system free from money.
This is just one option. there are others too.
What sort of world do we want to live in?
What sort of world do we want to leave for our children?
This gets even easier when a privaye citizen understands this and controls a product or a service hub. (check)
Or we can keep doing what we do now and sit back and watch things get progressively worse because the root cause of the problem is the very system itself.
We really do need to not be afraid to let go of that which no longer serves us.
“The only way to take people out of poverty is to give them more money. ”
That’s not true. The easiest way to take nearly all people in NZ out of poverty is to majorly reduce their housing costs. That would give them more disposable income. Very few need more money.
CV has it right. The wealthy are looting the poor through property inflation. The solution is to end the inflation once and for all.
And even that is not going to do that. Keeping Auckland houses at $700,000 for a very basic house is not going to do anyone good.
House prices have to come down, massively (by 10% or more), while secure rental accommodation costing no more than 25% of total income has to be hugely boosted.
As it is, the value of every dollar a worker saves is rapidly devaluing when viewed against the basis of an Auckland home.
House prices need to come down to the affordable 3 to 4 times the median income. Presently it’s about 10 times the average income so 10% isn’t going to do it.
Rental needs to be set 25% of household income. Best way to do that is massive state ownership of housing. And if we did that I figure we could probably drop it down to 10% of household income. Owning homes is actually really expensive due to the mortgage.
Not More of the Same
Like I said we need to let go of that which no longer serves us. It is more than just taking people out of poverty although I will concede that reducing prices low enough relative to wages will take people out of poverty.
However It will not stop the needless consumption of resources that goes hand in hand with people needing to work in order to survive. Add to that the central pillar of Capitalism – the Profit Motive and you have model that is the cause of many of the problems we see in the world today.
Sure reduce the cost of housing but you still have war for profit and resources because in order to get profit you need resources.
In fact it is not just ‘profit’ that is the central pillar. It is MAXIMUM PROFIT!
afterall nobody goes into business to make a little bit of profit. It is maximum profit.
Maximum profit = maximum resource usage = maximum environmental destruction
Yes you can reduce costs to maximise profit but when the highest cost for any business is the cost of Labour then you will have businesses automating to reduce or eliminate this cost just as has been happening for the last 30 years.
So what happens when there’s not enough jobs yet your system of choice requires people to work in order to survive.
If this is the best system you can come up with then find me another planet with a better one please because once you reach this level of technological advancement where we can easily replace people with automation yet keep a model where people have to work in order to survive….. Then you have a system of enslavement. Economic slavery to be precise and sol long as people cant think outside the box to find solutions where this isn’t needed, then your system isnt much better than any other system of enslavement throughout history.
So at least know thats what you’re advocating for and if you continue to do so then are you really any better than anyone who supported and advocated for any other ssystem of slavery throughout history?
Hell even black slaves in the US got a day and a half off per week so how far have we really come.
Especially when changing and using technology better could free people from having to work to the point where we could easily have a 3 day working week and a four day weekend.
Its time we got real about this.
Systems Analysis designed much of the world around you that you use everyday. It has been the catalyst for the upgrade of many of our manual systems.
Its time we applied it to a system for Humans also rather than the continual BS tinkering that you’re advocating.
Sorry buddy but for those of us who get it. Its thinking like yours that keeps us enslaved and quite frankly I’m getting a little tired of it.
+111
Yes. Glad some other people get it.
http://www.newstatesman.com/economics/2014/06/paul-mason-what-would-keynes-d
I was going to say Keynes had the solution but when looking for a suitable quote discovered this article……Keynes2.0
This whole argument is ridiculous. If property is where the wealth of a nation is, and you can’t buy in Auckland, then buy elsewhere, thereby making you wealthy.
The issue is in fact more shore than that – supply and demand. There is a limited amount of land. Once all the land is sold in one area, if you want a piece you’ll need to offer an incentive for the owners to sell up ie: an attractive sum of money. This pushes prices up.
If you hand Herne Bay over to the poor, within ten years they’ll all have sold up and will instead be the rich property investors and speculators that we love to hate. And Herne Bay will be as expensive as ever.
It will always be about supply and demand. No its not fair but nothing is, and thinking it’s somehow should be is folly.
“New Zealanders at the bottom get plenty of help from those at the top, says Prime Minister John Key as the latest statistics on wealth show the rich are getting richer. …”
Prove it!
The press and opposition need to challenge Key’s self-serving b.s.
Show us verifiable hard data or STFU because you are lying . . . again.
Prisoners, lifesestyle choices, and the gangster community and families dont count in getting help
Welcome to capitalism.
Of course they would say that but they’re right in one respect – there is nothing out of the ordinary happening here. The rich will always take and take and take until the society collapses. It’s happened every single time that capitalism has arisen throughout history.
That’s not out of the ordinary for capitalism. In fact, that is exactly what happens under capitalism.
The period between WWII and the 1970s when we had massive growth in economies and peoples welfare was out of the ordinary as Piketty has proved. And we had all that due to a massive socialist change in policy but it couldn’t last because the socialist policies didn’t go far enough and outright stop people from getting rich.
We need to get rid of capitalism.
We cannot afford the rich.
Notice the absence n no mention of foreign ownership, this is a pure propaganda distraction story.
How much of baby boomers retirement wealth was lost in the 2 trillion share market crash.
Western Governments must be very frightened of the imminent huge payout baby boomers will get. When Fonterra had just a few billions payout in the Rock Star economy period they upped interest rates, and put a economic handbrake on the non milk economy.
Canada has a huge pension fund, and have a lot of equity in NZ assets, when is that due for huge hit in payouts.
Is their a tipping point for kiwisaver payouts, which will see the market react by shrinking.
Notice Gold in Silver has gone up on the back of Brexit
Goldmansach’s has been buying a lot of it.
http://www.sbcgold.com/blog/goldman-sachs-and-hsbc-betting-big-on-gold/
On Radio NZ today, Key repeats his lies that there is nothing to see here and we have a highly redistributive system (we do, but not in the direction he implies). As always, he discusses people at the “high of lower” end of the scale – people earning $60k etc – no mention of the multi-millionaires and billionaires, which is where the real problem sits, and where most of the nation’s wealth is captive.
In the same article, Labour mentions that helping Maori and Pacific people own homes would reduce inequality. I agree, but Labour remains silent on the elephant in the room – which is the need to get the resources to deliver these things, and this can only happen by a large-scale and deliberate reversal of the moves over the last 30 years to shift the tax burden from the rich to the poor. Redistribution remains a dirty word for Labour it seems (and of course for most other parties too).
Labour gets absolutely shredded in and by the media whenever we suggest anything other than a small increase in the top tax rate, so discussion remains internal to avoid that.
And what kind of Labour policies will we end up with if they have to first receive the seal approval from the Fairfax and Murdoch corporate MSM?
None, but there’s no need to give ammunition either. Once in, there’s time to do it right, but getting elected is a key component of that.
@ Craig H
Politics is based on lies. You pretend you will make everyone happy and hurt no one. The solution is to lie to the voters about who you plan to screw once in office.
Here’s a lie Labour should try out: “We might ask Treasury to review if there are any unfair aspects of the Crown’s revenue streams and consider if improvements are warranted.” Naturally the terms of reference for “Treasury’s review of revenue streams” will inevitably recommend the tax changes you want.
Instead Grant Robertson announces in his pre-budget speech that Labour will definitely raise taxes.
Not many are stupid enough to vote for a party with him as its finance minister!
There is already a Labour policy to fully review the tax system in NZ – it came out of our regional conference last year, so I’m pleased to see it made it.
Labour doesn’t have to lie about small increases, as everyone expects them from Labour, so announcements of that are not scary to the population.
Anytime they say they will raise taxes they should also emphasise what they are going to do with it, like paying off debt and remaking our health, education, housing and infrastructure to the world class system we had before the vandals arrived in 1984.
Good point – Labour policies are along those lines, but it never hurts to emphasise them when making a case for tax increases!
It is far easier and less painful to fund your policies via borrowing (or issuing new money), rather than taxing households. 80% of which are struggling to make ends meet week to week.
That’s why tax increase policies are political party death.
it is also easier (politically) to provide tax cuts to your constituency and reduce public provision (and/or run a deficit) and the bonus is those tax cuts are sticky and make it politically difficult to reverse them……however given the comparatively low level of taxation (by OECD standards) for high income earners in NZ AND given the ease of avoidance and evasion AND lack of enforcement there is great scope to increase revenue without excessively burdening low and middle income earners…i.e the majority
Good point, and I am not being very strategic in my thinking.
The idea of a full review of the tax system once in government is a good one. And could mainly involve people from outside of politics, to (slightly) reduce the party politics in the whole thing.
Simply collecting and publicising better information could go along way to help – the report from Stats NZ that is the basis of this post is an example.
One glaring gap in the available knowledge is tax contribution / government assistance relative to wealth. This is a crucially important unknown and I expect could be extremely illuminating. Would be an excellent topic for a Stats NZ / Treasury study. We know all about tax vs IRD-declared income, but that doesn’t tell us that much.
National have a goal of reducing tax to 30% of GDP, it is currently around 34%.
That means less for the public provision of health, education, welfare etc…..
If we as a country wish to address the inequalities within our society and the costly symptoms of that inequality, both human and fiscal then the truth that taxation needs to increase for the necessary redistribution and incentive must be stated and explained by any party wishing to treat inequality seriously…anyone that doesn’t accept that needs to be called out and asked to explain how inequality is to be addressed otherwise….as far as I can see the only response there can be is the resulting inequality is of no concern…..is THAT a politically saleable message?
“as far as I can see the only response there can be is the resulting inequality is of no concern…..is THAT a politically saleable message?”
National certainly tries to sell that message – and sells it hard, with some success I’m sorry to say. But it is obviously bollocks.
The Nats tax % goals you mention – what garbage those goals are, pure ideology without a shred of actual analysis and logic behind them.
“National certainly tries to sell that message – and sells it hard, with some success I’m sorry to say. But it is obviously bollocks.’
Not really…National carefully disassociate tax from the symptoms of inequality…they know that if the question of tax is linked to better provision they open an argument they don’t wish to have.
“The Nats tax % goals you mention – what garbage those goals are, pure ideology without a shred of actual analysis and logic behind them.”
It is ideology and it is indicative…pure neoliberalism. There has been plenty of analysis and logic applied to this if they care to look…..they care not to.
“Not really…National carefully disassociate tax from the symptoms of inequality…they know that if the question of tax is linked to better provision they open an argument they don’t wish to have”
Actually, you are right about this I think. Hopefully the idea of tax being linked to better provision becomes much more popular in future!
King John can go FUCK HIMSELF. He is the leader of this mess – a cold, heartless sociopath who has gathered despicable subhumans around him. Sadly, it may not be enough to just get the Natzi Party out of govt at the next elections; will the new govt have the balls to fix things so that we have a fairer society?
Someone like James Cameron moves to lil ole NZ, inequality gets massively worse instantly.
How is anyone hurt?
its almost as if you didnt bother reading the post
“Dead Cat” argument from DavidC.
**IGNORE**
You don’t think vastly rich migrants affect inequality?
Not really.
Sure, one rich billionaire might shift it a touch towards more unequal distribution while budging the median along one place, but how big are the migration figures for the incredibly wealthy? Net immigration is ~1.5% of the population. It might have local effects when concentrated, but you’ll have to try harder than that to protect your tory mates.
They do. You are illustrating the fact that the super rich and the inequality they entail operate across borders, the problem is not localised within individual countries.
If James Cameron wants to live in NZ with vast wealth, he should contribute a lot of tax – then he can enjoy a country with a healthy society for all.
Depends on what he spends his money on.
“How is anyone hurt?”
have you SEEN avatar ?
Anno.
Unfortunately yes I have, but I don’t think he lived here then.
No. One person, no matter how wealthy, doesn’t affect the figures that much because If you’re talking about income inequality then it may be that he has a very low declared taxable income, in which case he wouldn’t really affect the figures at all.
“We must devastate the avenues where the wealthy live”
Lucy Parsons
“More dangerous than 1000 rioters”
“The coming change can only come through a revolution, because the possessing class will not allow a peaceful change to take place; still we are willing to work for peace at any price, except at the price of liberty”
Lucy Parsons
Just put a post on Facebook to see if any of my friends have been getting help from the wealthy lately
Nothing to see here, oh look over there, there is a dead cat, in 5 4 3 2 1 KA BAM look there’s your dead cat
This is not a response. This is highlighting the problem. An increasing gap should be something extraordinary.
It is a shoulder shrug that normalises the issue, the status quo. The not so subtle shameless sub-text is that National won’t do anything about it.
Exactly. Political news commentators could be asking why this is nothing out of the ordinary. They then might move on to thinking about if it is a good thing and it must be this way.
But they don’t. They go with the shoulder shrug. It’s easier that way.
The problem I have with this sort of framing is that it’s a bit like saying that taking care of neglected children is the responsibility of their parents. While I don’t disagree, the framing can serve to conceal the fact that it is shortcomings in the way the state operates that lead to widespread hardship in the first place. It leaves room for wilfully inadequate “parents” like Paula Bennett to say, “Of course I will be happy to buy a new sock for these children who have not done their homework yet ;)”.
So, if the people at the bottom are getting plenty of help from the people at the top, that must imply two things (at least):
First, that the gap between the top and bottom is sufficiently large that those at the top feel moved to do something to help, in lieu of what used to be the government’s role, and,
second, that if taxes at the top were increased a bit (like a reversal of the previous tax cut and an acknowledgement that dealing with poverty is more important than a tax cut in the near future), those at the top wouldn’t really notice it, because it would take away the requirement for them to give charity, and they could keep more of their take-home money.
Trickle down theory didn’t work did it, another B/S trick by the Tories?
It worked perfectly. It persuaded people that if we made the rich richer that they’d be better off as well and so they let it happen. The majority didn’t get any richer and many are worse off but the rich certainly did – exactly as planned.
On a global scale, it worked pretty well, actually.
http://voxeu.org/sites/default/files/image/FromMay2014/laknerfig1_2.png