With the recent OECD report being used by Labour and National alike to beat each other around the ears, and used by the Greens as a “told ya so” exercise, you’d think we’re all going to economic hell in a hand basket.
The OECD, often described as a club of rich countries, has produced a report supporting a view that a widening gap between rich and poor within its member states is not only bad for their society but also harms their economic growth. The report is of particular note to New Zealand because it names this country as one of those in which income inequality has widened most since the mid-1980s. It estimates that rising inequality has cost New Zealand more than 10 percentage points of possible economic growth since 1990, which appears to be more than any other member of the club.
In one sense this is not a surprise. New Zealand was a highly protected economy until the mid-1980s with a strongly unionised labour force, high taxation and universal benefits. It had removed these arrangements rapidly by the mid-1990s, conscious that it was opening itself to world markets later than most and with trade disadvantages of distance and scale. Even now, with its income gap having grown more than most, inequality in New Zealand is no worse than the OECD average.
Well, isn’t that a welcome bit of info? ¬† And the editorial gets even more calming. ¬† Read more »