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Matthew Bartlett on the good investment of poverty reduction, who really shoulders the tax burden, a polite response to Gareth Morgan, S&P gets stuck in, Dilbert & more

Matthew Bartlett on the good investment of poverty reduction, who really shoulders the tax burden, a polite response to Gareth Morgan, S&P gets stuck in, 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. It's his second Top 10 for interest.co.nz. You can see his first one here.

As always, we welcome your additions in the comment stream below or via email to david.chaston@interest.co.nz.

And if you're interested in contributing the occasional Top 10 yourself, contact gareth.vaughan@interest.co.nz.

See all previous Top 10s here.

1. Revealed: how much you earn, compared to everyone else
One of the things holding back the inequality debate is the fact that so many people have no real idea of where they stand on the income spectrum, or how much other people earn.

Without that information, it’s hard to make a meaningful judgement about how incomes have changed, who has benefited, and what things would look like in a more equal society.

Fortunately, the New Zealand Council of Christian Social Services has built this simple but (if we say so ourselves) rather stunning tool, in which you plug in your income and your household type, and it shows you just exactly where you stand compared to everyone else. Try it – you may be surprised (and indeed shocked).

2. Wealth inequality worse than most people realise
It's not often that a clip about inequality goes viral, but Wealth Inequality in America did just that. Now, for the first time, we have the same kind of data for New Zealand.

What it shows is that people would like wealth to be pretty evenly distributed. They think it's pretty unevenly distributed. The reality is much worse.

[AUT researcher] Peter Skilling said: "The results are really quite simple. People would like it to be a far more equal society, but they also do not understand just how unequal it really is." It's a conclusion that mirrors findings in similar surveys overseas. [Yet] while it seems most want a fairer society, many do not trust the Government to deliver it through policy or likely fear the impact of such policies on their own wallets.

3. A polite response to Gareth Morgan on inequality
Gareth Morgan, as we all know, is never shy about giving his views, and his take on inequality - which is that the only thing that matters is inequality of opportunity - was as forthright as you would expect.

However, Max Rashbrooke, editor of Inequality: A New Zealand Crisis, begged to disagree in this blog post, arguing that it is income inequality we should be most concerned about.

Think, too, about people working in low-wage jobs like rest home carers. They don’t need ‘opportunity’ to do another job – they want to keep doing what is an essential task. They just need – and deserve – to be paid better. That’s not about opportunity; it’s about inequality of income.

 

4. Standard and Poor's get stuck in
First it was the OECD, then the World Bank and the IMF. Now ratings agency Standard and Poor's has added its voice to the growing chorus of international economic and financial bodies raising concerns about income inequality.

Admittedly, these are the same people whose generous ratings of sub-prime mortgages helped spark the global financial crisis.

But we think they might be more on the money this time round when they say income inequality is going to lower American growth over the next 10 years:

A degree of inequality is to be expected in any market economy. It can keep the economy functioning effectively, incentivizing investment and expansion--but too much inequality can undermine growth ... Aside from the extreme economic swings, such income imbalances tend to dampen social mobility and produce a less-educated workforce that can't compete in a changing global economy. This diminishes future income prospects and potential long-term growth, becoming entrenched as political repercussions extend the problems.

5. Employers start to back the Living Wage
The Living Wage movement already covers 40,000 people in the UK, and its equivalent here – which is arguing that workers need $18.80 an hour for a life of dignity – has scored some high profile successes, notably at the Wellington City Council.

It's also starting to get traction with other employers, as its signup page indicates. It's true that many of the employers are those you'd expect: unions and charities. But then there are food companies like Auckland's Tonzu, and Wellington's very popular La Boca Loca. This is looking more and more like an idea whose time has come. Check out the list of accredited employers here.

6. The scorecard for Maori and Pacific peoples: not great
It's been over a decade since the furore around the Labour government's Closing the Gap policies. So what has progress been like?

Not so hot, according to Victoria University's Lisa Marriott and Dalice Sim, who have looked at progress for Maori and Pacific peoples in the last 10 years.

The conclusion is that, while there has been some improvement in areas such as education, on a lot of key measures, notably health and income, Maori and Pacific peoples have been falling further behind Pakeha.

This research indicates that while New Zealand has had some successes in reducing inequalities, the gaps in inequality among the majority of the indicators investigated in this study show worsening outcomes for Māori and Pacific people. This growing gap in inequality between Māori and Pacific people, and the European population, warrants greater government attention if the gaps are not to continue increasing into the future.

7. Reducing poverty: a surprisingly good investment
Some people like to think that providing more income to poorer families won't work, because it just gets wasted. Spend it on education and boosting opportunities instead.

In fact, thanks to Britain's Joseph Rowntree Foundation, we now know that providing an extra £1000 of income to poor families produces the same educational benefit to their children as spending that £1000 on the school system. (Kids who are well housed, fed and clothed, amazingly enough, tend to do better at school.) Not only that, but the extra £1000 in income produces all sorts of other benefits that school spending doesn't.

While a parent’s level of education, attitude towards bringing up children and other parental factors also have a bearing, research shows that having more money directly improves the development and level of achievement of children. Increases in family income substantially reduce differences in schooling outcomes and improve wider aspects of a child’s well-being. Cognitive development and school achievement were most improved by having more money. Conversely, reductions in family income, including benefit cuts, are likely to have wide-ranging negative effects. Money seems to have more of an effect among low-income families.

8. Who's really shouldering the tax burden?
It is sometimes said that the highest income earners already contribute the most in taxes, so why tax them more? In fact, this reflects nothing more than the banal observation that the highest income earners get most of the money, so it is hardly surprising that they pay a lot of tax. A better measure is what proportion of their income they pay in tax ... and looking at that figure yields some surprising results:

...the truth about tax in New Zealand is that the rich almost certainly pay less of their income in tax than the poor do.

9. Piketty vs Acemoglu and Robinson
Thanks to his publishing sensation Capital in the Twenty-First Century, Thomas Piketty is an economic big beast. Daron Acemoglu and James Robinson, authors of the highly influential Why Nations Fail, are slightly smaller big beasts. They don't like Capital at all. Here's why:

Thomas Piketty's recent book, Capital in the Twenty First Century, follows in the tradition of the great classical economists, Malthus, Ricardo and Marx, in formulating ‘general laws’ to diagnose and predict the dynamics of inequality. We argue that all of these general laws are unhelpful as a guide to understand the past or predict the future, because they ignore the central role of political and economic institutions in shaping the evolution of technology and the distribution of resources in a society. Using the economic and political histories of South Africa and Sweden, we illustrate not only that the focus on the share of top incomes gives a misleading characterization of the key determinants of societal inequality, but also that inequality dynamics are closely linked to institutional factors and their endogenous evolution, much more than the forces emphasized in Piketty's book, such as the gap between the interest rate and the growth rate.

10. Latta on inequality
It's a bit of a jump from parenting to inequality, but that hasn't stopped Nigel Latta from taking on this most complex of complex subjects. And, in fact, he doesn't do too bad a job.

His programme about income inequality, which aired a couple of weeks ago, is a well thought out piece that convincingly portrays the struggles of those who haven't seen any trickle-down yet – and, importantly, it has reached an audience that most inequality campaigners would struggle to tap into.

If you haven't seen it already, it's well worth a look.

We welcome your comments below. If you are not already registered, please register to comment.

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.

69 Comments

Regarding #3, income inequality,

We live in a society that values freedom:  If a person chooses to strive for financial rewards or makes the sacrifices required to gain skills for employment in a field where there is demand for those skills they can.  If others spend their time and efforts in non-financial/lifestyle persuits and some of these can still get work in low paid employment that's great for them.  When there is a sufficient shortage of rest home carers the market should ensure the most suitable candidates can work in their field of choice. 

I don't know what society could afford to pay artificially high wages for long in any industry if there were many more suitable people wanting a role than there were positions available. If our industries lose their competitive edge, all involved could all end up unemployed, there would be no tax take, no govt. welfare, and how many then could afford to receive rest home care. 

As I see it, perfect income equality requires loss of personal freedom and self determination, a negative impact on an employer's ability to compete, and so would result in unemployment and ultimately our demise.  

To pay anyone either more or less than what is justified by the demand for what they can offer runs contrary to the most fundamental laws of nature.

 

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You've completely mischaracterised the argument.  It's not about removing freedom and forcing perfect income equality (aka communisim).  This discussion is about the level of inequality, not the fact that there is inequality at all.

 

See the graph above on #2.  Most kiwis want inequality, they want the top 20% to have more than 20% of the wealth.  It's that by 'more than 20%' they don't mean 70%.

 

If we follow your argument, we should dismantle the taxation system and leave everyone to fend for themselves.  Surely, lower taxes for the poor and tax credits constittute 'paying someone more than is justified by market demand'?

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Redistribution means bringing down the level of income of the highest earners. I'm not convinced this would make a material difference to the income of the '99%' or whatever moniker you wish to attach to them.

Let's say you have a medium enterprise with 100 employees and a CEO on 500K. Heck, we can't have that, lets hack him down to say $200K and redistribute the other $300K to the workers. $300K divided by 100 workers = $3K each. May be a lot to some people on lower incomes, but given the tendency to spend i'd expect it to result in rising rents / inflation without any significant increase in overall wellbeing - afterall we're not improving productivity, we're just re-slicing the pie.

When you consider that CEO's earning millions typically reside over 1000s of staff, there's even less to go around when you start carving up the spoils. And i'd suspect less again when you look at the population as a whole.

 

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You don't read very widely do you. Get to grips with unearned income and then analyse your post again. Every time you talk about employment or wages you miss the counterparty to that arrangement, the employer who makes money off another persons labour. That is immoral and the real breach of the rule of nature.

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its not immoral.  are all children immoral?

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Unearned income? That's a very subjective statement, and of course completely unprovable. Employers bring plenty to the table, such as capital, risk, ideas, management...

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Did you think or research before you posted your drivel.

 

http://en.wikipedia.org/wiki/Unearned_income

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Well my comment still stands re 'immoral'. It's emotional claptrap.

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No it is quite simple and clear, just because you lack the capacity to comprehend doesn't undermine the principle. Not that I am a religious man but it is even there in the bible at Isiah 65 21&22, probably to be found in other ancient texts also:

 

They will build houses and dwell in them;
    they will plant vineyards and eat their fruit.

 No longer will they build houses and others live in them,
    or plant and others eat.

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reply regarding #3.... clearly the night-cre people should simply charge more for their services to their customers.  solved.

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pay with what?

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Re #8

The tax analysis ignores transfers particularly working for familiies. Analysing on an "income tax net of transfers" position would be more helpful. 

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regarding inequality....

I've been trying to understand Monetray systems and the nature of money for over 20 rys...

It is my view that one of the biggest reasons for wealth and income inequality has to do with the exponentially increasing money supply....

Money supply is Always growing at much faster rates than incomes...

In a global world we have suffered the deflationary wage pressures of emerging economies and at the same the the inflationary pressures of a world awash with  excess Capital... (which is largely the result of money creation ).

This Global Capital flow has result in asset price inflation and the financilaization of almost everything..

The Financial sector  ( or the FIRE economy ).... has grown exponentially since the demise of Bretton woods and is the result of the unfettered growth in Credit since then.

Because of the laws of exponents ...if u have wages growing at a lower rate than Money supply then  for a long time noone notices.....  but then suddenly the changes become profoundly meaningful..

The biggest mistruth is that the CPI  truely measures inflation... in a monetary sense..( after all ..that is what the reserve Bank uses in managing monetary policy..)...  They do this with the aim of maintaing the "store of value" aspect of money...  ie.. its purchasing power..

Truth is  that every new $ that is created actually devalues every dollar already in existance...   This is an underlying "1st principle" ....  a common sense truth.

People would intuitively know this if they imagined a counterfieter who could simply print and spend money...  This guy is appropriating wealth....   sucking wealth to himself...  AND... this would go largely unnoticed until he owned almost everything or money became worthless...

Thats the game that is being played .... By Central BAnks and the Banking system... By the financial Sector and those who get first taste of newly created money/credit.

The debasement of money that leads to massive wealth transfer.....   the losers are wage earners...   the middleclass and working class that do not own hard assets..

just my view...

 

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the wealth/income inequality isn't about the exponential increase in money supply- although that does exasperte the spread.

It that costs are fixed.  A person needs sleep, food, heat, clothes.
If your income is high, then those items are a smaller part of your revenue, and the rest can be used for other things. 
If you income is low, then those items will make up most of your revenue, and little else is left (if any for advancement).

Advancement is something that must be bought. (either as "cash invested" or improvement services eg better staff, or personal education/skill boosting.  Research and practice count as advancement and are very expensive.

That's the Capacitance side of the circuit.
-
The Inductive side, wealth - if you have wealth, you have options and access to resources.  Why? Because that's what wealth is.  It might be good friends who help you shift, a loved one who supports you, or a string of properties which you can use as security.    the point with wealth is that it doesn't do anything on it's own.  It's inert, dead.
  Until you start to move and act...then it makes all the difference in the world.  you have resources behind you, this attracts and opens access to other resources and contacts.  It's amazing the amount of difference a positive freind or a loved one makes when you've pushed your all on a project.  Or that "inert" security when you want a business loan.  Or even a good credit limit if you're plonking a bit of silver into high risk projects.
  the downside to wealth though is that it costs!  That nice wealthy house or car, it has hefty insurance tag, that friend who is always there for you that you better be there for them too, the borrowing with security has interest.
 The more your wealth, the higher the servicing cost.
- - 
And that where we start to run into problems.
If you have low income....and you live in a wealthy society...then the costs are going to problematic.
Also though - if you have either high wealth or high income, and you have high leakage, you'll have nothing soon enough.

- -

Creating dollars doesn't devalue the other dollars.  that has been proven by the cryptocurrencies.   Without a threshold of dollars there is no trade, there just isn't enough wee bits floating around to make anything happen.  
Because the flipside to that, is that dollars are injected into the system by lending contracts, these provide the force to make holes for the electrons.  the "electrons" in this case being the time, through paid* work, that the contractee is obligating to.  without the contract and repayment, there is no currency flow.  You can barter, each barter being a direct swap, but for fungible trade there needs to be a exchangable medium.
  But!  If there isn't enough introduction of "new" currency, then those holding the currency can't make more (a DC power source flowing to our "capactor" income).  The high income people get rich in money, but it does them no work.  the poor don't get much either.  And the system saturates.  They have to pay the others (which is why the capacitors often resent the inductors (and vice versa).)   But more importantly more people want contracts, want work, want to spend but to do so they must enter into work where there is already money that can be spent.   Now if we don't introduce new currency...then the paid work accumulates in certain areas and tends to stay there, the wealthy are wealthy, their side of the coin saturates, and their "get out of bed" cost is higher than anyone else can afford.   This is what we saw just before the breaking of the gold Standard.  Things were so expensive, because the only ones with the gold had all the gold...and they could only stay that way by not parting with it.   they were wealth and miserable, and people were forced to enter into barter again (food and lodgings for work, training for contracted servitude).

The counterfeiter... if he produces around the same velocity that his neighbourhood is growing will simply produce a Renaissance as the Medici family did.  It's when his printing outstrips the inward supply that the devaluation starts occurring.
 If the economy is working correctly, and at the moment it is not, then we should see places of demand, like expert suppliers/service people, having to put their prices up as monied-demand outstrips their ability to supply.  this is a natural control mechanism, e101.
 If he isn't printing fast enough however, we find that people with available contract time who are desireable of contracts and able to repay them, cannot access his notes...basically..the battery is out of charge, no electrons can be coaxed out.

However our system of currency creation is evolved around satisfying the money lenders, their internal leakage is quite high, and they see little reason that outsiders deserve usable work.
- - -
So it's not so much the debasement of the money, it's just that it naturally compounds. Little amounts compound (hetrodyne) slowly, large amounts do so significantly (because the loss is less than the gain each time).
- - - -
* the importance of _paid_ income can't be overstated.  I could "employ" myself to throw rocks at the moon, throw many as hard as I like, be the bestest rock thrower *ever*.  But if there is no resources to pay for it, OR no one willing to pay for it, it will not return anything.
Likewise people who think mothers should be paid...simply "From Whom".  The ability to pay comes from a monetary contact with the bank (or counterfeiter), without the closed circuit relationship, then there is no money created to take part in the cycle.  To pay you, then someone elses force/money must be tapped for you, which is hardly fair on them if they don't agree to it.

To achieve this a bigger "circuit" picture would need to be designed, evaluating what work is desirable and finding ways to supply that part of the system...  but since taxation is lossy (it costs money and resources to perform) then taxation to create wealth is a really badly designed system (high current, low gain, high loss/leakage.

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I loved reading your post Roelof.  I think you've identified the root of the problem.  the scary thing is that Mario Draghi and Jannet Yellen seem hell bent on accelerating the rate of money creation, forcing GDP up to maintain the debt/GDP ratio.  I'm in Munich at the moment where crappy 45 m2 apartments are selling for the equilavent of $650,000 nzd.  friend of mine just got a ten year mortgage fixed at 1.9%.  I wonder where that leaves nz?  Isn't our dollar pegged to other currencies.  We're pretending our nz dollar has some store of value with rbnz raising the ocr.  think of all the terrified Europeans looking at the soon to be worthless numbers in their bank accounts.  Then consider that there is no impediment whatsoever to those foreigners purchasing new Zealand houses and farm land.

 

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Responsible bankers versus hungry workers

In this split between the “responsible” policymaking elite and the “irresponsible” anti-euro right, Europe is replaying one of history’s classic battles between bankers and workers. Throughout the 19th and 20th centuries (and indeed much earlier) debt and monetary crises have pitted one against the other. Sometimes the bankers win, as they did during Latin America’s Lost Decade of the 1980s, and the US in the late 1970s, and sometimes, although never without a struggle, the workers eventually win, as they did in the 1930s both in the US under Roosevelt and Germany under Hitler.

Whether the bankers are right about the long-term benefits of maintaining the course or the workers are right (and history makes clear that neither side is always right), by defending the currency and the sanctity of debt, elite policymakers throughout Europe have taken the side of the bankers. In order to protect the current monetary structure they have allowed worker unemployment to soar and uncertainty and fear to spread through the middle class.

 

http://blog.mpettis.com/2014/08/can-pedro-sanchez-save-the-psoe/

 

 

 

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You're absolutely right Roelof

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... if you want to assist low and middle wage earners , introduce a comprehensive land tax of 0.5 % , including the family home ...

 

Use the monies collected to reduce the taxes on the lower thresholds .....

 

... scrap WFF , and give everyone earning a tax break ...

 

...and then  take NZ Labour's CGT proposal and set fire to it near some cold poor families ... warm them up , put it to it's best use ...

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Gummy Bear every now and again the Jesters mask falls off and an intelligent message to the King (or his successor) comes out.

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"ANT AND THE GRASSHOPPER

This one is a little different ........  Two Different Versions.

OLD VERSION:

The ant works hard in the withering heat all summer long, building his house and laying in supplies for the winter.

The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away.  Come winter, the ant is warm and well fed.

The grasshopper has no food or shelter, so he dies out in the cold.

MORAL OF THE OLD STORY:    Be responsible for yourself.

MODERN VERSION:

The ant works hard in the withering heat and the rain all summer long, building his house and laying in supplies for the winter.

The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away.

Come winter, the shivering grasshopper calls a press conference and demands to know why the ant should be allowed to be warm and well fed while he is cold and 
starving.

TV1, 2 and 3 News, and Campbell Live show up to provide pictures of the shivering grasshopper next to a video of the ant in his comfortable home with a table filled with food.  The country is stunned by the sharp contrast..  How can this be, that in a country of such wealth, this poor grasshopper is allowed to suffer so ..... ?

Sue Bradford appears on Campbell Live with the grasshopper and everybody cries ........

The Green Party stages a demonstration in front of the ant's house where the news stations film the group singing,  'We shall overcome'..

Green Party Leader Metiriea Turei condemns the ant and blames John Key, Rob Muldoon, Roger Douglas, Capitalism and Global warming for the grasshopper's plight.

John Minto exclaims in an interview with TV News that the ant has gotten rich off the back of the grasshopper, and calls for an immediate tax hike on the ant to 
make him pay his fair share..

Finally to gain votes to win an election, the Government drafts the Economic Equity and Pro-Grasshopper Act retroactive to the beginning of the summer.

The ant is fined for failing to consider how his hard work and preparation has affected the Grasshoppers Mana and, having nothing left to pay his retroactive taxes, 
His home is confiscated under the Government Land and Repo Act and given to the grasshopper.

The story ends as we see the grasshopper and his free-loading friends finishing up the last bits of the ant's food while the government confiscated house he is in, which, as you recall, just happens to be the ant’s old house, crumbles around them because the grasshopper doesn't maintain it.

The ant has disappeared to Australia , never to be seen again.

The grasshopper is found dead in a Drugs related incident, and the house, now abandoned, is taken over by a gang of Homeboy spiders who terrorize the once prosperous and peaceful, neighborhood."

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You're analogy is very simplistic, give the readers of this blog some more credit. The problem today as I see it is that the 'blue-collar' workers doing honest jobs which contribute to the NZ economy aren't being paid enough to live comfortably anymore. With the cost of housing and essentials rising it's almost impossible for them to get ahead. While some inequality is essential, I think it has gone too far.

Just so you understand we are talking about people who ARE working - not beneficiaries. Unfortunately more and more of the working class are slipping into relative poverty year on year while the top prospers. Money begets money. I think that the people toiling on minimal wages at least deserve enough to support themselves on (we current pay indirectly anyway through WFF).

Now before you say 'why don't they all up-skill', obviously not everyone in NZ is going to become lawyers, doctors, property investors etc. Do you not at least see that the current economic regime is slowly tossing a whole raft of the working class 'under the bus'?!? Ever-increasing income inequality will only end in a worse society for everyone to live in.

(FYI: Your ant would be paying higher PAYE equivalent and capital gains tax in Australia. Damn, back to the drawing board!)

 

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Two things, first, we don't have real poverty in NZ, if you showed a film of our 'impoverished' to starving villages in Africa they would either laugh or cry.  The news often shows lines at the WINZ office and half the people in the line are obese and playing on their iPhone while they wait.  Second, how much money do beneficiaries and other "working poor" spend on smokes and alcohol per week? 

 

'why don't they all up-skill'

 

A friend of mine runs a business and employs a beneficiary, the govn pays the business to take him.  He gets employment, training and a wage above the minimum, he's being trained as a french polisher.  A good scheme that gets beneficiary back to skilled work; I assume that what the govn pays the business is less than what they would pay in a unemployment benefit so win - win. 

 

The schemes are there for people to lift themselves out of poverty, if they choose to. 

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That's why I used the term 'relative'. No, this is not Sub-Saharan Africa where poor may mean no food, water, electricity and living in a hut. New Zealand is a 'wealthy' country, obviously poor here is relative but it still exists.
 

You have missed the point. I'm not talking about beneficiaries finding a job, I'm talking about the people in legitimate 'blue-collar' jobs struggling to keep up with the cost of living in NZ. It is these people who I feel for as they're doing honest work but are falling behind under the current system.

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My point is we should all be very careful about how we go about resolving any perceived inequality.  There's no use persecuting employers and other wealth creators to the point that they leave or stop bothering to create the wealth as you will just shrink the pie. 

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Come on Happy "Wealth Creators" is a bullshit term and you know it.  It's not all about hard work, some people simply are not that smart.  

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its not a bullshit term, its just applied to the wrong group.
Under the current usage a highwayman would be considered a "Wealth Creator" as would the carriage driver.   The people applying the term misuse it to excuse their activities

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Are the crew at Interest.co.nz Doing the Time Warp Again?

It was bad enough reading my posts once, why is the recent positng list 5 days old?? bug?

....
edited ...and now it's updated. what up guys?

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not everyone qualifies to be a beneficary.

And no there aren't "schemes there for people to lift themselves out of poverty".  There's a bunch of politically convenient promises most of which don't fit those in poverty (don't qualify for benefits like I didn't), or are rather suspect in their application (for beneficaries - which I'm not going into detail, because sometimes winz personal will look the otherway and accidentally drop someone on to a course that actually helps them).

that's why I can understand compeltely that Guy going postal down south.
Bit of help if you're a "disadvantaged minority" wanting to get off the numbers, not much help if you're anyone who actually wants to make a living.

I looked at taking on an unemployed person, even did for a short time, but the conditions were really weird and I pretty much couldn't take on anyone I deemed safe or reliable.  One of my ex-coworkers, 20 yrs ago was on one of those schemes, she only got on because she was female and her mother was a declared as her dependent.

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I talked to a working family a year or so. They said their rental home had ice on the inside of windows in winter.

 

Is that relative or absolute poverty Mr Happy?

 

As a society why are we not doing more about the imblance between incomes and costs for the ordinary family?

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When I finiished at one job I had no more than the farming clothes on my back and a borrowed car.   I couldn't afford to rent anywhere, WINZ recommended that I live at a bed and breakfast or YMCA hostel/camping grounds.

Friends who had caravans/tents and stayed on friends lawns/paddocks (or borrowed their caravan/hut/tent) have spoken of waking with beards frozen solid.  They didn't want beards but disposable shavers cost money.   Because these people wouldn't relocate for temporary work, or had foot/back issues that made them unable to do longterm seasonal work they too were refuse government assistance.   What little income they had went towards food, which costs more when you can freeze/refrigerature storage/left-overs.

I think that the wealth level, and "education" level in NZ blinds many people to what is happening in the rest of the country.

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Brendon....that is a heating and insulation issue is it not?   When I was young I lived in a place like that and even the pot plants froze inside the house in winter......so I guess I must've been in poverty if that is the measure then?

 

Yes a lack of income was my issue.....but did you hear that...it was my issue.....it was not up to someone else to improve or help my income.....it was up to me!!!!  I learnt this as a 17 year old !!!!.....

.......and you know what....the more knowledge and experience I gained....the more I realised the system of Socialism and Nanny State was a scam.....hence my intense loathing of the system......the willy nilly running up of Government debts and the systems reliance on the efforts of business who ultimately starts all employment and produces all income to fund the bloated Government system that never actually works for anyone......but it keeps public servants employed mainly on higher wages than those in private enterprise......

 

If people want to address any imbalance between income and costs for the ordinary family then the size and cost of Government and local Government has to be severely restricted so the people can keep the majority of what they earn in their own pocket.

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Plutocracy if you shift your thinking away from blue-collar/working class people for a short-time......and think about all private sector employers and employees then you will have  the ANTS !!!!

 

Any inequality present is from the size of the State and its redistribution.

 

 

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No, the modern version is.

 

The grasshopper played golf all sumer. Then when winter came it flew off to its luxuary home in Hawaii. The grasshopper is a banker

 

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#3 is a point I have made on here many times myself. It is an abuse of the goodwill of the people that look after us to pay them so poorly and on top of that charge them rent.

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but can we afford to pay them more?  I cannot, I can barely afford to keep my bank and government in the style that they wish to become accustomed.

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So NZ is going to be held hostage to some inequality debate that is farcial to say the least.  Inequality is caused by Political interference!!!

Why are there no objective conversations on the affects of double dip GST and low income earners (all earners for that matter)??

 

What about a conversation on how the minimum wage is going to escalate inflationary pressures affects and how low income earners will be worse off?

 

What about a conversation on how Labour/Green/Internet Mana's CGT is inflationary which changes the purchasing power of money widening any inequality gap further?

 

Why are so many people intent of ensuring that NZ heads in the direction below? The destruction of people's freedoms and liberty is what creates inequality and poverty.

 

I cannot understand why interest.co.nz continually pursues this very dangerous Socialist propaganda path. The NZ economy cannot take one more push in this direction as there will not be enough left with which to resurrect a proper functioning capitalist system......why are you giving your childrens right to freedom and liberty up?

 

 

http://www.emersonkent.com/history_dictionary/communism.htm

 

"What is the difference between Socialism and Communism?

Socialism and communism are alike in that both are systems of production for use based on public ownership of the means of production and centralized planning. Socialism grows directly out of capitalism; it is the first form of the new society. Communism is a further development or higher stage of socialism.

[...]

The Communists believe that as soon as the working class and its allies are in a position to do so they must make a basic change in the character of the state; they must replace capitalist dictator­ship over the working class with workers dictatorship over the capitalist class as the first step in the process by which the existence of capitalists as a class (but not as individuals) is ended and a class­less society is eventually ushered in. Socialism cannot be built merely by taking over and using the old capitalist machinery of government; the workers must destroy the old and set up their own new state apparatus. The workers state must give the old ruling class no opportunity to organize a counter-revolution; it must use its armed strength to crush capitalist resistance when it arises.

The Socialists, on the other hand, believe that it is possible to make the transition from capitalism to socialism without a basic change in the character of the state. They hold this view because they do not think of the capitalist state as essentially an institution for the dictatorship of the capitalist class, but rather as a perfectly good piece of machinery which can be used in the interest of whichever class gets command of it. No need, then, for the working class in power to smash the old capitalist state apparatus and set up its own. The march to socialism can be made step by step within the framework of the democratic forms of the capitalist state."

 

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That's pure genius!

If we could somehow lower the minimum wage to $1 per day for workers, this should remove all 'inflationary pressure' and help them prosper. Also, removing all worker rights and all regulation on employers would also help - am I on the 'right' track?!! (pun intended)

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And if you could simultaneously lower the cost of living to $0.50 per day for workers the next day, whats the problem?  they'd be better off than now....

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Thanks for covering my rear on that one Cowboy (no internet for a bit so couldn't get back on).....nice answer!!!.....

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Hi, notaneconomist,

You forgot to mention Crony Capitalism, or did you forget to open your other eye?

 

You talk about Freedom as though you know what you are taklking about.

As you did not mention it i suppose you mean freedom is

All those instant fines for

Not wearing a cycle helmet

Not fencing your swimming pool

Not wearing your seat belt

Daring to exceed the speed limit

Not registering your car

Not getting a warrant of fitness

Staying too long at a parking meter

And many many more.

 

When people like you talk about freedom your one eye only sees financial freedom and cannot see how, as individuals, we are all strangled by laws and regulations.

PS

and dont forget that crony capitalism

 

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This is an interesting article from today's Herald, but the headline is completely misleading:

 

Kiwis want more action on child poverty - but not higher taxes

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11319509

 

So the survey finds that 51% of NZers (a majority) believe the government is not doing enough to counter poverty and 36% of NZers (a minority) would be prepared to pay higher taxes to reduce poverty.

 

But of course a minority would be willing to pay higher taxes to reduce poverty BECAUSE it will always only be a minority of the population that can afford higher taxes.

 

Hence, I'd interpret that as 36% of all NZers is a huge vote in favour from the majority of those people who can afford them.

 

 

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If you watched the town-hall debate the other night, and if you didnt live in Christchurch, and hadn't been there recently, and lived in Auckland or parts north of there, listening to John Key you would believe everything is hunky-dory in Christchurch, Key & Co and Brownlee & Co have done a good job

 

Well I've been there in the past 9 months and Key has mis-led you

I could not reconcile what Key said with what I saw with my own eyes

 

Amazed they can blow into town and utter garbage to a television audience that is none the wiser

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And if you'd actually lived through the whole thing rather than breeze in for 9 months, and talked to far more Cantabs you'd realise that what you just said is garbage. Chch will stay Labour come Election Day, it's always been that way, but there is a very large recognition by the majority of Cantabs that the Govt has done a good job in Chch - the fair minded ones, which is the majority, understand the issues and even many of those frustrated with slow insurance pay-outs absolutely know that Govt interference would have risked no insurance cover at all.

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Really the bank employee sticking up for National how shocking.

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Wow Grant A you now feel you can speak for a majority of Cantabs!

 

What gives you that right?

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No I don't Brendon but this guy was making a claim that the majority are dissatisfied with theG Govt's  handling of the earthquake - he is simply wrong and quoting a school hall of people with problems on John Campbell's program is naive to say the least. There are people still with big problems and aggrieved, but they are a tiny minority now. Most realise that there was little that could be done for at least the first two years until the quakes stopped and most Cantabs understood that. I really so think that many outside of Chch have be mislead (probably accidently) by the likes of Campbell into generalising about all of Chch, and someone being here for 9 months who never went through it, and frankly is wrong, isn't going to be telling me any differently

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Well GrantA - as that guy you refer to - let me respond

1. I'm a periodic visitor to Christchurch. That wasnt my first journey.

2. Been to Christchurch any number of times prior to the quakes and twice since

3. I made no reference to "the majority of dissatisfied" - where'd you get that from?

4. What's your reference to John Campbell - where did you get that from?

5. I was referring to the moderated second debate - no John Campbell

6. Some people (just a few?) with big problems are a tiny minority? - Really?

7. Chris_J disagrees with you

8. I simply point out that JK minimised the issues, representing the same view you are in saying, it's only a few, it's all fixed, get over it, move right along, while in your next post you say it will take 20 years - make your mind up

9 Also, any non-Cantabrian who has never been there (the vast majority of Aucklanders) and seen it with their own eyes would accept at face value JK's addressing the issue with a once-over-lightly touch which seems to be the purpose of his quick-trip to town and out again the next day - because his main audience, out there in TV-land are not in Christchurch - and wouldn't even know

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Well let me respond and sorry if I mistook what you were saying. I do live in Chch and have been for more than a couple of decades. I was in the CBD on the 25 Feb and like many had a close shave. I was lucky in that my house was in the west and repaired inside one year. But I also have family, friends and team mates in the two sports I play here and so have followed their experiences somewhat as well. Most were fixed within two years, some only in the past 12 months with real structural damage, and one looks like he will finally settle in the next month or two. The last guy had complications with multiple earthquake damages and claims, a matrimonial,retaining wall and easement issues - his was complex as many of the longer lasting ones have been accordingly to one friend who works for an insurance company.

I'm based in Chch but work around the country most weeks so know well the perception that Brendon talks about is correct, with many people, until they get down here and look at whats happened they don't appreciate the size of the problem. But thats exactly it, for the ones still with issues everyone feels for them hugely but its a numbers game when hundreds of thousands are impacted.

I have no problem with Campbell keeping the focus on them as it all helps, but the perception many have outside of Chch is that its all like that .....but its not for the vast majority. I'm not sure that JK makes light of it but from Parker's days onward there has been a commendable attitude by authorities to keep Cantabs up, to be positive, look forward and celebrate the wins.....in my circles, including business speckles who yes have had massive challenges and done brilliantly, Cantabs are hugely positive and doing exactly that and most are giving credit where its due

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I watched that debate in CHCH as well, two otherguys, and not being from CHCH I certainly went away with the impression from John Key that only 1000 EQC claims remained outstanding and things were progressing swimmingly well.

 

It wasn't until Chris_J came on here the day after and explained the lie that I realised things hadn't suddenly and massively improved over the past 3-6 months.

 

I also saw an interview with Dalziel - and simialrly she seemed to be attempting to minimise the outstandings - talking up progress on the re-build. I can only imagine that she wants outsiders/visitors to return in numbers, trying to sell an idea that CHCH is again the vibrant tourism destination it once was. I could see no other reason for her not to be critical of central government handling/progress.

 

 

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What I found more disturbing was JK's softly-softly response to the behaviour of the big insurers and re-insurers

 

By his passivity, he in effect condones them on the basis we are beholden to them, they are too big, we have no other choice, there is nothing we can do, and if we did they would walk away. We are captive.

 

In other words he is supporting them by condoning them. They are too-big-to-fail, or we are too-small to fight back

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Where once I'd have been perplexed about that kind of attitude, I now see it for what it is: government collusion with the corporates and utter contempt for the citizenry.

 

http://liberation.typepad.com/.a/6a00d83451d75d69e201b8d063a00c970c-pi

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What I find disturbing is those are the companies that made their gains in less restricted time, when rules were easier and labour less expensive...  now the government and people responsible for keeping them in check want to give them free passes and bend things to their convenience.

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Well he's nothing but pragmatic, and that may well have been the reality.  Eitherway he's the guy that has to take the responsibility for the approach and we'll probably never know the consequences of how it would have panned out if he had gone in there boots and all - certainly if it proved we did have no choice, would the taxpayer have welcomed becoming the complete insurer/risk taker for Chch and/or NZ ? We have enough to be concerned about in recapitalising EQC which has to happen before early next year which when the Press reports it will run out of money ? No Govt should put the country into that position. Easy to be a critic without the full facts which none of us here have.

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Therein lie the problem - why can't we have the full facts?  Are you saying that lying and/or twisting the truth and/or not availing us of the full facts is a synonym for "being pragmatic"?

 

It's the line we've all been fed time and time again about Key's governance style .. "being pragmatic" seems to me to have been the line/descriptor adopted to legitimate 'do nothing' whenever that approach is taken to a policy/governance problem or decision that (for whatever reason) they (National) don't want to address. 

 

It's one of many one-liners/words/phrases that serve to retain the status quo.

 

At least years ago when I was in central government, the fervant neo-liberalists (i.e., the  'hands-off' fanatics) actually admitted they were recommending a 'do nothing' approach from the range of other options available - and Minister's subsequently explained to interested parties why 'do nothing' was seen as the best option. They never hid the fact that there were other options. This seems to have changed over time.

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He said so at the leaders debate but I dare say if its correct, and no one should be surprised if it is,  there's no way he's going to be divulging confidencial discussions with insurance companies or any other businesses for the matter - I have no doubt that is hugely market sensitive, but I guess we could always get some friends to hack the Govt or insurance company systems in the name of democracy right ?

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"there's no way he's going to be divulging confidencial discussions with insurance companies or any other businesses for the matter"

Unless he gets the information from the SIS, seems fine to divulge things then.

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You are being too gentle or too kind GrantA - hope you are not a propagandist for the Nats, pushing the positive case only

 

In this modern world of 24/7 news it is too easy to forget that some time after CHCH quakes AU had devastating floods in Brisbane coupled with massive damage from the Wivenhoe dam overflowing, people on flood plains losing their houses, and the very same insurance companies playing hardball - for a while

 

Subsequently the Federal government and the Queensland government got stuck into them and suddenly all the issues were resolved

 

I havent heard one complaint in over a year now, and there were many more houses affected than in Christchurch

Many were simply swept away. Total loss.

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But iconoclast, a hugely lesser disaster in global terms and a far more major market that insurance companies weren't going to walk away from easily. I don't heard it being quoted as the 4th largest in the world. Walk away from Qsld, and youre walking away from Australia, not going to happen.

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You are conflating the damage to "houses" with the damage in the CBD. I suspect the bulk of the "4th largest disaster" is comprised of the CDB damage

 

I'm comparing "houses" to "houses" residential only

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Rubbish on the statement that government interference would have risked no insurnace cover at all.  Two points:

 

First, the government itself, via an inadequately and incompetantly staffed, directed and funded EQC caused more, if not most, of the delays to insurance being paid out.  They performed abysmally.

 

Second, the government needn't have "interfered" in the insurance market - it needed to intervene.  That's what responsible governments do during a crisis. It needed to drive settlements forward; it needed to clarify through the courts certain legal matters to do with policy wordings and obligations. It could have done this via class actions. Instead it stood on the sidelines and let individuals go into bat on their own, against large corporates - many people settled short of what they were entitled to. Many are still fighting.

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+1 Kate. These are serious issues you raise not like some others here....

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I am hearing more from non-Cantabrians who come down here to Canterbury for the rebuild or some other reason. They had been 'over' the earthquake prior to coming, believing the problems were just a few whingers. But onced  they had been here for a while, seen the unrepaired roads, if they travel to the east they still see houses that are standing munted, the CBD that will take 20+ years to get back to what it was and so on. Then they realise that this government has sold a snow job to the rest of the country on how well the rebuild is going.

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Did you ever think it wouldn't take 20 yrs mate

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Thanks mate for acknowledging something big happened in Christchurch.

It is a shame the government takes such a superficial approach.....

But it is good that serious banker types like you Grant see the problem clearly.

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Congratulations Grant, that must be the most perverse comment of the week.

Certainly from the National party play book and it is so easy. Unfortunately people here in Christchurch often don't understand the consequences of Government actions let alone people in the rest of the country. Lets face it, most don't care about what does not touch them. The complexity of issues would never translate to a sound bite even on JC show.

An example is their actions have, in many cases, made it impossible for businesses to claim under their business interruption insurance policies. This includes decisions that have wiped out businesses in the past year.

Visited a new fine dining resturant here last night, in the new "in" area, across the table was a current  Nat. MP.

The general comment made, as he held court at the bar before seating, was that we have at least the best fine-dining in the country now, this naturally evoked a positive response. 

As a consultant here, I could have noted the Government decisions that have ruined businesses of the same type, in the same street, in the past year. If you are not affected...would they care?

 

 

 

 

 

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Grant A, i have relatives in Chch and they are quietly waiting for action. Meetings with EQC pressuring them into acepting cheep fix up jobs.

Do you know what happens

If EQC cannot get you to agree to their repair method

 

They stick money into your bank acount and say "you fix it" That money is way below the real cost of repair. They then say "Thats another repair solved"

Treated like crap.

 

The government is only interested in building a centre city in their own image.

 

Talk about communism.

The government just took over, no consultation

Look also at Ecan - we still dont get a vote because the governments mates are in charge

Only a fool claims this government believes in freedom of the individual

 

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Hi Mike - no question there are still some with real issues, but that wasn't the point of the debate, it was about the majority view of the progress - your relative will rightly not be in the positive camp as indeed is my mate. Those having to deal with Ecan before it was taken over felt very much like your relatives, that they were incompentent and screaming for them to be sacked as they were seriously holding Canterbury back - it was one of those pragmatic calls that Kate hates, but that said no doubt it will be handled back at some point soon, but hopefully to some elected, and compoment, people. 

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Well that's the trouble with interpreting data Kate.....it could also mean lots of things!!

 

If I had to answer a question in a survey on countering poverty I would techinically be in the 51% group.....however my reasons on thinking the Government was not doing enough would be the opposite to yours......I would want the Government to take action by deregulating.....you perhaps would want the Government to take action by more regulation.

 

The 36% who want higher taxes vs the 64% who don't want higher taxes could be a message that 64% want the Government ceasing to be such an impediment to business and life in general.....

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Ref 1.  The calculator misses the expenditure half of Mr. Macawbers logic.

"Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

Charles Dickens  David Copperfield

 

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