Monday, August 4, 2014

Wanting the story to be true… inequality

Recent media discussion and comment has focussed heavily on a story many seem to want to be true – in spite of the fact that it isn’t. 

Claiming that inequality is growing in NZ is an easy sell at present. Couple it with the idea that the fault for such inequality lies with the rich and you have a sure fire winner but for one thing.

It is incorrect.

It may appeal. It sounds cute. It may “resonate” for those wishing to sound “concerned”.

The Ministry of Social Development states, baldly and boldly in their latest report:

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

Inequality is a non story.  Does it mean there is no poverty?

  1. No – assuredly it does not. All aggregate figures and averages mask the sub groups in populations – including NZ – who undoubtedly suffer and in some cases suffer badly.
  2. Moreover, numbers give only the most mechanistic impression of the horror of poverty for some.  Read the Auckland City Mission’s “Speaking for Ourselves” to get some impression of that.

Still – stories built for political and other self interested motivations around the idea that inequality is growing overall in NZ simply cannot be supported.

What’s more, change in who is affected and how needs to be considered.

More than three quarters, some 76% of the people in the lowest decile in 2002 were, seven years later, no longer there. Moved up, migrated or dead in blunt terms – the majority had moved up.

Notice too that the entire decile group moved upward – and quite considerably.  Between 2002 and 2009 GDP per capital (PPP in USD) increased by some 35%. On average people were 35% richer than before – so what we regard as “average” moved along at 5% a year.

So – on average people were a good deal better off than they had been and that with no increase in inequality. What’s more more the period spanned considerable chunks of both Labour and National led governments – so point scoring there is irrelevant as well.

Acknowledging that reality ought encourage further growth while  focussing on the seriously poverty stricken.

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