This article was first published on AUT's Briefing Papers series. It is here with permission.
By Peter Skilling*
One notable theme in this recent attention has been the repeated representation of current high levels of inequality as bad for everyone. (There are notable exceptions of course: witness the explicitly adversarial framing of the Occupy movement’s “we the 99%” versus the “privileged 1%” messaging.)
It has been said that inequality is associated with widely-experienced social problems, such as increased levels of crime and health problems; the erosion of social cohesion and trust, and the weakening of innovation and economic growth. It is telling in this regard that recent warnings against high levels of inequality have come not just from the “usual suspects” in left-leaning groups, but also from such non-partisan organisations as the OECD, the United Nations, the International Monetary Fund and the World Economic Forum.
Despite these claims of inequality’s negative consequences for societies-as-a-whole, and despite opinion polls demonstrating significant public concern, the public has seemed less willing to support parties and policies that promise to address inequality.
During last year’s election campaign in New Zealand, for example, surveys suggested that the public saw the gap between rich and poor as the biggest issue facing the country. On election night, however, the parties that had campaigned most stridently on these issues – Labour and the Greens, for instance – did very poorly, their combined vote easily eclipsed by a party that had consistently downplayed the issue.
In this Briefing Paper, I ask how people think about the matrix of issues related to inequality (issues such as taxation, welfare, the role of government and the extent of individual responsibility). Why does concern over inequality not translate into support for parties who promise to focus on reducing it?
Part of an answer, of course, is that people do not vote based only on a single political issue. Or, necessarily, on the basis of a bundle of issues. Questions of politicians’ personality, and perceptions of their integrity and competence are also important in voting decisions. Further, it is not accurate to imply that only parties of the centre-left proposed policies to address inequality. What is true is that these parties (Labour, Mana, the Greens) proposed a more traditional leftist approach that relied on the redistributive mechanisms of taxation, welfare transfers and increased wages for low paid workers.
The National and ACT Parties, by contrast, framed the issue in individual terms. If inequality was a problem, it was a problem of individuals under-performing in terms of skills, training and employability. The proper response, logically, would be for those individuals to take more responsibility for their own educational and employment outcomes.
Surveys consistently show that a majority of New Zealanders would prefer to live in a more equal society.
Survey questions, however, tend to be posed in abstract and decontextualized terms. Surveys rarely ask, for instance,why greater equality is seen as desirable, what mechanisms are seen as necessary to achieve greater equality, or what consequences might follow from this pursuit of greater equality. Yet these secondary questions are crucial in understanding how people really think about the issue. It is interesting to note that while 62% of respondents to a 2009 survey felt that income differences in New Zealand were too large, only 42% of the same respondents thought that it was the government’s responsibility to reduce those differences (see page 23 of this journal). And, in 2005, only 26% supported the idea of redistributing wealth through increased taxation. We might say that most people prefer a more equal society if all other things are held constant. But all other things are never constant. Addressing inequality involves a host of trade-offs, many of which (especially any proposal to increase tax levels) trigger strong reactions in many people.
To explore the question of how people think about inequality in the context of complexity and contestation, last year I convened a series of focus groups, comprised of members of the public holding a wide range of opinions. How would people explain and defend their opinions in the presence of divergent views? In keeping with survey results, most focus group participants – when asked individually – expressed a preference for a more equal distribution of incomes (better wages for the low-paid; restraint in executive compensation). In the subsequent group discussion, however, these preferences were marginalised by the view that, while a more equal distribution might sound nice, it was likely not feasible given the “realities of the market”. Firms, it was said, facing constant pressures to remain viable, could not be expected to pay more. Low-paid workers, it was said, should not complain about their low-pay but should instead take responsibility for enhancing their attractiveness in the labour market.
What was most interesting here was that while this “market reality” trope was typically advanced by only one person in each group, it seemed able to over-ride a majority preference for greater equality. Even those participants with very strongly-held egalitarian commitments found it difficult to argue against this appeal to the constraining power of market forces. In a way, this is unsurprising. Potential counter-arguments (that “the market” is a human construct that humans can reformulate if they wish to; or, perhaps, that the free-market is not a neutral arbiter of value but is systematically biased in favour of certain groups) are complex, and no longer commonly heard within society. Just as importantly, believing that our existing economic system is fundamentally unjust comes with a psychological cost.
Social psychologists such as John Jost use the term “system justification theory” to express the observation that people are driven to accept and justify the existing social order. As Lissa Johnson explains, ‘believing in the existing social, economic and political order helps people to feel safe and secure (existential needs), that life holds coherence and meaning (epistemic needs), and connected to others through a sense of shared reality (relational needs).’ It is, in this context, psychologically easier for people to see inequality as an individual failing than as a symptom of a fundamentally broken system. If the basic political and economic systems of our society are accepted as fair, it implies that the distributional outcomes they generate are just: that people get more-or-less what they deserve. Doing well is a just reward for individual effort and ability within a fair system; failure is the natural consequence of individual shortcomings.
The notion of system justification theory can help to explain why many people are concerned about inequality, yet reject calls to address inequality by altering the basic economic and political systems of society. It also poses challenges for those groups who argue that inequality requires resisting and altering these systems. As Johnson notes, presenting ‘the reality of a serious social problem … creates system threat’, which is likely to provoke a ‘system justification’ in many people, and a resistance to calls for fundamental social change.
Peter Skilling is a Senior Lecturer in Management at the Auckland University of Technology. His research interests include the challenges facing the transition to a more sustainable economy, and the uses of political language. He is currently working on a three-year research project - supported by the Marsden Fund of the Royal Society of New Zealand - that explores the diversity of public attitudes towards economic inequality.
This article was first published on AUT's Briefing Papers series. It is here with permission.
58 Comments
When I see a person driving a new Rolls or Ferrari I think to myself: "Lovely car, you've done well, but my more modest thing suits me better".
To some bitter and twisted people, they may be thinking "that person doesn't deserve that car".
Inequality doesn't matter as long as you are happy with your lot.
I am concerned about inequality , but I am not so dumb as to think that voting for someone who is planning redistributing the country's wealth to the poor is the answer .
Frankly , distribution to the poor is not a solution , NZ already has a poor track record of capital formation ( that's why our banks and biggest assets are owned by foreigners ) , so it defies logic that we would want to confiscate the wealth of those with capital and throw it about
To answer the question posed ............ quite simply , every New Zealander knows that inequality has nothing to do with redistribution of wealth by left wing parties , but everything to do with individual choices ............. starting with your work ethic , your lifestyle choices right through to how you save invest and spend.
I started work with nothing , and now the statistics suggest I am wealthy and I don't feel wealthy .Its been a hard 4 decades of working every day ( sometimes 2 jobs) , saving for everything ( and using a bicycle before my first car ) and yes also struggling to buy our first home , not smoking and moderate drinking , investing and being careful with money .
Making more than 50,000 NZD per year makes you a 1 percent-er. One of those evil bastards who influence pollies to make themselves richer. http://www.globalrichlist.com/
20,000 NZD per year ( dole + accommodation supplement ?) puts you in the top 12%.
0.01%ers? you mean those making at least 120,000 NZD per year? Most Labour/Green MPs make more than 120,000 per year. National has repeatedly campaigned not to let MP salaries keep rising, guess who always opposes these motions?
Actually, national, not really
Certianly not the opposition,
a) "The Green Party are also opposed to the increase and will today propose an overhaul of the broken system".
b) nor, "NZ First leader Winston Peters, also believed MPs don't deserve a boost."
c) nor, "Labour leader Andrew Little is calling for a reform of the system, "
http://www.stuff.co.nz/business/industries/66672796/Backbench-MP-pay-ri…
and who is in Govn? and hence can change things? oh National.
That website is wrong. It says there are only 5 million people earning more that 100K USD in the world. Wikipedia says there are 16 million earning over 100K USD in USA alone. I suspect the website just wants you to feel richer than you are so you donate to their charity.....
but I am not so dumb as to think that voting for someone who is planning redistributing the country's wealth to the poor is the answer .
Actually, you just proved that you are that dumb.
Redistribution of wealth happens all the time but it's redistributed from the poor to the rich.
so it defies logic that we would want to confiscate the wealth of those with capital and throw it about
They're not the ones with the capital - we are. The problem is that we let ourselves be led to believe that the rich are the ones with the wealth and that we need to suck up to them when what we really need to do is to get rid of them.
We simply cannot afford the rich.
every New Zealander knows that inequality has nothing to do with redistribution of wealth by left wing parties , but everything to do with individual choices ...
And that is, of course, the lie that many tell themselves to soothe their conscience. Everybody who works hard knows that working hard doesn't make you wealthy. It's usually a combination of luck and who you know.
There are a few issues at play here, and one of them is definitely the fact that most people are expecting to have to PAY for a more equal society, when - if one looks at the statistics, most, people would end up benefiting from it.
People just don't realise.
I personally talked to people in the run up of the last election, who told me they would be voting national, and didn't believe me when I pointed out that under a Labour/Green government, they would be better off. More money in their pocket.
people hear : tax increase and switch off. They don't hear: on incomes over 150K, or highest tax bracket (a lot of people don't even know there are tax brackets).
Educate - financially educate - your electorate, and parties like the Nats or Act won't be able to get away with as much spin as they can, now.
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The fact that a lot of our media is controlled by people who prefer the status quo, doesn't help either, of course.
The beneficiary bashing is continuing unabated and is often front page news, but Banks' multibillion profits is relegated to a sideline on page 14.
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In short: the electorate is being lied to. it does not have all the fact. This is done deliberately. A united population would be too dangerous for those in power, so it is in their interest to sow discontent aad set us up against one another.
@ DFTBA , I don't recall hearing a single squeak from David Cunliffe about reducing inequality in the last elections .
Labour went on attacking the so called "rich" without any definition and Cunlifffe was unable to explain their main tax policy .......... the capital gains tax , which we all know can be avoided and is akin to a voluntary donation
Apart from wanting heavy trucks off the roads , Cunliffe seemed focussed on trying to bash National using 'revelations' from a looney with a book of stolen e-mails ( open to any interpretation) on the extreme left
All I heard was Nicky Hager , Nicky Hager , Nicky Hager and Kim Dotcom , Kim Dotcom , Kim Dotcom.
And for the life of me I don't see how taking money away from me and then giving a tiny amount back to me is of any use .
It is simply wasting my hard earned tax $
Oh nonsense mate ........... my capital is not under the mattress , its working , and it generates income for me and pays taxes for the goods and services you use , like free education , free healthcare , accomodation supplements , student loans , subsidized scripts , universal superannuation , policing , and all manner of free stuff , not to mention the benefit, Working for Families , etc
my capital is not under the mattress , its working
No it's not.
http://positivemoney.org/how-money-works/banking-101-video-course/#bank…
Put simply, banks don't lend out the money that they have on deposit but create it every time they make a new loan.
and it generates income for me
Making you a bludger. Yes you are, you're getting an income from doing nothing. The perfect definition of a bludger.
pays taxes for the goods and services you use , like free education , free healthcare , accomodation supplements , student loans , subsidized scripts , universal superannuation , policing , and all manner of free stuff , not to mention the benefit, Working for Families , etc
This is also part of the lie that you've bought. The government doesn't actually need taxes to pay for anything as it could, and should, create the money. The taxes are then the means used to destroy that money so as to control inflation.
The simple fact of the matter is that the government, as our representatives, are the source of all wealth in this and other countries simply because they're the caretakers of our resources. Of course, they're not doing that very well either as they allow them to be exported unsustainably.
Those with fiscal management ability tend not to end up poor.
Fiscal management ability is necessary for a country to gain wealth.
Therefore those who aren't poor should be the ones managing most of the money so that they increase the country's TOTAL WEALTH and more wealth trickles down to those who want something for nothing.
Those with fiscal management ability tend not to end up poor.
Hmm. If you don't earn a lot of money it doesn't really matter how advanced your fiscal management ability is, you'll still end up poor. A sweeping statement and generalisation completely unsupported by fact.
Fiscal management ability is necessary for a country to gain wealth.
yes, I agree. The National government have no displayed any, and NZ is getting in more and more debt because of it.
Therefore those who aren't poor should be the ones managing most of the money so that they increase the country's TOTAL WEALTH and more wealth trickles down to those who want something for nothing
This is an informal fallacy. People who aren't poor are not so because of their fiscal management,. They may have gotten lucky, or were born rich, or benefited from excellent social services when they were young, which provided them with shelter and education, and cheap health care, so they could make money (John Key comes to mind).
This doesn't automatically mean that people who are rich are good at managing money or at making money.....
I recall a story I heard somewhere about a class of students being broken up into groups and given just $5 per group with which to invest and make a return over 2 hours. Many teams made returns of over 4,000%.
https://www.quora.com/I-have-5-What-is-the-best-way-to-invest-and-grow-…
It doesn't take money to make money, it takes knowing how to make money, to make money :)
This is his opinion, and there is no evidence in the real world that this has taken place, certianly within the original terms of 'trickle down theory" ie
If the rich were indeed getting richer and there was also trickledown then even the poor would be getting richer, this simply has not happened. in-equality in say the USA as a great example is actually significantly worse.
http://money.cnn.com/2015/06/15/news/economy/trickle-down-theory-wrong-…
"In fact, researchers found that when the top earners in society make more money, it actually slows down economic growth. On the other hand, when poorer people earn more, society as a whole benefits"
productivity for instance has increased, yet the workforce has seen little of it.
http://krugman.blogs.nytimes.com/2015/09/06/productivity-and-pay/
There is actually no contradiction between "the poor are getting richer" and "inequality is getting worse". Both can happen at the same time.
What is your evidence that the former has not happened, and the latter has, in New Zealand? Do you really think that poor people in New Zealand are now worse off than poor people in New Zealand were in previous years?
You point to the US, but that is completely irrelevant to a discussion about poverty and inequality in New Zealand. US policy settings, particularly as regards welfare, are not like New Zealand's, and neither are the outcomes in terms of poverty and inequality
The poor in NZ today have significantly better healthcare, faster modes of transportation, more reliable food supply, cleaner drinking water, access to hot showers, clean clothing and comfortable beds than even the nobles of 200 years ago.
Absolute wealth has increased while relative wealth has decreased. the inequality argument in NZ isn't about the poor wanting the basics it is about them wanting what others have. What they deem the basics today were as recently as 50 years ago deemed to be luxuries In the late 60s to early 70s color TV was a luxury, now even the "poor" on the dole often have multiple color TVs at home. 20 years ago broadband, cellphones and flat screen TVs were luxuries, now almost every "poor" kiwi has all 3.
Trickle down works and has been working throughout history, it is only when you develop tunnel vision and look at relative wealth as opposed to absolute wealth that you can conclude that it doesn't work.
Fiscal management ability is necessary for a country to gain wealth.
Wealth has nothing to do with finances. Wealth is the resources that a country has to utilise. This is a limited amount and needs to be used sustainably to ensure that no one is living in poverty and to protect our environment.
agreed the radical left (Nicky Hager and his ilk) I think do more damage for the Labour party than good, as the average voter clearly saw his timing as manipulation and didn't accept his "holier than thou" attitude. Labour would have been better off if he hadn't stuck his head up.
@ Boatman If you hadn't noticed the world is awash with capital yet it still refuses to invest in growth assets. Do you "invest" in Auckland property returning negative real yields? Or perhaps companies that are borrowing to buy back their own shares or to pay dividends because they refuse to invest? The weakness in the global economy is largely due to a lack of demand caused by stagnant and/or falling real wages and excess debt. Btw good luck living in your "lord of the flies" utopia where you don't have any of the benefits of a civil society.
If equality means little more than financial worth, the idea falls flat. Someone will always amass more money than somebody else, through whatever personal, professional or opportunistic levers they choose to grasp and hold on to. And if it's money that drives them, good luck to them. It's not the only measure of self-worth, achievement or happiness. An academic, an artist, a care-worker, may have entirely different priorities and values. Even those in professional roles like horticulture or medicine may have entirely different motivations.
If we all go round fretting about the rich we miss out on leading our own lives. As long as society is genuinely taking care of those whose abilities and opportunities aren't sufficient for life, and seeking to repair those abilities and opportunities where they can be repaired, others should be free to chase whatever monetary or other reward drives them. And if it's just accumulating money that matters, then living a life doesn't amount to too much.
The question of equality, it seems to me, is far better addressed to issues like equality before the law, equality of access to the law, equality in democratic access and process, etc. These, together with the necessary personal and social care and amelioration I mentioned earlier, are playing field issues. A host of games are possible, via ability and choice. Chasing after money isn't the only game worth playing.
inequality leads to envy, which leads to corruption (obviously not always).
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I agree with your premise that equality should not just be measured in monetary terms, but as long as we have a monied society, and money can buy whatever your heart desires, people will want to be rich. Most people, anyway.
Money influences your access to justice, as skilled lawyers demand more money.
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I don't mind the rich being rich, if they just hoarded their wealth and didn't bother me. But they do.
The knock-on effect of people chasing more and more profits, means the world I live in, the environment I cherish, the habitat I need to survive, is being sacrificed on the altar of their greed.
Their insistence on slapping a price on everything, means the air I breathe is polluted, the water I need is hocked off and/or contaminated, the seas I swim in are dying, and the soil I need to grow my food is poisoned beyond repair.
Their chasing of the dollar has a serious impact on my life, and that, I resent.
Yes, DFTBA, you make a powerful point. The greed of some (a few? a great many? the most of us?) is inarguably destructive, and we live with its detrimental results - socially and environmentally, for sure. Envy, the other side of the coin, is destructive too, though in other ways. I prefer or hope for self-control before political control, but the preference, the hope, may be mere naivety.
I was talking to a Mates father... who is Welsh..
We were talking about the history of the " Labour Movement"... ( I don't mean the labour party )
He told me about life in the Welsh coal mines in his Grandfathers day....
Slavery... lack of freedom...inequality ( in its most basic sense ) were words that came to mind...
( The mine owners even compelled the miners to spend their wages at the Mine shop..??? )..
People whos' only asset was their labour had little power...had very few "rights"...
The 8 hr day....the 5 day week.... ending of child labour .... These are things we take for granted ..yet they were things that did not come easy.... they were, kinda, fought for by the labour movement.
I view inequality in that context.... A , kinda, balance of things... Standard of living...quality of life...freedom of opportunities...etc..etc..
Addressing inequality is more than just waving the tax/redistribution wand..
Maybe most people realize that the wealth of a Nation has more to do with its work ethic, innovation and entrepreneurship.... and also its natural resources.
Maybe most people realize that more social welfareism .... will take us further down the path of entitlement and dependency...??
Maybe most people know The labour party and the Greens simply don't offer any real answers/solutions beyond tax and redistribution.... and evermore regulation..
I don't think system justification theory explains the seeming apathy...
I think, most people have a sense that Politicians dont offer any real answers... maybe they realize that politicians ...might not even know what the real, underlying issues are.
Maybe it is Globalization and ,so called, free trade that are part of the problem..??
Maybe its' the financialization of the Western world that is driving growing inequality..??
Maybe having money supply growth at 9% and wage rate growth at 3% leads to growing inequality..???
how does the size of govt affect inequality..??? Should Govt... be 30% of GDP or 60% of GDP..??
Politicians will never ask those questions...... Most people know there is no such thing as a free lunch..and that the Robin hood way of simply taking from the rich and giving to the poor is not really a solution...????
What will the impact of TPP be on inequality..??? Will Multi Nationals behave like those early Coal Mine owners in Wales..??
Should a countries natural resources benefit ALL citizens..??
Should we only be exporting surplus production ...at export prices??
Lots of questions..
The point I'm trying to make is that I believe most of our politicians are kinda ignorant..... and just parrot out yesterdays' ideas, which have become dogma .... AND most people can sense/see that... can see that the Greens and Labour have nothing to offer in the way of meaningful change .... all they seem to do is give us more regulations and more tax/redistribution.... ie.. there is not much difference between parties...
the older I get ...the more I believe in "open society".... transparency and many individuals having an input in decision making ( maybe referendums...etc ) ... some way to have ongoing reform,
I think the input of 10,000 ordinary engaged people is vastly superior to a single ..."Tim Groser" who negotiates on our behalf ...in secret..
There's various types of rich people and various types of poor people. When political parties promise to take from the filthy, greedy, undeserving, leach rich to give to the suffering, hard-working, deserving poor that's one thing. However when the (perceived) message is that that they want to take from the hard-working, fairly rewarded, deserving rich to give to the lazy, undeserving, sloth poor that's quite another.
Whether rich or poor most people seem to think they are the deserving ones and the others aren't.
Part of the problem is inequality across jobs. Take for instance Police, they deal with violence and abuse on the street, their staring wage is $70k, When they arrest someone they spend a couple of hours with them and then hand them over to Corrections at prisons whose staff have to deal with them all day and night until released, Corrections Officers start on $46k and every day face the threat of, and actual violence from massed crims. Yet the Government won't fund Corrections to enable any kind of recognition of the risk their staff face.
Murray86 - Neither Police nor Corrections would exist if there wasn't Small and medium sized businesses somewhere generating the initial income streams that allows any of the State spending in the first place........if the public servants want pay equality then many will have to take a pay reduction because private enterprise has to compete in a global free market unlike the public servants......
If I applied your "part of the problem is inequality across jobs" to say agriculture and said beef and sheep farmers aren't getting paid the same as say dairy farmers........who would pay that difference in inequality????
It is unequal that people in small and medium sized (including sole operators) business have to be at the beck and call of the bureaucracy and comply with everyone of their requests at their own personal cost.....never yet heard of any academic or bureaucrat recognising this inequality!!!
Business has to collect all taxation at its own cost - now that is inequality for you!!
Business has to be responsible for the health and safety of all employees..this is a double whammy inequality....first the employee is not even allowed to be treated as a human being in their own right it is state enforced enslavement of employees and the employer must comply with the state which is another form of inequality as the rules are different depending on the title the state applies to each individual!!
Real Inequality comes from Political and bureaucratic interference with constitutional rights.....most people want to be "treated" as an individual on an equal footing with all others.......not as a collective of individuals drafted into different classes/categories by the State!!
yeah... and throw on top of that ,"free trade agreements" with countries that don't have those regulatory/compliance costs... eg China,..
AND... the unspoken imperative is that those businesses, in NZ, should simply get efficient and compete....or die..
Surely "free trade" should go hand in hand with "fair trade"... "level playing field"... ..
I must be missing something.??? seems obvious to me...
If a NZ business must meet certain environmental standards ....then so should a Foreign business that exports to NZ..... anything less would seem like some kind of hypocrisy
In rugby ..the same rules apply to both sides... the playing field is flat..!! ....
I wonder if TPP is different..??
"I wonder if TPP is different..??" We'll never know until it's too late if our govt has anything to say about it. Luckily other govts including Myanmar and Canada have pledged to release the text before ratification, even (God forbid!!!) allowing public discussion and analysis of risk/reward. What has democracy in NZ become? Answer: another oligarchy with a Dear Leader..
You should google what's happening in Portugal.
I've said on this site before that Greece was the petri dish for what the far right was trying to do....nobody stopped them in Greece, and so the Portuguese right feel no fear in undermining their democracy, either...
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