Their problems not necessarily ours

Visiting academic Robert Wade made the most of his opportunity on Q&A last week to opine about inequality in New Zealand.

He was alter forced to admit he’d been a bit sloppy and shouldn’t have included New Zealand in his view about the 1% ruling for the 1%.

He was wrong about growing inequality too. Brian Fallow writes:

The idea that New Zealand has become one of the most unequal societies in the developed world is just not supported by the data. . .

A standard measure of income inequality is a thing called the Gini coefficient; the higher it is, the greater the inequality.

Since the global financial crisis New Zealand’s has whipped around – it fell in the latest survey, reversing a jump in the one before – but the trend line through it is flat at a value of 33.

That is similar to the Gini scores of Australia, Canada and Japan, which ranged from 32 to 34, well below the United States’ 38 and a little above the OECD median of 31.

Another way of measuring income inequality is to look at the income of the top decile or 10 per cent of households (when ranked by income) and compare it with the bottom decile’s.

The average over the past four household economic surveys is that the top decile have received 8.5 times the income of the bottom one, after tax and transfers.

That puts us in the middle of the OECD rankings, and lower than Australia and Canada (8.9 times), Britain (10 times) and the United States (16 times).

The definition of income here is household disposable (or after-tax) cash income from all sources. So it includes transfer payments like New Zealand superannuation, Working for Families tax credits and welfare benefits.

The tax and transfer system dramatically reduces income inequality among the working age population compared with market incomes alone, reducing the Gini score by 22 per cent.

Again, this is similar to Australia (23 per cent) and not much worse than the OECD norm (25 per cent). . .

“For many OECD countries, lower income households tended to lose more, or gain less, than high income families,” the report says.

For New Zealand, however, there was a small gain for bottom-decile households of 1 to 3 per cent and a net fall, of around 8 per cent, for the top decile.

These facts don’t fit the narrative of a crisis of inequality which the left keep labouring.

There is poverty here but Rob Hosking points out that won’t be solved by importing solutions to other people’s problems .

Visiting academic Robert Wade brought in all the rhetoric about the “austerity” and “top one per cent” to these shores and imported them, holus bolus, into the New Zealand context.

Professor Wade later backtracked from his comments, but the important point is not a “sloppy” – to use his own description of his language – sermon from a British academic.

Rather, the important point is the way local “progressives”, as they like to call themselves, lap this stuff up. . . .

This goes further than the colonial cringe – it’s a kind of colonial S&M. Oh please humiliate us, the local anti-colonist progressives plead to their lofty offshore masters. Tell us how bad we are. Beat us, hurt us, and make us feel cheap.

Bring in all that guff about austerity measures, the top 1% of the country holding most of the wealth and making all the decisions and we’ll all just pretend we’ve got the same issues as the US or the UK.

It would not matter – apart from perhaps being a fascinating if rather hilarious study in group psychology – if it were not the fact this group then advocate importing their favourite solutions from their colonial, tenured masters northern hemisphere academia.

Fortuitously, the same week Professor Wade was titillating his local progressive followers with how dire New Zealand is the latest figures on inequality here came out.

And New Zealand is pretty well OK. Inequality isn’t growing – in fact, it has shrunk a bit in recent years – and the top 1% here get 8% of all taxable income – comparable with Sweden, Norway, France and Australia, and much lower than the UK (14%) and the US (17%). . .

So our colonised progressive movement is rather off the beam on this one and it is probably why the left in New Zealand is just not connecting with voters at present.

If you want to get elected you need to demonstrate you understand the concerns of the people you want to elect you, and that you have solutions to deal with those concerns.

Pretending the issues here are the same as the UK or the US, and getting academics in to pontificate about the solutions to deal with those other countries’ problems, is perhaps not the best way to go about this.

Nor does it seem particularly progressive.

That the left has to import other countries’ problems and solutions shows things aren’t nearly as bad here as they’re trying to paint them.

If they were they’d have plenty of local examples, supported by facts and figures and wouldn’t have to rely on those from foreign academics who have little knowledge of how things work here.

13 Responses to Their problems not necessarily ours

  1. robertguyton says:

    “forced to admit” – yes, he was bullied by Bill English, as reported in numerous newspapers around the country. This gives credence to my claims that Tories are bullies.


  2. homepaddock says:

    Bullying is a very over-used phrase and the facts of the exchange are disputed.

    What isn’t disputed was that he was sloppy – assuming what happens in his country happens here when it doesn’t.

    ” But he also says he does not know much about New Zealand’s tax system, and was not aware of the range of specific capital gains taxes which apply to financial sector investments.

    Nor was he aware regular property investors have the capital gain on their properties included in their income, and taxed as part of their income tax.”


  3. JC says:

    “If they were they’d have plenty of local examples,”

    They do.. the Herald regularly interviews such poor people, however, when checked the stories often fall apart, the interviewees turn out to be Labour and Green activists, the APN’s own staff and/or there’s ample evidence of a degree of affluence.

    When we do our own research such as this Treasury/Otago University seven year study:

    Click to access 2396149-mcop-briefing-income-deprivation.pdf

    .. a much more nuanced picture emerges, eg, people are income mobile.. only 25% remain mired in long term poverty, of the 6% in persistent low income less than 10% are always in deprivation and they tend to be Maori and solo parents (but there’s strong crossover in those two groups).

    Rather than chase the unicorns and fairies of a supposedly large group of people in poverty we need to zero in on the tiny percentage in persistent deprivation.



  4. TraceyS says:

    And newspapers always get it absolutely right about everything don’t they Robert? Especially when it’s what you want to read.


  5. robertguyton says:

    Robert Wade claimed Bill English was threatening and bullying. Was Robert Wade not telling the truth?
    What do you base your opinion on – Bill’s gruff denials?
    Okaley dokely.


  6. JC says:

    Well, he was wrong or lying about much of what he said about NZ, so why would you trust him.

    Mind you.. maybe we should:

    “Professor Wade also told NBR ONLINE any capital gains tax should be used to lower personal income tax rates – rather than, as proposed by the Labour and Green parties, increase them.”



  7. robertguyton says:

    Well, NBR claimed that’s what he said, but as Tracey claims, you can’t believe everything you read :-0


  8. TraceyS says:

    Robert, you wrote “yes, he was bullied by Bill English…”

    Only the witnesses can know what happened with all certainty. You were there were you? Or are you letting your biases be in control of your words again?

    You can learn something from Prof Wade who appeared to have made the same mistake. We should expect a high level of intellectual rigour from academics, especially visiting ones. Otherwise what are they there for?


  9. TraceyS says:

    Great Robert, we agree on something. Since you have accepted that those newspaper claims aren’t making a direct accusation, then you better retract your definitive statement that Bill English is a bully, for it had no foundation. Time for you to man-up like Robert Wade and admit your “sloppiness”.


  10. robertguyton says:

    The newspaper didn’t make the claim, Tracey. Robert Wade did. he was quoted by the newspaper. Quotes are something journalists have to be very careful to get right, in my experience.


  11. TraceyS says:

    Doesn’t make it fact, Robert. If Prof Wade was so intimidated, then why would he describe Bill English as “decent”? Decent people have emotions too. Rational people like Prof Wade will no doubt appreciate this. I think you should interview the man. Find out for sure if this is the evidence you implied it was that all right-wingers (Tories as you call them) are “belligerent bullies”.

    You take things one step too far in my opinion. How you manage to give fair consideration to one of “us” in your representative role, hmmm I wonder. Hope I never have to find out. Trust at the very minimum you would consider me to be a decent bully. Oh hang on, that makes no sense at all.


  12. Viv K says:

    Contrary to what Ele says, things are bad here. In the last 3 decades NZ has gone from being one of the world’s most equal societies to one of the most unequal. ‘Over the past 30 years real incomes have grown 4x faster at the high end than those at the low end’. That was a quote from a Herald article by Brian Fallow, 30/08/12 titled ‘Report reveals picture of rising inequality’. The report is a NZ one by the way.


  13. JC says:

    “In the last 3 decades NZ has gone from being one of the world’s most equal societies to one of the most unequal.

    ‘Over the past 30 years real incomes have grown 4x faster at the high end than those at the low end’.”

    And the cost of this equality was a national debt of 65% of GDP. In short we were camouflaging one of the worlds most unequal societies with unsustainable borrowing for welfare and becoming a failed state.

    “As the country faced increasingly difficult economic times the government tried to use exemptions, incentives and subsidies to increase exports and so raise overseas revenue. The list of exemptions and incentives that farmers enjoyed stretched to many pages by the early 1980s. Domestic manufacturers were also protected by tariffs (taxes on imports). People found loopholes in all these exemptions and incentives. Many business decisions were taken to reduce or avoid tax, not because they made business sense. Incentives led to business behaviour that was not productive – consumers and producers were not exposed to the true costs of decisions.

    By the 1980s some could use the loopholes, exemptions and incentives extensively to minimise their tax payments while others could not. Not only was the tax system unfair, it was distorting the economy.”

    Thats the actual real NZ history of striving for equality.. massive subsidies, massive failure, massive tax evasion and followed by massive change to avoid national bankruptcy and state failure.. yet that is the prescription of the next generation of Greens and Labour in their race to the bottom of the OECD.



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