Their problems not necessarily ours

21/07/2013

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.


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