We need more useful rich.
New Zealand’s rich are endlessly fascinating, but as wealth concentrates ever tighter we are poorer.
The wealthiest New Zealand are about 40,000 people out of about 5.5 million of us. 70% of all the shares in our sharemarket are owned by that 1%, and 99% of us don’t. That’s about the same wealth concentration as in the United Kingdom in case we had any egalitarian pretentions.
As wealth concentrates more and more, there are fewer people able to alter important markets.
Let’s start with cars. The rich afford to buy new cars. New Zealand has one of the oldest car fleets in the developed world, but the “clean car rebate” of the Labour-led government saw a huge upsurge in people moving away from petrol cars.
The people buying new cars are rich people and fleet operators who need big numbers. Sure, there is a good second hand market for the Prius and the Leaf. But it is the rich that lead the market away from the combustion engine. The hard issue comes when the rich have achieved their Tesla and Polestar, and the rest of us who can only afford a second hand car have to start questioning whether to go for a reliable petrol car that we think one of our cousin or our dad can fix, or make the leap with the help of a $20-$30k loan.
Food shopping is class-driven. The rich who shop at Nosh or Moore Wilson or Raeward Fresh are small in number but very high in value. Even when the certifying labels are getting simpler and more effective, it is the rich that are more likely to have the time and mental space to allow considerations like food production ethics, ingredient precision, and nutrition density to feature higher than price in individual item choice decisionmaking. Even better if you have the time and resource to do it all online and they deliver it to your door and you avoid the shit of being in a supermarket altogether. As a percentage of food spend, the lowest decile of household is cutting back hard on fruit and vegetables.
The rich change the recessions’ impact. We can see where that recession has bitten hardest. It’s in the areas where people are employed to bring shoppers the stuff they’ve bought or to transport you around. The rich kept piling their spending into construction, and i.t. media and telecommunications.
The rich are altering our house ownership. To see how fast home ownership is affecting the future wealth prospects of younger New Zealanders as against older New Zealanders, check out the steep decline in the brackets 15-39 years of people living in their own house.
Deloittes did this graph out of the NZStats series.
And who are these people that own houses worth a million or more? Aucklanders. This is one of the most regionally unbalanced concentrations of wealth in the developed world. This snip comes from a graphic from thespinoff.
Bluntly, there’s a set of older Aucklanders people owning multiple houses worth more than $1m holding onto their real estate wealth and that’s pulling up the ladder for everyone particularly the young.
Our rich alter the careers needed across society. The professions you need to protect that wealth are those that support new cars and real estate are: electronics mechanics, painters, plumbers, carpenters, construction engineers, architects, building material suppliers, window makers, drainlayers, door makers, lighting systems people, furniture importers and suppliers, landscapers, tree and plan suppliers, appliance and kitchen designers and installers, and all the people who repair those things. You also need conveyancing lawyers, surveyors, local public servants to measure up title and evaluate land, civil engineers and Geotech engineers.
Then you need the people that keep the main houses running for those great landed 1%. You need cooks, groundskeepers, organic produce suppliers, people to look after the children, people to arrange your holidays and conduct those holidays, hairdressers to do your hair, pet groomer and walkers, designers to tailor your clothes, mechanics to service your cars, etc etc.
So that’s the careers and businesses we have. 97% of businesses in New Zealand employ 20 people or less – over half a million little enterprises. Hundreds of thousands of little tradies doing your hair and your pets’ hair and your lawns and changing your tyres.
If you think that is markedly different from the vast estates of Pride and Prejudice or Downton Abbey, in reality that list of professions above is pretty much identical to what we have right now here in New Zealand.
Conversely, if there was lower wealth concentration in New Zealand, there would be more people able to move each one of those markets: more people able to buy new electric cars or electric bikes even, more people demanding higher quality food at reasonable process, more people demanding that holidays are organised and pets are looked after, more people demanding higher quality clothing, more wealth to share and distribute around.
This is where the insights of Max Rashbrooke’s work Too Much Money (2021) really kicks in. Possessing wealth opens up opportunities to live in certain areas, get certain kinds of education, make certain kinds of social connections, gain partners and marry into wealth, and exert certain kinds of power including market power and political power. When access to these opportunities becomes remarkably uneven, the implications are profound.
In the absence of longitudinal wealth data for New Zealand, we have to use snapshots. Between 2001 and 2018 total wealth increased, with older people gaining a lot more than younger people. NZ Treasury analysis is that this is mostly driven by proportionally it’s older people who own houses and they get the capital gains. Also, they are working longer beyond 65.
That is a very big and fast change in median wealth. I’d like to see if that’s continuing in future series.
Across so many fields, as more and more of New Zealand is owned by fewer and fewer people, we all find it harder to change anything for good.
The rich have their uses, but they are far less useful when they control more and more of us.
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