Friday's Top 10: Matthew Bartlett on the IMF backing inequality, unashamed economic defenders of inequality, Piketty for dummies, the tax system that fights inequality, Dilbert & more

Friday's Top 10: Matthew Bartlett on the IMF backing inequality, unashamed economic defenders of inequality, Piketty for dummies, the tax system that fights inequality, Dilbert & more

Today's Top 10 is a guest post from Matthew Bartlett from the New Zealand Council of Christian Social Services, which is running the Closer Together Whakatata Mai campaign. He focuses on income inequality.

As always, we welcome your additions in the comment stream below or via email to

And if you're interested in contributing the occasional Top 10 yourself, contact

See all previous Top 10s here.

1. The IMF backs inequality
Some people can be dismissed as lightweight flibbertigibbets.

The good folk at the IMF? Not so much.

So when they published a paper in February this year with evidence that countries with lower inequality had stronger economies, it was hard to ignore them.

We find that higher inequality seems to lower growth. Redistribution, in contrast, has a tiny and statistically insignificant (slightly positive) effect.

These results are inconsistent with the notion that there is on average a major trade-off between a reduction of inequality through redistribution and growth. If there were such a trade-off, then the coefficient on redistribution should be not just negative but more negative than that on inequality. If that were the case, then redistribution that reduced inequality would on average be bad for growth, taking into account both the direct effect of higher redistribution and the effect of the resulting lower inequality. The results in column (1) decisively reject that hypothesis: the coefficient on net inequality is clearly negative while that on redistribution is close to zero.

This implies that, rather than a trade-off, the average result across the sample is a win-win situation, in which redistribution has an overall pro-growth effect, counting both potential negative direct effects and positive effects of the resulting lower inequality.

2. Where’s my recovery?
Inequality/poverty is now the No 1 issue for NZers in the Roy Morgan poll. That's because, inequality author Max Rashbrooke argues, people are starting to wonder where all our supposed economic growth is going.

Now that the economy is theoretically well into a recovery, with growth expected to be 2-3% in coming years, that has all changed. People see growth – but they feel they are not getting their fair share. Since nearly half the workforce didn’t get a pay rise last year, and benefits haven’t been increased (except for inflation) in a very long time, they are probably right to feel that way.

All of which means that questions of distribution – ‘who is getting what?’ not just, ‘am I doing okay?’ – become much more relevant. So unless dramatic steps are taken to redistribute income, we can expect to see these concerns continue to rise in the coming months and years.

3. In defence of the 1%
Unashamed economic defenders of inequality aren't as numerous as they once were, but Greg Mankiw hasn't lost his convictions. While we don't agree with much of what he says, it's still the clearest argument for unchecked inequality we can find.

Consider chief executives. Without doubt, they are paid handsomely, and their pay has grown over time relative to that of the average worker. In 2012, the median pay of CEO’s for companies in the Standard & Poor’s 500-stock index was nearly $10 million. Did they deserve it?

Critics sometimes suggest that this high pay reflects the failure of corporate boards to do their job. Rather than representing shareholders, this argument goes, those boards are too cosy with the chief executives and pay them more than they are really worth.

Yet this argument fails to explain the behaviour of closely held corporations. A private equity group with a controlling interest in a firm does not face this supposed principal-agent problem between shareholders and boards, and yet these closely held firms also pay their chief executives similarly high compensation. In light of this, the most natural explanation of high CEO pay is that the value of a good CEO is extraordinarily high.

4. Piketty for dummies
Thomas Pikketty's Capital in the Twenty-First Century is the talk of the economic world. But we can't all face reading a 700-page tome, no matter how many Jane Austen references it has. NZ economist Geoff Bertram Piketty for dummies is the answer to our prayers.

Piketty in three sentences:

1.The economic logic of a capitalist market system with private wealth plus inheritance leads to a highly unequal, but stable, social order with a patrimonial rentier class at the top.

2. Whether this social order is compatible with democracy depends on what a democratic society is prepared to tolerate.

3. If the capitalist distributional equilibrium does not lie within the boundaries of democratic tolerance, one or other has to give.

5. The sensation bites back
Speaking of M. Piketty, the Financial Times’ claimed 'expose' of his work made headlines last month. Here, Piketty makes it clear – very gently – just what a hash the FT made of the numbers.

6. The Pope weighs in
Pope Francis - reportedly the most influential Twitter user in the world - in the first major publication of his papacy last November denounced our current financial system, consumerism, capitalism, inequality, and the tyranny of capitalism. (Also see Matt Nolan's Top 10 from last December on what the Pope said).

Just as the commandment “Thou shalt not kill” sets a clear limit in order to safeguard the value of human life, today we also have to say “thou shalt not” to an economy of exclusion and inequality. Such an economy kills.

We have created new idols. The worship of the ancient golden calf (cf. Ex 32:1-35) has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose.

7. Economic inequality: A user's guide
Few people have spent as much time studying New Zealand's inequality as Brian Easton. Here the self-professed keeper of "the lonely garden of the analysis of economic inequality" sets out some key facts and data about our income and wealth gaps.

Is New Zealand satisfied with shifting from a low inequality to a high inequality society? What would its founding nineteenth century migrants have thought about the fact that, after allowing for each country’s size and affluence, New Zealand is now more unequal than the countries they left? And what would those who invited them here have thought had they known their descendants would be firmly in the bottom end of the unequal distributions?

8. The great divide
The New York Times has been running an 18-month series on income inequality, with Joseph Stiglitz as curator and editor. The Nobel prize winner has just summed up the series with his usual style and grace.

The problem of inequality is not so much a matter of technical economics. It’s really a problem of practical politics. Ensuring that those at the top pay their fair share of taxes — ending the special privileges of speculators, corporations and the rich — is both pragmatic and fair. We are not embracing a politics of envy if we reverse a politics of greed. Inequality is not just about the top marginal tax rate but also about our children’s access to food and the right to justice for all. If we spent more on education, health and infrastructure, we would strengthen our economy, now and in the future. Just because you’ve heard it before doesn’t mean we shouldn’t try it again.

We have located the underlying source of the problem: political inequities and policies that have commodified and corrupted our democracy. It is only engaged citizens who can fight to restore a fairer America, and they can do so only if they understand the depths and dimensions of the challenge. It is not too late to restore our position in the world and recapture our sense of who we are as a nation. Widening and deepening inequality is not driven by immutable economic laws, but by laws we have written ourselves.

9. The tax system that fights inequality
One of the things that taxes already do is reduce inequality. Nobel prize winning economist Robert Shiller argues that top tax rates should go up when inequality increases, as a counterbalancing force. It's a provocative but sensible idea.

10. The whole story in one chart & one video…
Whatever is said about inequality, it's hard to escape this fact: in the last 30 years, incomes have doubled at the top, while barely shifting at the bottom. That's the issue we have to confront.

Inequality: A New Zealand Crisis – Max Rashbrooke from NZCCSS on Vimeo.


* Closer Together is a programme run by the NZ Council of Christian Social Services (NZCCSS) about New Zealand’s economic inequality problem and what to do about it. NZCCSS is the umbrella organisation representing Anglican Care Network, Baptist Churches of Aotearoa New Zealand, Catholic Social Services, Presbyterian Support New Zealand, the Methodist Church and the Salvation Army.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.


Indeed, the modern equiv though is an AR15....

It has got to the stage that facebook delivers news articles like that a good week before they appear on

RE #10 video
I remeber a journal paper states that 
"Less inequality will result in higher economic growth for a nation, with necessary condition  that the nation has a largely homogenous population base, i.e.,scandinavian countries"

I dont see its a necessary condition at all.

Afghanistan is just about the most equal country in the world.  Where is the economic growth?

Not applicible really.
Arguably those who have the guns v those that dont makes Afgtanistan highly in-equal.
Not in the wording either,
"Less inequality will result in higher economic growth for a nation"
Doesnt mean the growth is measurable just that it would be relatively higher.
so 1% v 4%
or 0.0001 v 0.0004%
If you actually dont take such an extreme example that youpicked then actually a more equal society does seem to have a better economy.

Which countries do we pick then?
All these countries have inequality at levels dream of by the people such as those who wrote The Spirt Level.  Why are they not paradise on earth?  Where are their Scandinavian living standards?

What do you hope to prove by picking extremes? I already said the comment or observation is relative and I'll add "all else being equal"
Pakistan has huge in-equality and so?

Pakistan is very equal by the GINI measure, on the same level Germany.
I'm not picking extremes, I've listed half dozen countries that don't reflect this idea inequaliity is the thing that matters.  Is this something that only works for OECD countries or is it only Scandinavian countries?  
What are the other criteria you need before inequality is somethng that matters a damn?  You say "all else being equal", well perhaps we should be spending more time looking at what that "all else" contains then?

Pakistan clearly has huge in-equality whatever the GINI says.
I think the comment does indeed refer to OECD countries, but I dont see why that necesarily has to be the case.
By all else I mean say a civil war aka Afganistan would trump equality or not as the dominant factor.

20 lowest inequality (World Bak GINI) countries: Tajikistan, Australia, Montenegro, Pakistan, Romania, Ethiopia, Kazakhstan, Germany, Bulgaria, Afghanistan, Serbia, Finland, Belarus, Ukraine, Austria, Czech Republic, Slovakia, Norway, Sweden, Denmark
20 highest inequality (ditto) countries: Seychelles, Comoros, Namibia, South Africa, Botswana, Haiti, Angola, Honduras, Bolivia, Central African Republic, Colombia, Guatemala, Brazil, Zambia, Hong Kong, Belize, Suriname, Lesotho, Paraguay, Chile
Is every single highest inquality country a hellhole? No (particularly if you are wealthy)
Is every single lowest inquality country a paradise? No (particularly if you have been an ongoing warzone for the past 30 years)
Let's agree that if the country is actively at war, it has bigger problems than inequality. However, New Zealand is not actively at war, so the IMF comments about inequality and growth may have more weight.

Of those 20 with low inequality, how many are currently at war?

Pakistan (civil), Afghanistan (civil), Ukraine (it's complicated but lets call it civil)

Steven you get caught up in the "Less inequality results in economic growth" saga without looking at the bigger picture.
Tell me.......if you paid no income or GST taxes could you fully support your family and their needs that the Government currently pays for?
That means you will have to pay for your kids education, have insurances for surgery but perhaps meet any regular Dr visits etc.
Then what if you paid a small amount of tax that was unrelated to your income such as an APT tax set at a low rate of say 4%, could you still meet you payments in the above question?
Income levels are not the only thing that cause inequality.......the amount of effort a person puts in can also be unequal which results in inequality.....would you like to reward those who put in less effort at the expense of those who put in more effort?

No, the big picture is lower inequality seems to show BETTER economic growth which is about the biggest picture there is. It is a pretty high level concept, maybe too high for you?
"me" isnt the point, the point is an economy is there to support the society ppl want that means we have a progresive tax system and help the bottom % somewhat.
Self-supporting, if we look at the lower 0~25% then the anwser is no, it may even be quite a bit higher.  I dont know if I could cover say 10 years schooling without some form of debt, possibly 20 years worth (given private schooling seems to be circa $10k per child per year = 100k, um no)
"Effort", frankly thats a crock, and overly simplistic. I see hard workers on the minimum wage so how hard you work bears not on the wage you receive.
Consider that a rich columbian drug lord could work quite hard but his "business" is still parasitic and clearly damaging to society (if not the economy).

You know what Steven I'd allow your snarky comments if they actually pointed out some factual information but they don't!!!
They fact is you rely on a job and Government assistance for your very existence so you want to keep up the pretentious nonsence as you are a benefactor of those handouts and nonsense.
When you can stand on your own two feet and pay your way then maybe I would listen to you. When you come under the same rules as business and have the same compliance costs as business then maybe I will listen to you.
The fact is your anti-business, anti-competition and want a full state owned communist functioning government running the country......have you ever considered migrating?
Sitting in your ivory tower preaching that the point of an economy is to support your view of how society should function is pretty rich......and when the heck was there any ever vote on a progressive tax system?????
There has never been a vote on what type of tax system NZ should have so that means the current models like their predecessors were forced upon the people. so don't give me that bollocks that it is what society wants.
I for one am sick of working to keep this lazy hoax of system going....why should I contribute more than you for instance....I am sick of covering the incompetent people's rear end.  Why should I or anyone else in business have to take all the risk, solve all the problems, employ people and do all the necessary training to ensure those employees don't have an accident through there own stupidity????  When you get on your socialist band-wagon of resolving inequality you sound like some preacher promising a better place.
It is people like you who with bad attitudes that are holding the world back. There is nothing to stop you or anyone else from going it alone and getting into business and taking charge of your why haven't you??? I'll tell you why - you want some other sucker to do it for you!!!
I have had an absolute gutsful of doing all the compliance BS that your type of society through peer pressure bullying tactics enforces itself on me and every other business. People sitting on their arses in offices who have never done a decent days work in their whole life really annoy me. The trouble is your extreme left leaning Socialist Policies will cause a revolution go look at some of the other countries who have suffered dictatorships.....go see how how the people have faired, go through the orphanages and stay a day or two and help out,  Is that the kind of NZ you want????
If you think your policies of redistribution will help and assist NZ people then you need to think is a very fake picture you are painting and the consequences will be highy destructive as bit by bit the whole damn thing tips over.  Think about where the pitchforks will be pointing when it does happen.

Actualy you sit in utter politically blinkered ignorance so i dont think you would ever listen to me, that's fine, not my problem.

"I for one am sick of working to keep this lazy hoax of system going..."
Man I'm calling the heck out of that bluff. If you really believed what you're saying then you would stop doing it - stop working, stop employing people, the whole lot. Instead you carry on as you have, so I must assume that your rewards for your effort are sufficient. You whine a lot about the poor feeling that they're owed a living, but you clearly feel that you're owed great wealth!

Benwave, I am suggesting you do some more reading.....cos I don't think you are understanding this whole redistribution issue very well.

Not sure what I'm supposed to get out of this. I'm reading about a massive transfer of wealth from a populace in general to a privileged class who held the reigns of power?

It's pretty much the same system as we have today.......the redistribution of wealth creates poverty !!!  Those that hold the power call the shots, about all that has changed is the way the wealth is taken is not seen as being so barbaric......the cards are dealt slightly differently after all we are a so called sophisticated culture and economy but the results are the same.
The same principles of tax collection being the sole responsibility of the few is steeped in history. You might not be murdered for not collecting the taxes but you sure as hell will likely face the wrath of power if you fail in your collection duties.
The privileged class who hold power can redistribute as they see fit.....both the modern and ancient approach to redistribution rely on a cause. The modern day approach is accepted as being more palatable to the populace after all there is war against poverty, a war on environment issues, a war on educating the people, a war on health and well-being, a war on domestic violence, a war for public good, a war on inflation and deflation etc .......never mind that none of these wars have had a victory.......gotta keep the movement otherwise there is no cause !!  Redistribution is such an affective method......everyone wants to do it !! 

I can't help but see a fundamental difference between a redistribution which works away from the privileged class and towards the general populace; and one which works away from the general populace and towards a privileged class (as in the roman example).
It's easy enough to see how the latter would be destabilising in any economy given that the natural progression of unhindered capitalism is also towards polarisation betwen an ever more powerful privileged class and a general populace. I find it difficult to see how the former kind of redistribution would be similarly destabilising, and in fact some kind of redistribution to counter the natural progression of capital seems a lot like a necesary condition if stability in an economy is to be achieved.

If you think that is a fundamental difference then you need to address why the general populace are not ALL wealthy !!! You have been told and believe that this is how redistribution works but it actually works in the opposite way to your first satement which aligns it with the failed Roman Empire.
Think of a pyramid......the general population is at the base.....and All roads lead to Rome.
No income is generated without the actions of the general populations involvement in business first i.e. the goods, services, labour etc. Then the extractions/redistribution upwards much trickles back down to the bottom of the pyramid? How much is taken in supporting the centre and top sections of the pyramid?

China doesnt does it? it has lots of minorities, often over run by the Han yet can grow at 7~10% per annum.

Hi Mark,
As been discussed here before, you can’t increase the minimum wage ad infinitum as there will be a level where businesses fold.  For example, if I pay each of my workers $47.35 per hour my business will fold.  That’s not speculation, that’s a mathematical fact based on my businesses current turnover.  Furthermore a business like mine that export will not benefit from the increased domestic expenditure that result from increase in domestic minimum wage. 
Take the WalMart example, if they paid each of its 1 million lowest-paid workers an extra $30,000 per year it would be underwater and go out of business leaving 1.4m workers with no wage at all.  The loss of profit won’t be made up through more spending because, as he says, people only need so many clothes, cars, etc and the minimum wagers will save also. 
I’m not saying there should be no minimum wage increase at all but I am saying that this guys comments that it has no effect no matter what level is incorrect. 

Last para, you appear as per usual to be making a straw man argument.  Unless you would care to clearly show where Mark is saying pay $47?
What he is saying is with re-distribution and a reasonable min wage (Sweden jumps to mind) we can have a good economy, without it not, all else being equal.

The $47 is a real world example, my business, and I'm sharing that to illustrate my point.  The point being a reasonable minimum wage is fine but there comes a point where businesses fail if it's pushed too high. 

$47 per hour as a minimum wage in today's money is clearly way to high, ergo an un-realistic example.

And steven you've been known to formulate a few of your own straw man arguments, glass houses and all that. 

Actually, no I try not to, unlike yourself where this seems to be the norm.

OK, how high do you think the minimum wage in New Zealand should be?  Bearing in mind that as far as I can make out (looking at OECD data) Sweden doesn't actually have a minimum wage and New Zealand's is already among the highest in the OECD. 
You might also find it of interest to have a play with the interactive graphic at the bottom of this

Don't know but if a government is going to increase it they had better come up with a very accurate way to track that any increase is not causing job losses.  There will be a sweet spot somewhere along the way which is unique to NZ. 

Well, how about we start the discussion with what the minimum wage was in 1969 compared to what it is now. And then see if we can at least get agreement on that it is possible to have a minimum wage at 1969 levels and still have a functional society (I'm not even trying for agreement on it being worth the tradeoffs, just agreement that it is possible because we have had a functional society in the past).
Now, the 1969 level is more or less what the "Living Wage" proponents are arguing for, with accompanying arguements about doing away with all the benefits for the working poor that are ultimately employment subsidises for low wage industries.
And this same level is also what the city of Seattle (and the wider Seattle area has the same population as NZ) have passed into law as the minimum wage, phased in over the next few years, at which point we will have a really clear case study of is it a disaster or not.
Now, as there are people on this site that fall into the "all taxation is theft camp" I am confident we can get no agreement on what the minimum wage now should be, but can we at least agree we had a functioning society in 1969.

Why should we start the discussion with what the minimum wage was in 1969?    If you've picked that year because that's what the "living wage" proponents are arguing for, why not just start with their argument?

Because I don't completely agree with the Living Wage arguements. All I'm arguing for, and it is somewhat uphill battle on this site, is that New Zealand has had such a level of minimum wage in the past and the world didn't end. It may be impossible for particular people to employment particular workers without that owrker being subsidised for them by the government these days, so would be unable to employ that person if the country returned to 1969 wage rates, but I would argue the country as a whole can clearly have a functioning society at 1969 wage rates (because we did) so people who say it is not possible are basically saying I couldn't run my business in 1969 rather than exploring what else in society in terms of cost structures would need to change to support returning to a 1969 wage level (which is possible in theory, but I don't for a moment believe is practical politcally).
All I am arguing, uphill, is that it is not actually impossible. 

"And this same level is also what the city of Seattle (and the wider Seattle area has the same population as NZ) have passed into law as the minimum wage, phased in over the next few years, at which point we will have a really clear case study of is it a disaster or not."
Very good point, it's going to be interesting no doubt.

Not really, as its not geographically distinct, unlike NZ.

At a minimum it tells us if the people who said it could or could not work are right. It further suggests that people will be right or wrong in their reasons for that outcome (and those that got the outcome wrong are more likely to have gotten their reasoning wrong). So, regardless of what the outcome is, we can some arguments are known bad in what will be the first clear cut experiment. This makes that bad reasoning more likely to be bad in other places (because it has failed when put to the test). This is why we don't build bridges like the Tacoma Narrows anymore.
But we can do better than that. The people of Seattle are human beings living in a modern Western Society. So are we. Indeed, I would say our similarities outweigh our differences. In saying it is not the same as they are not as geographically distinct, you really need to establish why exactly that makes a difference. Should it lead to better economic conditions under the circumstances or worse than it would in New Zealand. Once you posit an actual effect two important things happen 1) it becomes testable to see if the effect matters enough to bring to the table 2) If it does matter enough we have a mechanism by which we can translate the Seattle result in a way that is meaningful for NZ.
If we just stop at the assumption of compatible, with testing the reasons for why, we can never compare anything to anything because everythingn is subtly different- two glasses of water differ in their OH concentrations, and if we don't actually explore the basis of that difference we could never make assumptions that water will act the same.

I think there is some consenus around $18.80NZ or so and not the present $14.xx? min wage.
There are some businesses who have signed up to tthe "livable wage" and in the case of one I make it a point to buy their tofu products.
I suppose take an example of say office cleaners if they are on the min wage of $14 would uping it to $18 break things for the top %? I'd suggest not.
Would paying McDonalds workers $18.80 v $14.xx be a biggee? so their awful burgers cost more? I suggest maybe not.
In terms of the OECD graphs they aremeanginless. The entire point is the lowest worker earns enough to get by not than one worker is not quite as starving as another worker ie they are both starving.

"Would paying McDonalds workers $18.80 v $14.xx be a biggee? so their awful burgers cost more? I suggest maybe not."
Fun fact, the CEO of McDonalds is a robotics engineer.

No, there isn't "consensus".  Some people think it would be great to give more (of other people's money) to low-paid workers, some don't; some businesses have chosen to pay their staff higher wages, others haven't.  If those employers that do pay higher wages get better results, then other employers will follow their example anyway; if they don't, then why would you want to make everybody do the same.  
What do you mean, the OECD graphs are meaningless?  This discussion is about inequality, and the OECD graphs enable comparison between different countries over three different measures of inequality, before and after tax and by age, over the past couple of decades.  They may not show what you want (that New Zealand is rubbish and everybody else, with the possible exception of the US, is great) but that doesn't make them meaningless.

Missing from this entire Top 10, and (until now) from the comment thread following, are the three little words that are essential to wealth creation:

  • Incentive
  • Motivation
  • Risk

Because, worthy though these sentiments are (and I've heard them all my life from the earnest campaigners for this and that), they tend to assume the continued existence of the Fruits to be re-distributed.
Yet there are, broadly speaking, only three ways to create wealth and thus them Fruits:
1 - grow something (the farmers' term is Natural Increase)
2 - Transform something - ore into metal, trees into SIP panels, grass into Chinese White Marching Powder.
3 - Take something that's already Made:  hunting, gathering, most criminality.
And to do any of these, one must assume Risk, have an Incentive to do so, and remain Motivated enough to keep at it (Edison and the filament bulb come to mind here) even though the hill gets steeper, the load heavier, and the pool of blood deeper (GoT references are, I understand, now compulsory).
There is certainly a case for re-distribution, which is usefully summed up in the tax phrase - the most feathers, the least hissing.
But it's also possible, and particularly in a highly mobile world, to disincentivise the Makers of Fruits to such an extent that they leave, reduce or limit production, and in general Go Galt on ya. 
To which I rather suspect our good Christians don't have much of an answer.

Well the pope and picketty have a lot in common......note my use of lower case...I can't ever be bothered the extra effort of using the cap button.
If neutral = an impartial or unbiased state.....then it must be applied to everything....hence constitutions place gurantees that each person is treated impartially and unbiased and a Governments role in neutrality is to protect that position at all times.
Does taxation achieve this......NO !!!!
Income inequality is a by-product of a system that has inequality. But stoopid people only look at the rate of applied taxes on income, goods and services etc. And fail to view the other side of the equation in what is essentially a tax advantage activity.
A wage or salary earner doesn't have the ability to tax deduct expenses as they are not viewed equally within the current systems of taxation and these same people are also not prepared to take on the risk level that others in business are prepared to take stoopid is the IMF, Picketty and the Pope and every other person advocating Socialism to the vulnerable with the pretense of helping them out of the situation that Socialism places them in, in the first place. You cannot tax yourself to prosperity when it is a tax system that causes the lack of prosperity in the first place.
Redistribution via a tax system which is promoted as alleviating poverty is a very sad HOAX !!!!
If you have a system in which all people and their earnings and expenses are treated identically then the HOAX dies. I don't even think the populace can trust the HOAX makers to implement a broad tax system which is neutral.......they'd screw that up too.
Poverty and inequality are what happens when Politicians and other busy-body organisations interfere.  These busy-body people lack the skills and discipline that is required to treat all people equally in regards to earnings and expenses. And if anyone wants anymore evidence then look at how we tax now.  Too many people can't get their heads around income taxes and the effects so they will not be able to ever get their heads around alternative taxing options that are available.
All taxes distort the economy and inequaity is simply one outcome of those distortions.
The role of Government is very poorly defined. Democracy is poorly defined....some think it is the right to vote....others the right to vote out......but democracy should be far more than either of those. Democracy is the right to govern according to and in line with the principles of a constitution that recognises the rights and freedoms of the people without any form of prejudice or discrimination.
The current economic and taxation systems have both prejudice and discrimination.
It is the 9 to 5 wage and salary brigade who allow all this prejudice and discrimination to they simply allow the hideous system to keep operating. That is why it is a minority who are in busines but we should all be in business and then the hoax would self-destruct. 
If your life is not your business then quite simply your life has become someone else's business and that allows Politicians, bureaucrats and a vast team of other parasites to sell their snake-oil policies to you.

Cold war and progress
During the 20th Century we had a cold war between America and Russia.
During that cold war these two countries started a Space Race.
As a result of that race, many technologies, such as Rocket science, advanced by many decades.
Today there is a similar, but quiet race, going on between America and China. It is a race on Super computers.
Titan, the American super computer, is the second fastest computer in the world.
It has the power of 7 billion people carrying out 3 million calculations per second.
It has over 18k CPU's and a similar number of GPU's.
It is deployed on science projects - working through the intricacies of molecular-scale physics and predicting how our climate will change.
It was the worlds fastest in October 2012.
By June 2013 it had already been beaten by Tianhe-2 in China.
Tianhe-2 can run nearly twice as fast as Americas Titan.
It can run at 33.86 petaflops per second. That is the equivalent of 33,860 trillion calculations per second.
Tianhe-2 has over 3 million Intel CPU's. It has a mixture of tasks including predicting earthquakes and developing new drugs. It is a flag for Chinese innovation and technology.

There is a power race on between America and China to be number one, and by 2020 (only 6 years away) it is predicted they will have entered the exascale age with computers 1,000 times faster these

So watch all the new science that will came from this. It will be mind boggling and probably no jobs left as computers will do everything.
What will happen to inequality then? and will governments be caught, as usual, with their pants down?

PS taken notes from an article by Dr Michael Banks.

Good article just up on Modern Farmer on the Netherlands dramatically cutting antibiotic use on farms.
I can see, reading it, that dome of the things they are doing would be politically impossible in New Zealand.