Inequality, Poverty, Social Problems, and Politics

It’s been a week since psychologist Nigel Latta presented a documentary on New Zealand television called The New Haves and Have Nots.  Latta pointed out that the gap between the poor and the wealthy seems to be ever-increasing, and the numbers are disturbing.

Back in 2007, Statistics New Zealand called the distribution of wealth in New Zealand “unbalanced”, noting in a paper on wealth disparity that while the top 5% of New Zealanders held almost 38% of the country’s wealth, the bottom 50% accounted for just 5%. Bizarrely, it seems difficult to nail any official data more recent than that, although this map gives some idea of what it looks like visually. (Please, don’t take the map literally and assume the north of the country is “rich” and the southernmost tip of the country is “poor” as some respondents have apparently done—this is just a metaphorical representation.)

There has always been a certain degree of discrimination from the “haves” towards the poor who are not working. No one wants to feel like they are labouring away while helping to support some lazy clod sitting at home watching tv and drinking beer, but according to Latta the problem isn’t so much unemployed benefit-bludgers as it is the working poor.

It used to be (back in the 1950s and 1960s) that a single-income earner could support a family. Today, it seems that even in families where both parents work, if they’re only making a minimum wage and/or aren’t both full time, it’s nearly impossible to stretch that weekly budget to include even such modest pleasures as the occasional movie or trip to the zoo or family camping holiday. First you need to pay the rent, the power bill, the phone or cell phone bill,  the internet bill (if you have a computer), food, school fees, and car WOF and registration and petrol (assuming you have a car), or transport costs if you don’t. And then there might be one-off costs for things like clothing, shoes, medical bills, a second-hand fridge when the old one dies… There’s often not enough left over at the end of the week, fortnight, or month for a cup of coffee.

Overall social outcomes in highly unequal societies are mostly negative, according to the often-quoted but somewhat controversial book The Spirit Level by Richard Wilkinson and Kate Pickett, published in 2009. Wilkinson’s TED talk on the subject highlighted how factors like health and mental health, crime, addiction, infant mortality rates, and life expectancy are all affected by the psycho-social stress caused by income gaps and status anxiety.  If you watch the talk, you'll see in the graphs how NZ stacks up with other countries, and a New Zealand Herald article examined the New Zealand situation in reference to claims made in the book.

Latta has come under some flak for his doco. DomPost columnist Jane Clifton accused him of being “a know-all riding a hobby horse”, and expressed her disgust that a psychologist should step out of his area of expertise to comment on a social issue[i]. A small flurry of letters to the editor followed this diatribe, some defending Latta for covering the story and accusing Clifton of stepping out of line, while others gave Clifton’s denigration a thumbs up. This is an election year, after all, and raising a polarizing topic such as this could be seen as a political move.

The issue hovers elsewhere in the media too. In a recent article in the Sunday Star Times, Tim Pullar-Strecker looked at the New Zealand tax system. While our income tax rate for our wealthy citizens is one of the lowest in the OECD[ii] community of 34 countries, there is no tax-free threshold for low-income earners as exists in other countries, and we are the only OECD country that slaps a GST tax (currently 15%) on all goods and services including food. Indeed, Kiwis even pay GST on other taxes (e.g., petrol tax, rates)!

Although it sounds like the rich, at least, benefit from the current system, research suggests financial equality is good for growth. According to an International Monetary Fund (IMF) study published earlier this year, “countries with high levels of inequality suffered lower growth than nations that distributed incomes more evenly.” That said, New Zealand had been dubbed “the rock star economy of 2014,” a belief that continues to be touted by the National Government keen to strut their this-prosperous-recovery-happened-under-our-watch” motif leading into the election.

It IS an election year. If you are a Kiwi, and this is an important issue for you, vote. Just a quick squizz at the three major party policies on this topic reveals...

National, the party currently in power and most likely to stay there, doesn’t seem to have any real policy on this matter. The closest they come on their website is where they identify four priorities they specifically say are “for families”: 1) manage the government’s finances; 2) build a more competitive economy; 3) deliver better public services; 4) rebuild Christchurch.  Personally, I'm not convinced these are specifically “for families,” but this is National's viewpoint.

Labour acknowledges an inequality problem and generalizes three vague objectives to mitigate the problem: 1) well-paid jobs, 2) lower power bills; and 3) more affordable housing, but they offer no specific details.

The Greens, on the other hand, offer ten very specific solutions under four general categories: 1) taxation; 2) energy; 3) income support; and 4) housing. 

There is plenty of food for thought here. I DO think New Zealand has some significant social issues that would be well served by a closing of the inequality gap. Perhaps there is a groundswell  growing; I think many folks would like to see at least some of these problems addressed. Although most of us can do little individually to affect changes in our society, and being a democracy that's probably a good thing, one thing we can do that can make a difference--albeit a small one--is vote. 

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[i] I don’t want to digress from the topic, but as someone trained in psychology, I wonder if that means I’m not allowed to think or have opinions on issues other than what goes on in people’s heads. Curious, I googled “What is a psychologist?”  and the first entry that came up, from the Rhode Island Psychological Association, began “Psychologists help to ensure the health and well-being of all people: individuals, families, groups, and society as a whole.” So I think he's right on target.

[ii] Organization for Economic Co-operation and Development