Latta vs rich List

August 4, 2014

Nigel Latta’s TV programme on the New Haves and Have Nots has reignited the debate on inequality.

Eric Crampton counters the assertion inequality is growing:

. . . First, as noted last night, inequality has not been increasing. There was an increase from the mid 1980s through the early 1990s, and it’s been flat since then. Last night I put up the Gini time series, but that’s hardly the only measure of inequality. Let me here quote the Ministry of Social Development report:

Overall, there is no evidence of any sustained rise or fall in inequality in the last two decades. The level of household disposable income inequality in New Zealand is a little above the OECD median. The share of total income received by the top 1% of individuals is at the low end of the OECD rankings.

That’s one of their big bolded summary findings. Inequality is flat, we’re hardly out of line for the OECD, and whatever you think about inequality in NZ, it’s not being driven by the top 1%. . . .

Whether or not he read that, Latta added to the debate with a Facebook post:

And… for all those people out there who dispute the fact that inequality has been steadily increasing in this country… and who argue the ins and outs of the statistics from the most recent Household incomes survey… and even the man on Newstalk ZB who just said the episode was all just “socialist propaganda”… well, all those people might be interested in the fact that in the latest National Business Review Rich List Survey the collective wealth of our rich-listers has more than doubled since 2004 from $22.3 billion to $51.2 billion in 2014.

You can call that any one of a number of things, but I don’t think you can look at those numbers and say that inequality has been “stable” since the 1990’s.

So, you know, there’s that.

To which responds:

. . . Meantime, is the Rich List 2014 exhibit A for growing inequality?

It’s worth noting the Rich List isn’t stuffed with cigar-chomping bankers or sweat shop owners or other Dickensanian characters.

Take the wealthiest new entrant, Ian McCrae (Orion Health) or Rod Drury (Xero) who had one of the biggest jumps in personal wealth this year.

Both of these sell-made CEOs have roughly doubled their software companies’ workforces from around 400 to more than 800 a piece over the past 12 months. 

Those are high quality jobs. As are the 1500+ employed by Rich Lister John Holdsworth at Datacom, which has shot up the TIN100 rankings to become our second largest high tech exporter (just ahead of Fisher & Paykel Healthcare, founded by the Rich List Paykel family).

Companies on the TIN100 (and NZTE/Callgahan Innovation-backed list of our largest high tech companies) piled on staff last year — and would have added more if not for a skills shortage. The TIN100 is stuffed with NBR Rich Listers too numerous to name, but it includes Sir Peter Jackson, and the Gallagher Family.

Many make a broader contribution. Xero has fostered a shoal of smaller NZ software companies that support its platform. Holdswoth and Morgan each invest in dozes of startups, as does another Rich Lister Sir Stephen Tindall (and there are many other examples of investing in new businesses; I’m just pulling a handful from the tech scene). Morgan is also investing further afield including multiple projects in Africa aimed at creating sustainable businesses. 

It’s also worth noting that Drury and McCrae’s companies are barely gouging and exploitive by nature. Xero will only succeed against rivals if it makes it easier for small businesses to do their books. Orion Health has had wins around the world for its software, which among other things makes it easier for healthcare providers to put patient records online and share them others who need access. But its biggest success as been in the US on the back of the Obama reforms which have made healthcare more accessible. Orion is helping to make our hospital system work better too. That’s a good thing.

It’s true Rod Drury’s wealth has increased four-fold over the past couple of years, but it’s not like he got there by reaching into workers’ back pockets. It reflects the value that NZ, Australian, US and other investors have ascribed to his company’s shares.

Drury and McCrae have also made useful contributions to the debate around ICT infrastructure and public education., among other areas.

Not all Rich Listers have made such active investments in terms of employment or otherwise contributing to the economy. Some have merely seen the value of properties increase over the past year, with mixed results for middle and working class NZ. And not ever retailer on the Rich List is about to get a medal from the CTU. But it’s notable that the largest retailer, Sir Stephen Tindall’s The Warehouse, introduced a living wage programme over the past year (or Career Retailer Wage as the chain calls it). There are counter examples, but across the Rich List there are lots of examples of good jobs being created and even, like Sir Stephen, a few examples of closing the gaps.

Most wealthy people are wealthy because they have worked hard and taken risks.

They have earned their wealth and most have made a positive contribution to both the economy and society in doing it.

A very few might have got ahead at the expense of others but most get ahead by creating wealth which not only helps them it also helps others, by creating jobs and providing goods or services.

There is no doubt there are people in dire circumstances in New Zealand but the statistics on how many and comparisons with others don’t matter nearly as much as the people who are in need.

The easiest way to reduce inequality is to make the rich poorer but that won’t help the poor.

The real problem isn’t the gap between rich and poor but whether those at the bottom have enough and how easy, or difficult, it is for them to improve.

Some in immediate need require immediate direct help.

The key to helping the rest is improvements in their education, health, and helping those who could work but aren’t to move from welfare to work.


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