The poor get richer?

Written By: - Date published: 9:33 pm, December 13th, 2011 - 81 comments
Categories: capitalism, cost of living, poverty, tax - Tags:

Phil O’Reilly’s article in today’s DomPost headed “The rich get richer but so do the poor ” is appalling.  Responding to the OECD report on inequality, he is following in the footsteps of Alasdair Thompson. BusinessNZ are still dinosaur employers  from the Victorian age.

There’s a “bit of a debate” about inequality, says O’Reilly. No, there’s a huge debate and it’s growing. That is why the OECD is concerned.

In his hymn to capitalism (which is doing so well at the moment), O’Reilly says:

The sloganeers would have us increase taxes on higher income people to combat “inequality”.

Except it’s not the sloganeers, it’s the OECD. Here’s what the Director-General says in his opening speech.

Reforming tax and benefit policies are also measures that can promote a better distribution of income. Tax-benefit systems have become less effective at redistributing incomes over the past decades. The main reason for this declining redistribution is on the benefit side: levels were cut and eligibility rules tightened to contain social spending, and transfers to the lowest income groups failed to keep pace with earnings growth.

Over the last two decades, there was a move away from highly progressive income tax rates and net wealth taxes in many countries. As top earners now have a greater capacity to pay taxes than before, some governments are re-examining their tax systems to ensure that wealthier individuals contribute their fair share of the tax burden.

This aim can be achieved in several different ways. They include not only the possibility of raising marginal tax rates on the rich but also improving tax compliance (and in this areas we have been helping governments eliminate bank secrecy and fiscal havens), eliminating tax deductions, and reassessing the role of taxes on all forms of property and wealth.

Of course the real reason for O’Reilly’s diatribe is that the main reason the OECD identifies for increasing inequality is the growing gap between wages and salaries.

The single most important driver has been greater inequality in wages and salaries. This is no surprise: earnings from work make up about three-quarters of total household incomes among the working-age population in most OECD countries.

In Britain, the Telegraph reports that Chief Executive pay has gone up 1200% in 25 years.

81 comments on “The poor get richer? ”

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  1. Draco T Bastard 1
    13 December 2011 at 9:41 pm

    http://www.businessweek.com/news/2011-12-07/raise-taxes-on-rich-to-reward-true-job-creators-nick-hanauer.html
    http://www.businessinsider.com/rich-people-do-not-create-jobs-2011-12
    http://www.businessinsider.com/history-of-tax-rates

    Copied those links across from Open Mike as they’re definitely on topic here.

    The evidence is fairly clear. Rewarding the rich for being rich doesn’t help either the economy or our society.

    • aerobubble 1.1
      14 December 2011 at 2:55 pm

      Its like a P addict who sells P from a home with a hill side of homes overlooking the street.
      Rewarding stupid for being stupid doesnt help anyone.
      I’m completely awe struck that,
      i.) the markets are in dire straits and nobody on the right will reckon their ideology has anything to do with it,
      ii.) that syria believes killing its citizens will demotivate them, and that stopping protests won’t force them to take up more desperate means – aka suicide bombings, road side bombs, etc. Syria leadership lost the moment they gave up their cause by attacking their own people.
      iii.) that the left hasn’t spoken to how neo-liberalism is not an ideology per se, its more tail wagging the dog, the ideology emerges from the needs of the right wing government to hold on to power, and has nothing to do with running the economy, in fact now its so obviously disconnected (rightwing political power and the needs of the global economy).

  2. Anthony 2
    13 December 2011 at 9:45 pm

    Anger levels rising…

  3. Jackal 3
    13 December 2011 at 9:59 pm

    There is no question that the trickle down rhetoric of the wealthy is nothing but a big lie. O’Reilly claims that the poor are getting richer, but gives us no information about the data he’s basing his belief on.

    O’Reilly is making shit up to try and sooth the concerns of any right winger’s who still have a beating heart. Every social statistic of consequence shows that things are getting worse for the poor. They have less money and it’s worth less as well.

    For O’Reilly to claim that work will set you free and those that are born into poverty have equal opportunity in a user pays system is about the dumbest thing I’ve read all week. What a shmuck!

    • aerobubble 3.1
      14 December 2011 at 3:00 pm

      Yeah, we know Key had free education, free university funding, we know that most boomers did. On any measure every uni educated person entering the workforce is in debt to their eyeballs.
      How anyone could say the young wage earners of today are better off I don’t know!

  4. QoT 4
    13 December 2011 at 10:10 pm

    I couldn’t believe he wrote that with a straight face. Yes, Phil, the poor are “getting richer” too, but the gap is widening, which means your mates are getting richer faster, keeping up with/ahead of the CPI/inflation/etc, and basically making out like bandits while demand for foodbank services is at record highs.

    Wait, no, that’s just because, um, poor people are dumb and don’t know how to add, or something.

    • rosy 4.1
      13 December 2011 at 11:01 pm

      “Wait, no, that’s just because, um, poor people are dumb and don’t know how to add, or something.”

      yeah just as poor people don’t understand… like y’know low wages are good for them because it will incentivise them to climb the ladder, whereas the rich need lower taxes to incentivise them. I mean it’s just so logical.

    • Draco T Bastard 4.2
      13 December 2011 at 11:30 pm

      Yes, Phil, the poor are “getting richer” too,

      Actually, the poor are getting poorer as their incomes fail to keep up with inflation.

      • vto 4.2.1
        13 December 2011 at 11:35 pm

        That’s what I was going to say mr draco, “the poor get richer”,, relative to what?

        Certainly not the price of fish.

        • mik e 4.2.1.1
          14 December 2011 at 8:06 pm

          the poor are getting rich in the knowledge that the rich have won and the poor have to live on fresh air while the rich have many more times of the resources than they need

      • Ari 4.2.2
        13 December 2011 at 11:52 pm

        Not just inflation but also active rise in the price of necessities beyond the level of inflation. In terms of income-adjusted-for-cost-of-living, the poor are getting squeezed to pay for tax cuts for the rich.

      • QoT 4.2.3
        14 December 2011 at 7:10 pm

        You and your facts. Phil O’Reilly doesn’t need your facts.

        • lprent 4.2.3.1
          14 December 2011 at 7:58 pm

          Wrong. He needs them. He just doesn’t want them…

          I can see why you got a C in sociopathic neoliberal psychology… *sniFF*

    • KJT 4.3
      14 December 2011 at 7:41 pm

      Food up 25% in a year. What did benefits and the minimum wage go up by, again!

      • Jackal 4.3.1
        14 December 2011 at 9:03 pm

        Benefits went up 2.02% to (apparently) cover the increase in GST from 12.5% to 15%. In terms of a single 18 or 19 year old living at home, that’s an increase of $2.71 per week. The minimum wage increased by 25c or 3.25% in April… in other words SWF.

  5. RobM 5
    13 December 2011 at 10:21 pm

    Oh what a dynamo:

    “This is dynamism at work.”

    “Those who brandished slogans in the wake of the OECD report last week perhaps fail to understand how valuable that dynamism is.”

    “This reveals another interesting thing about economic dynamism.”

    “In other words, since the 1980s the economies of developed nations have become more dynamic.”

    The fuckwit should have read this:

    http://www.voxeu.org/index.php?q=node/7402

    “Third, while standard economic models assume that pay reflects productivity, there are strong reasons to be sceptical, especially at the top of the income distribution where the actual economic contribution of managers working in complex organisations is particularly difficult to measure. In this scenario, top earners might be able to partly set their own pay by bargaining harder or influencing compensation committees. Naturally, the incentives for such ‘rent-seeking’ are much stronger when top tax rates are low. In this scenario, cuts in top tax rates can still increase top income shares – consistent with the observed trend in Figure 1 – but the increases in top 1% incomes now come at the expense of the remaining 99%. In other words, top rate cuts stimulate rent-seeking at the top but not overall economic growth – the key difference with the first, supply-side, scenario.

    To tell these various scenarios apart, we need to analyse to what extent top tax rate cuts lead to higher economic growth. Figure 2 shows that there is no correlation between cuts in top tax rates and average annual real GDP-per-capita growth since the 1970s. For example, countries that made large cuts in top tax rates such as the United Kingdom or the United States have not grown significantly faster than countries that did not, such as Germany or Denmark. Hence, a substantial fraction of the response of pre-tax top incomes to top tax rates documented in Figure 1 may be due to increased rent-seeking at the top rather than increased productive effort.

    Naturally, cross-country comparisons are bound to be fragile, and the exact results vary with the specification, years, and countries. But by and large, the bottom line is that rich countries have all grown at roughly the same rate over the past 30 years – in spite of huge variations in tax policies. Using our model and mid-range parameter values where the response of top earners to top tax rate cuts is due in part to increased rent-seeking behaviour and in part to increased productive work, we find that the top tax rate could potentially be set as high as 83% – as opposed to 57% in the pure supply-side model.

    Up until the 1970s, policymakers and public opinion probably considered – rightly or wrongly – that at the very top of the income ladder, pay increases reflected mostly greed or other socially wasteful activities rather than productive work effort. This is why they were able to set marginal tax rates as high as 80% in the US and the UK. The Reagan/Thatcher revolution has succeeded in making such top tax rate levels unthinkable since then. But after decades of increasing income concentration that has brought about mediocre growth since the 1970s and a Great Recession triggered by financial sector excesses, a rethinking of the Reagan and Thatcher revolutions is perhaps underway.”

    http://www.voxeu.org/sites/default/files/image/FromAug2011/SaezFig2(1).gif

    http://www.voxeu.org/sites/default/files/image/FromAug2011/SaezFig1(1).gif

  6. McFlock 6
    13 December 2011 at 10:33 pm

    Another proud soldier for the dark side in the class war.
     
    A bit like the band playing “nearer my god to thee” – from the lifeboats, not on the deck of the ship.

  7. marsman 7
    13 December 2011 at 10:47 pm

    Phil O’Reilly like the late Roger Kerr writes patronising bits of fluff that on the face of it may seem plausible but when you look closely they make no sense, bit like neoliberalism in general, it’s all a con.

  8. vto 8
    13 December 2011 at 11:06 pm

    Don’t worry folks, people like O’Reilly are becoming less and less relevant.

    like dinosaurs thrashing around in the overgrown undergrowth just before the impact..

  9. jbc 9
    14 December 2011 at 4:44 am

    I think the sloganeering on both sides is misinformed: speaking from experience as working as a sole contractor and working as an employee in companies with 30,000 – 60,000 employees.

    On one hand I believe it is true that the inequality is rising and it is unjustified. When I look at the insane packages given to chief executives and bankers it drives me nuts. Particularly because I don’t think there is any relationship with productivity. People and companies making money out of the misfortune of someone else.

    On the other hand I have seen companies with rigid pay scales based upon experience and years of service. These organizations reward the seat-warmers while their smarter resources are picked off by companies that want smarter people and are prepared to recognize them.

    And then there is the basic economics of it all. If you put ten guys on a problem for 6 months and they can not solve it, and then one knowledgable person comes in and fixes it in one day… how much would you pay to keep that person on your staff?

    – What if they continue that performance?
    – Pay them on your rigid pay scale?
    – What if a high-performing company that sees their value wants them too?

    Sure, these are exceptional cases. But exceptions are what causes the disparity, aren’t they?

    And then, when I work in these places over a longer time I see the seeds of inequality. I see smart people quitting, and seat-warmers staying, and politics increasing. Jobs for mates and yes-men. The same shit that pervades governments of every colour.

    I believe in the principle of “From each according to his ability, to each according to his need.” and as a software geek I find that is one of the underlying ideas in much of the open source movement. A community effort for anyone that appreciates the community effort.

    I’m extremely wary of state control of incomes as I think that just penalizes the most productive and gives them incentive to seek alternative home states. I’m also extremely skeptical of the pure market alternative as that lends itself to bizarre distortions.

    I don’t know the answer but there is one area where I think the attention should be focused: finance. Making money out of money. That single thing blows away the foundations of any sensible productivity measures.

    The sooner that money movers are on an equal footing with other utilities (water, gas, electricity) the better. In fact they are less worthy. They manufacture nothing but trouble.

    • felix 9.1
      14 December 2011 at 5:18 am

      Thoughtful comment jbc, and I agree with much of it.

      Don’t know what you mean by this though

      Sure, these are exceptional cases. But exceptions are what causes the disparity, aren’t they?

      It seems to me that material inequality is becoming more entrenched, more unthinkingly accepted, and more expected at a systemic and institutional level.

      Gross inequality appears to have become the norm rather than the exception.

      • jbc 9.1.1
        14 December 2011 at 2:57 pm

        By that comment I meant that extreme differences in ability (relevant to employment) are exceptions rather than the rule. It is also exceptional differences in income that cause the widening inequality. Perhaps I was trying to infer the two are related.

        I was probably confusing myself as I wrote that.

        There are likely many reasons for widening inequality – with cumulative effect. In some cases it may arise from education/skills inequality. Other cases by automation – enabling a company to drastically reduce workforce size. And of course there is the finance industry (a blatant oxymoron) which introduces gross distortions without corresponding productive gain.

        The more I think about it the more it seems that finance is a big sink for money. It falls outside the fundamental rules of production/productivity.

        • Colonial Viper 9.1.1.1
          14 December 2011 at 6:23 pm

          And of course there is the finance industry (a blatant oxymoron) which introduces gross distortions without corresponding productive gain.

          The more I think about it the more it seems that finance is a big sink for money. It falls outside the fundamental rules of production/productivity.

          You sound like you would like an education. This is my suggestion.

          http://www.zerohedge.com/

    • RedLogix 9.2
      14 December 2011 at 8:13 am

      Very thoughtful jbc. As a sort of software geek myself I recognise the thinking.

      Consider a family… any sized or sort of family will do. Each member of it is different, very different. Each has widely differing needs, from infants, to kids through to the elderly. Each has a huge disparity in ability to contribute; a wider disparity in even the workplace example you mention above.

      Yet human families in one form or another, have thrived and persisted for millions of year. Why? Because they solve the underlying question you pose; how do resources get distributed?

      They do this because humans evolved a sophisticated empathy mechanism… we learned to love, care for and cherish our families. When that mechanism is in play… the problem is instantly solved because each member of it essentially set’s aside some of their needs to serve the needs of the family.

      Human civilisation has been predicated on our ability to expand the scope of that instinctive, evolved mechanism to wider and wider circles of community; suppressing at the same time an older more primitive instinct to be suspicious of strangers and outsiders.

      This expansion of empathy has been achieved by a range of means, religious, cultural and economic. The variety of ways in which this narrative has been played out, tragic, comic and surreal … is the rich vein of our often inglorious history as a species.

      We are however at the end of a major chapter… maybe the end of Part 1. Right now the author has dug us into a bit of a cliff-hanger, the hero is clinging to a crumbling root over an abyss… and the orcs are coming. We can hear their screams of delight…

      If there is to be more chapters in this story, we need a whole new plot device. Something new that takes what has gone before and casts it into a new light is what is needed to keep this tale cracking along…

    • Spratwax 9.3
      14 December 2011 at 1:12 pm

      Yes, the rise in importance of finance and the demise of production since the late ’70’s has led to the situation we are in today. The thriving business schools and commerce departments at universities and other institutions are churning out a multitude of money-shufflers (aided and abetted by ‘sponsors’ in the finance industry), but the steady and severe decline in production in most western countries makes you you wonder where this money comes from until you realise it is all fiction.

      The banks loan money they don’t have and this gets multiplied exponentionally when we include derivatives (futures, Swaps, options), and hedging. The importance of people who work in this industry has skyrocketed- Most NZ voters mistakenly believe that John Key, a currency trader, is well-qualified to lead/run NZ. The corporate media are also guilty of cultivating a narrative which belies the ubiquitous dishonesty and a massive con. Its all based on TRUST. That trust has worn wafer thin.

  10. One Anonymous Bloke 10
    14 December 2011 at 6:02 am

    When you are determined to reject reality, what matter is not that you say something clever, what matters is that you say something.

  11. Pssst 11
    14 December 2011 at 7:23 am

    I found the OECD background data interesting. Between mid 1990s and late 2000s GINI decreased before and after government transfers for the total population and working age population. The GINI gap that opened up between 1980 and the mid 1990s is still large compared to some other countries but the data would suggest that income inequalities have been decreasing albeit slowly. Of course that’s not how the NZ press has reported the information.

  12. Uturn 12
    14 December 2011 at 8:56 am

    It’s called greed. That’s the problem. Humans seem to think that at some point along the path of their insatiable appetite they will stop taking more than they need. After the next car, or the next house, or just as soon as they’re feeling a little more comfortable. But it never comes. The thing with greed is you have to recognise it and stop it in yourself. And greed usually turns up with his mate fear: oh but if we stop we’ll starve; you’ll be left behind; you’ll lose what you have; what will you do in old age? It’s all lies to get you greeding again. If you can’t stop it, the least you must do is realise it when it happens.

    For greed to get it’s hooks in, you have to believe that life paths are linear, that you can plan out every minute of it and that your efforts are a source of strength and certainty on a par with any god the human mind has yet created. You need to filter out every unexpected moment and dismiss it as irrelevent then push the narrative of your life through a Disney World Hollywood filter so that nothing seems out of place – and if it does, it stays on the cutting room floor. The more you leave on the floor, the more prevailent the twitch in your eye, the more vicious your slogans.

    How about those who think they are worth so much turning around and looking at themselves and exploring the fact their efforts effect more than just their bank account. They work in a larger environment. Their talents were a chance of birth, however hard they think they worked to develop them. So you’re highly trained and skilled and expect repayment? There’s a name for that too, and a philosophy, but as long as you don’t go digging around for answers you can still argue old economic theory, fears and greed – just a little greed, not big greed like someone else. The era of hedonistic extroversion our society is based on has got us into a mess. People who aren’t like the pin up models try their best to imitate them. Those who are like the models forget there is more to their own psyche and that it’s as easy as asking a question to get in. Both poor and rich can be greedy. Greed feels good. It’s justifiable in a thousand ways. If it didn’t feel good, no one would do it!

    What is so wrong with people that they cannot face facts? Do they think that if they admit to greed the work finishes there? That they officially “lose”? This is the whole point. We can base jump off mountains, land on the moon, submerge to the deepest depths of the ocean and split the atom, but almost no one will bother looking inside themselves to meet their own small problems. Inside each of us is a far deeper abyss and wider terrain than anything the outer world can offer. This old and largerly unexplored frontier is what will hold answers to our personal and political problems of the future – even the alternatives to capitalism – and will no doubt be left off the list of crafts of a new Knowledge Wave.

    • RedLogix 12.1
      14 December 2011 at 9:14 am

      Greed gets taught. We’re trained into it. It can be unlearnt.

      • mik e 12.1.1
        14 December 2011 at 5:11 pm

        Greed is a natural instinct of survival but we are supposed to be a modern civilization but the greed is good neo liberal thinking is taking us back to the cave man thinking literally global warming will ensure that outcome.

        • RedLogix 12.1.1.1
          14 December 2011 at 5:35 pm

          That’s pretty much what I would have said as well until recently.

          But consider the pre-agricultural, hunter-gatherer communities we evolved in as a species for 4-7m years. That’s the proper context you need to consider when thinking about our “natural instincts”, or “evolved preferences” as I suggest is a better term.

          In such an environment there was really no purpose for greed. For a start there was little of sufficiently permanent value to be greedy about. The only resources that mattered, food and a little shelter were all readily available and if those at hand got used up … then the group would just wander up or down valley where there was always plenty more.

          Human population density for much of pre-history was exceedingly low; rarely was it necessary for out-groups to compete against each other. Why risk a fight when the obvious, safe solution was to simply move to another place where a fight was unnecessary?

          Greed I suggest is the consequence of property, and property arose only very recently in human evolution since the invention of agriculture. For the first time in all our long evolution, suddenly a place, the crops, the villages and stock and assets associated take on value. Suddenly there is something extrinsic which had value which couldn’t be simply found elsewhere. A crop planted in spring needs defending in autumn. When food is stored over winter, and if it is insufficient or lost the group may perish. For the first time in human history … more was better.

          More food, more stock, more people, more troops, more tools, arms and so-on… and all of this needing organising. Organisation demanded hierarchy, which in turn demanded obedience and the power to enforce it. The ultimate desire became of course… more power.

          It is in this entirely recent cultural context that greed arose. Hence my assertion that it is better understood as a learned cultural artifact… not an inherited, evolved instinct as you have in mind.

      • Vicky32 12.1.2
        14 December 2011 at 7:26 pm

        It can be unlearnt.

        True, but only if the person wants to unlearn it! (Too few even realise that it’s a problem… 🙁 )

  13. randal 13
    14 December 2011 at 2:19 pm

    haven’t read that yet but I have read the article by Associate Professor PeterO’connor on the right wing attack on education traditions.
    kweewee and the nashil gubmint are about to wreck the school system to payoff the nutbarsa nd nobody is doing anything.
    thes nutbars are inot getting the school system for free and using it to turn what is now an extesnion of the humanist and progressive and critical tradition into a device fro creating unsatisfied and unsatisfiable consumers.
    it gets uglier by the day but all the wingnut tories who feel so proud of themselves for electing a nutbar gubmint are going to have to pay donw the line.
    new zealand is already a snoops and sneaks paradise and when it becomes a greasy little right wing strip mall then anything meaningful will have been long gone.

  14. Frank Hanlon 14
    14 December 2011 at 2:34 pm

    Sadly those in charge and that benefit from the system will never do anything to make change happen. Honestly, why should they care, they do ok (although there is plenty of evidence that less equality affects all the negative stats-crime, suicide, ill-health etc, which affects all incomes groups adversely). Even if they wanted to share more, how could they possibly. They are just as much slaves to the system, that dictates maximum profit must be made, at all times.

    If we want a fairer share of the wealth, we’re going to have to do it ourselves. No point asking the politicians to do it for us, one group may throw us a few more crumbs than another one, but basically the whole rotten exploitative system will remain.

  15. prism 15
    14 December 2011 at 5:56 pm

    The sloganeers would have us increase taxes on higher income people to combat “inequality”.

    It is strange to hear this man’s world view which is equivalent to looking through darkened glass and seeing his own image unclearly but not seeing the outside world clearly either, beyond the near environment. If any people are sloganeers it is Phil O’Reilly and his ilk. What a lot of self-serving fatheads they are, extending down to their shoulders, the plump self-satisfied pussies.

  16. Thomas 16
    14 December 2011 at 6:09 pm

    I’m sick of this whining about inequality. Suppose I gave you a choice between two societies.

    * Society 1 has high levels of equality, but everyone is relatively poor. Say they have a GDP per capita of $10,000 per year.

    * Society 2 has high levels of inequality, but it is wealthier. Say 95% of the people are better off than those in Society 1.

    Obviously you would chose option 2, which shows that inequality is not the be all and end all of social welfare. It shows that inequality isn’t bad in and of itself.

    Sure, all else being equal, I’d prefer lower inequality. But in the grand scheme of things, I don’t give a damn about it. There are far more important measures of social welfare—poverty, education, health, etc..

    Maybe inequality is correlated with the important factors. But so what? Why not cut to the chase and directly address education, poverty, and health?

    More to the point, focusing on inequality leads one to think that attacking the rich will help the poor. It may reduce inequality, but it will not help anyone, especially not the poor. If we deported the richest 10% of the population inequality would go down, but health, poverty, and education statistics would go the wrong way.

    So I’m sick of people complaining about inequality and completely ignoring the real issues. Every time an OECD report comes out people scream about inequality, but completely ignore health, education, and poverty statistics.

    • Colonial Viper 16.1
      14 December 2011 at 6:17 pm

      What a load of shit.

      Tell you what, if I could design an economic world at the snap of my fingers like you just did there, it wouldn’t look or behave like the neoliberal anti-social sciences shoebox you built it inside.

    • RedLogix 16.2
      14 December 2011 at 6:33 pm

      You posit two interesting alternatives there Thomas. Lets drill into them a bit.

      Society 1 is … if you make that in US dollars, it’s right on the recognised threshold, under which a society is dominated by absolute poverty and more income is tightly linked to a better standard of living… to one where above that number income and standard of living are less well correlated.

      In other words in this society most people will have just enough to live on, feed, clothe and shelter themselves and participate in their community. By observation we know that all other things being equal they’ll probably be fairly happy.

      Society 2 … describes your typical western nation. It’s what you know, it’s your comfort zone Thomas, so I’d totally expect you to pick this option.

      But the fact is such nations, while superficially comfortable are also riven with depression, anxiety, heart-disease, strokes, obesity, mental illness of all types, and alcohol and drug abuse on a massive scale. Violence and abuse of all sorts stalk the dark corners of our world, and from time to time the mobs go mad.

      Nah .. we may be comfortable, but we’re a miserable bunch on the whole.

    • Draco T Bastard 16.3
      14 December 2011 at 6:46 pm

      I take it that you missed these links.

      Why not cut to the chase and directly address education, poverty, and health?

      Clue Bat: Addressing inequality addresses all of those things.

      BTW, you’re society 2 cannot exist. What actually happens is that a few people (~1%) are inordinately well off, a slightly larger chunk (~24%) have adequate income and everyone else (~75% of workers earn less than the average wage) is pretty much in poverty. The 50% earning the median wage or less are in abject poverty.

      Basically, the majority of people will actually be worse off than all the people in your society 1.

    • Vicky32 16.4
      14 December 2011 at 7:32 pm

      Society 1 has high levels of equality, but everyone is relatively poor. Say they have a GDP per capita of $10,000 per year.
      * Society 2 has high levels of inequality, but it is wealthier. Say 95% of the people are better off than those in Society 1.
      Obviously you would chose option 2,

      Wrong!!!! Wronger than a very wrong thing…. 😀 I would choose option 1, without hesitation.
       

    • Jackal 16.5
      14 December 2011 at 7:55 pm

      If we redistributed the wealth of New Zealand’s richest man, Graham Hart, between those Kiwi children who are living in poverty, they would be better off by $34,091. That would improve the lives of 220,000 children and make one person poor… not a bad trade off if you ask me.

      • burt 16.5.1
        14 December 2011 at 11:50 pm

        Shocking tradeoff – unless you just want vast undeclared wealth as an unintended consequence.

        Besides, all your actions would do is teach people to look for an easy meal ticket – good luck with that society 10 years on. But hey you’re a socialist so bask in the glow of your glorious state intervention just long enough to hand a basket case economy to National, go on – it’s not like that isn’t already the pattern from your repeated failed experiments at legislating a more equality society.

        • felix 16.5.1.1
          15 December 2011 at 1:00 am

          “Shocking tradeoff – unless you just want vast undeclared wealth as an unintended consequence. “

          Can you explain what you mean by this?

          (And as a favour to me – it’s late – can you explain it in the form of an answer rather than a question please? Ta.)

          • burt 16.5.1.1.1
            15 December 2011 at 12:40 pm

            I’ll get back later tonight felix, but in the short term have a look at this:
            http://www.stuff.co.nz/business/money/6144194/NZ-household-savings-return-to-the-black

          • burt 16.5.1.1.2
            15 December 2011 at 8:17 pm

            felix

            The same thing that happened when the top tax rate was well above the company and trust rate. People restructure their affairs to avoid declaring income in ways that attracts maximum taxation.

            So if you raid peoples savings using the power of parliament then people will hide their savings.

            And here is the question;

            How long after you are done raiding the $100m stash’s, the $10m stash’s, the $1m(s) stash’s before we get to the $100,000 stash’s and need to stop telling people they need a few hundred thousand for retirement?

            • felix 16.5.1.1.2.1
              15 December 2011 at 8:46 pm

              I don’t think Jackal was literally saying the answer to the problem is to raid Graham Hart’s savings account. I think he was just demonstrating in tangible terms the degree of inequality we’re talking about.

              At least I hope that’s what he meant. After all, Hart hoarded that money more or less according (presumably) to the current rules of the game.

              A lot of people are describing the current rules of the game as a “failed system”, but I disagree. What we’re dealing with is the only possible outcome of the current rules – a handful of people live in luxury with far more than anyone needs while many many more can’t even meet the basic costs of living.

              That’s not a failed system. It works just fine if that’s the society you want to live in, but – and this is important – it’s the only society that the current rules can deliver.

              The answer lies in changing the game, not in reshuffling the deck.

              • burt …
                15 December 2011 at 10:31 pm

                felix

                How can you possible claim the Jackal isn’t literally saying the answer is to raid [insert-rich-prick-name-here] bank accounts when he says;

                “That would improve the lives of 220,000 children and make one person poor…”

                To suggest he’s pointing to a new economic model is outrageous.

                Perhaps you believe in some new form of socialism that raids the absolute richest person once and once only then runs largely status quo regressive taxation and redistribution models. But through that single deed a new system will form… F-Me!

                You could just acknowledge that harshly regressive taxation regimes encourage aggressive avoidance and often end up with the rich paying little or no tax. That would open up the possibility that an unintended consequence of harshly aggressive taxation can be an overall reduction in taxation revenue, but you only need to acknowledge the possibility, you don’t need to concede anything.

                • Colonial Viper …
                  15 December 2011 at 10:41 pm

                  The richest person, after his bank account is raided (taxed), will still be able to afford every BMW in the showroom, will still be able to afford 2 first class world holidays a year, will still be able to upkeep his 80ft luxury yacht, will still be able to add the full sized olympic pool next to his two tennis courts.

                  What’s the problem.

                  Its not like he’s going to be hurt.

                  • burt …
                    15 December 2011 at 10:46 pm

                    CV

                    So are you saying that when Jackal says; “and make one person poor…” that said person could still buy every BMW in the showroom… Shit this thread is bang on… The poor have got richer….

                    • Colonial Viper …
                      15 December 2011 at 10:54 pm

                      Silly boy…a few rich people are going to be taxed a bit more, but life will still be sweet as sugar.

                    • burt …
                      15 December 2011 at 11:03 pm

                      So do you think Jackal is bonkers with his idea that we leave the richest poor and redistribute it evenly to other poor people.

                      Or perhaps you are saying that Hart’s share (since he is now poor) is still enough to buy a showroom full of BMW?

                      Please explain.

                    • Colonial Viper …
                      15 December 2011 at 11:07 pm

                      meh

                • felix …
                  15 December 2011 at 10:45 pm

                  “How can you possible claim the Jackal isn’t literally saying… “

                  Because of the word “if” at the start of his sentence.

                  I don’t think you really understood my comment though. I’m saying there’s no point redistributing wealth within the existing paradigm.

                  • burt …
                    15 December 2011 at 10:52 pm

                    I got that felix, so what are you actually wanting to debate?

                    I’ll go that the current system is inherently flawed at creating an equal society. Problem is felix, I think that the equality of a society is like it’s crime rate. It’s a consequence of it’s culture and it’s social policies and it’s past. It’s a BS measure to compare one self against other countries with. But humans have the need for graphs and visual indicators so we do it anyway.

                    Personally I think human society is intrinsically hierarchical and so I think engineering a more equal society is inherently wrong. You can educate it toward that position but a lack of patience for good political outcomes is no excuse to legislate it so.

                    • Colonial Viper …
                      15 December 2011 at 10:56 pm

                      Personally I think human society is intrinsically hierarchical and so I think engineering a more equal society is inherently wrong.

                      Since you support the Born to Rule this is not a surprise.

                    • burt …
                      15 December 2011 at 11:05 pm

                      Is attacking me all you got? Pathetic.

                    • felix …
                      15 December 2011 at 11:06 pm

                      “I got that felix, so what are you actually wanting to debate?

                      Nothing. I agree with you.

                      There’s no point reclaiming the excess wealth from one multimillionaire.

                    • Colonial Viper …
                      15 December 2011 at 11:10 pm

                      Net asset millionaires are nothing these days anyways.

                      You gotta have at least $10M in NZ to count, $40M in Australia and $200M in the US. The USA with over 700 billionaires and 46M on foodstamps.

                • Armchair Critic …
                  15 December 2011 at 10:46 pm

                  Only taxing the very richest would mean the IRD could be seriously downsized; they wouldn’t need staff to tax everyone in the country.
                  Smaller government, less bureaucracy, more efficient blah blah blah, sounds like ACT policy to me.

                  • burt …
                    15 December 2011 at 11:14 pm

                    So how many rich people will declare their wealth honestly to the vastly downsized IRD when only rich people are being taxed ?

                    I put it to you that within 2 years of only taxing people earning over say $200K there would be piss all earning over $200K in NZ. There would be a shit load of people earning $199,999 and having multiple trusts though. Good luck with a reduced IRD to manage that simplification.

                    • Armchair Critic …
                      15 December 2011 at 11:29 pm

                      Thinking outside a very narrow set of parameters just isn’t your thing, is it?
                      Authoritarian intrusion into people’s lives is also a new (but getting old) ACT paradigm. Start off as a liberal party, nek minnit, John Banks. Simple solution burt – no one would need to declare their wealth, the downsized IRD would be authorised to know.

                    • Colonial Viper …
                      15 December 2011 at 11:36 pm

                      I put it to you that within 2 years of only taxing people earning over say $200K there would be piss all earning over $200K in NZ.

                      Forget about taxing earnings, a 0.5% property and assets tax applied to wealth over $1M fits the bill.

                • McFlock …
                  15 December 2011 at 10:48 pm

                  Nice drugs there, burt?
                   
                  Are you unfamiliar with the concept of using an extreme hypothetical example to illustrate a principle in its simplest form?

                  • burt …
                    15 December 2011 at 11:07 pm

                    Yeah sure, I understand that concept. Tell me how you think one might implement a more real world model starting with a context of absolutely asset stripping individuals for the common good. Toke hard, it might take some doing….

                    • McFlock …
                      16 December 2011 at 1:00 am

                      Nah, easy.
                       
                      Firstly some libertarian oik who thinks he’s god’s gift to political discourse posits two societies, one with massive inequality and one with massive redistribution of wealth to a perfectly equal society. Said oik assumes that people will agree with his assessment that the massive unequal society is preferable.
                       
                      In response, someone points out that if that were applied at a less extreme level, i.e. the wealth of one of the richest people in nz were entirely redistributed to the poorest, then actually quite a lot of the poorest people would be significantly better off. So (and this requires an understanding of context, so step slowly), a more moderate plan of progressive taxation is not the maoist nightmare any normal person would automatically discard.
                        
                      And you go off the handle and believe that the response was a fully articulated tax plan.

        • Draco T Bastard 16.5.1.2
          15 December 2011 at 1:25 am

          Shocking tradeoff – unless you just want vast undeclared wealth as an unintended consequence.

          And you still don’t know what the actual cause of that is (hint: It’s got to do with one of the seven deadly sins).

          Besides, all your actions would do is teach people to look for an easy meal ticket…

          Actually, we already get that – people like John Key, Blinglish and, in fact, everyone in NAct. Socialism would actually get them working and paying them what they’re worth (ie, SFA).

        • Jackal 16.5.1.3
          15 December 2011 at 8:59 am

          Burt

          Shocking tradeoff – unless you just want vast undeclared wealth as an unintended consequence.

          Vast undeclared wealth as a tradeoff to what… redistribution so that 220,000 children don’t live in poverty? Why would that be undeclared? I think you’re perhaps trying to say that they haven’t earned that wealth. Show me the jobs so they can earn Burt?

          Besides, all your actions would do is teach people to look for an easy meal ticket.

          Opposed to them starving. You seem to be saying that unless they work (in non-existent jobs) they don’t deserve food. This is a very sick mentality that is often extolled by the more extreme right wing psychopaths.

          Good luck with that society 10 years on.

          You mean a society that doesn’t have impoverished children? You haven’t considered the eventuating social dysfunction and costs associated with child poverty. According to this report paper in 2006, the social cost of health care in Canada in relation to poverty was $7.6 billion.

          This 2011 report by Child Poverty Action Group states that “Economic work undertaken for Every Child Counts in 2008 found that the cost of child abuse and neglect amounted to NZ$2b” in New Zealand. I suspect this to be an underestimation.

          And finally This report by the Joseph Rowntree Foundation states that “Additional lifetime costs of NEET youth are estimated to be in the region of £15 billion (£7 billion in resource costs and £8.1 billion in public finance expenses). These costs include educational underachievement, unemployment, crime, health and substance misuse (DfES, 2002). Other costs within the education domain attributable to poverty include spending on children with special educational needs (social, emotional and behavioural difficulties): an estimated £3.6 billion a year (Hirsch, 2006a).”

          But hey you’re a socialist so bask in the glow of your glorious state intervention just long enough to hand a basket case economy to National, go on.

          But hey, you’re a capitalist so let poverty drive down productivity and limit our earning potential.

          it’s not like that isn’t already the pattern from your repeated failed experiments at legislating a more equality society.

          I’m not a political party so have not legislated anything to be able to fail. Please stop with the dumb comments burt.

          • burt 16.5.1.3.1
            15 December 2011 at 10:39 pm

            Jackal

            How many countries can you point to that you would like to live in that monstrously raids the personal savings of law abiding individuals to provide social services it can’t provide through fair taxation?

            • Colonial Viper 16.5.1.3.1.1
              15 December 2011 at 10:51 pm

              In the US they raid millionaire’s personal bank accounts just to try and save banker wealth.

              Google MF Global and Gerald Celente.

              This is the top 0.01% screwing the top 1%. Its so funny.

            • Jackal 16.5.1.3.1.2
              15 December 2011 at 10:52 pm

              The US war in Afghanistan undertaken to steal their oil reserves springs to mind… although I wouldn’t want to live there. Is that the extent of your argument then burt?

              • burt …
                15 December 2011 at 11:19 pm

                Jackal

                Lets get this straight, are you saying it’s a good idea to completely asset strip rich pricks or not?

                We can debate the concept of measuring a countries entire socioeconomic fabric with one easy comparison as a basis for ideological direction once I understand the starting point.

        • mik e 16.5.1.4
          15 December 2011 at 11:12 pm

          Aschully socialists have more people working not collecting a benefit hisTory proves that over and over!
          Tories like to brag about not encouraging people to be on any benefit But always have worse unemployment figures .
          So they make up for that by bullying those who they have put on benefits.

  17. Georgecom 17
    14 December 2011 at 7:26 pm

    O’Reilly needs to read what Morgan and Guthrie wrote in the NZ Herald regarding the OECD report. The message was fairly simple:

    “Markets won’t naturally generate “trickle down” benefits. Well-designed curbs and checks are needed, supplemented by taxes that redistribute from the rich to the poor.”
    http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=10772838

    O’Reilly then needs to get his head around the matter that things changed in 2008. The ‘market will deliver’ and ‘trickle down’ neo-liberal myths were stripped bare and exposed as being wrong.

    Finally, O’Reilly needs to think long and hard about how he can contribute actual answers to our problems, not simply serve up outdated slogans.

    • Colonial Viper 17.1
      14 December 2011 at 7:38 pm

      Finally, O’Reilly needs to think long and hard about how he can contribute actual answers to our problems, not simply serve up outdated slogans.

      O’Reilly, and the class he represents, are part of the problem, and we shouldn’t expect them to come up with solutions.

      He might even genuinely believe his claims, after attending innumerable neo-liberal business seminars and economics courses.

      That doesn’t make any helpful difference though.

      • mik e 17.1.1
        15 December 2011 at 11:30 pm

        The only solution they have got to keep peasants happy while they are poor is cheap alcohol through their supermarkets and plenty of gambling outlets to make communities even worse off.
        An added poverty tax on these is a user pays solution to a problem it is creating.
        Shonkey is to scared to stand up to the ‘parties’ funders and is happy to have alcohol shown to be a fun carefree Drug that is causing 5to6 billion dollars worth of damage each year on year to our economy and community it should pay its own way and not bludge its way through our corrupted by alcohol “party”
        The National Drunken party Drunk with power sucking up to the lobbiests who are running a covert add on TV now, Funny That
        The add that said Arnold Nordemyer introduced a tax on Imported beer so the working man could not enjoy imported beer.
        Hogs [head] wash The working man would not be seen drinking poofy imported beer.
        Areal man drank the local brew so their add is a lie.
        then the add goes on saying National didn’t repeal that tax 1962 The local brewery employed a lot of locals Making world beating beer.
        In the add on TV they conveniently leave that fact out as well as our balance of payments improves !
        This is corporates Bullying the govt.
        Dog whistling at its worse!

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