A remarkably insightful, level and sensible Herald editorial. (I think I need a lie down)

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.

Not so.

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.  

We are on a par with countries such as Canada and Italy and more equal than Japan, the United Kingdom, Israel and the United States. All of them have suffered economically from inequality, according to the OECD’s directorate for employment, labour and social affairs. Is this credible?

The directorate’s results sit oddly with economic performance. The countries it finds more unequal are those that have come through the global financial crisis in generally better shape than those, mainly in Europe, that are more equal or becoming so. Greece, which had reduced inequality since the 1980s, became the first basket case of the euro zone.

Clearly if social equality is good for economic growth, other things matter more. Such as competitive industries, low inflation, sound public finances, balanced budgets and low public debt. All of these may come at a cost to social equality. But the OECD suggests how that cost might be minimised. Redistribution of incomes through higher taxes and benefits is one way, though it cautions that not all redistribution is good for growth. It depends on whether benefits are well “targeted” to needs. That does not mean concentrating on poverty, the report warns. Governments need to be concerned about how the bottom 40 per cent are faring. They need better education, training and services such as healthcare to narrow the income gap and make a greater contribution to economic growth.

Education, or the lack of it, is central to the theory that inequality harms an economy. OECD surveys show that children of poorly educated parents are more likely to be poorly educated themselves as income inequality widens. They leave school earlier and with less proficiency by comparison to those with better educated parents. New Zealand educationists call this the “tail” of under-achievement but it is surely not as high as 40 per cent in this country.

So what the NZEI, PPTA, Labour and Greens do?

Oppose Charter Schools.  Oppose the government’s program to get better teachers to upskill others.

It appears to be that National are on the right track, and it is the “tax ’em more and keep ’em dumb” lefties that are the engine room behind the inequality problem.   After all, without inequality, what on earth would a left wing government’s purpose be?

 

– NZ Herald

 


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  • cows4me

    Don’t fall for it Cam, it’s a lefty trick. Saying something calm and soothing, it has to be a distraction. And when you think they have seen the light they will turn feral again only more viscous next time.

    • Dairy_Flat

      I like what you did there with “more viscous ” Cows. They are indeed thick.

    • Wallace Westland

      There’s always the possibility that the horried accidentaly aquired a guest editor that wasn’t Lucy Lawless.

  • Dairy_Flat

    Success breeds success; failure breeds failure. Educate the parents and they in turn will ensure the children are educated and therefore more likely to achieve. Not rocket science but the left allow ideology to murky the waters and deny many the best chances to achieve. There is no substitute for education coupled with hard work; do these things and the rewards will come.

    • dgrogan

      Education is good for the populous, but nurturing entrepreneurship is where real growth is achieved. Do we as parents nurture enterprise and entrepreneurship in our children?

  • oldmanNZ

    Think you hit the Nail on the Head, if the NZ economy is growing, the poor getting richer, people working…..
    Not many people left to support labour and greens.

    • Bartman

      This is why I don’t see any possibility of a left government in the near future, simply because their focus is not on the people but on the ball (perversely), they miss the point that society has changed – and dramatically so. Even the “poor” have much our forefathers would be envious of, and while there will always be miscreants (or, as Cam calls them, ferals), in voting terms the tide is well and truly out for good on the left. The next government to usurp National will be very much a centrist beast, and therefore can only occur if Labour / Greens fragment and splinters connect with NZ First. The catalyst for this will be a 2017 election loss for the left, where they finally take an honest look at themselves (unlike the farcical review just completed) and the unions drive a permanent wedge into the heart of Labour.

    • phronesis

      The other side of that coin is that it’s only in advanced economies like ours that people have the time available to come up with these stupid ideas like equality, and all the other progressive crap. Not much time for these ideas in the third world.

  • parorchestia

    The Press also had a sensible editorial today, too. Is the common sense disease breaking out?
    The OECD report seems wrong at first glance. Communism had wonderful equality – or, as we would call it, repressive poverty.
    The cause of inequality in the west (if it really does exist) is due to changes in employment (fewer labouring jobs), better incentives being seized by hard workers who get richer as a result, better government with less wasted investment in underperforming assets, increased personal responsibility with the consequent rewards for those with the ability and guts to make the commitment required.
    Taxing workers to provide the unworthy with a lifestyle they don’t deserve doesn’t seem to be a good idea, no matter what the OECD says.

  • fergus

    Over my life the poor have gotten substantially richer and the rich have got more plentiful.
    My reasoning:
    In the 60’s:
    Not every household had a car.
    Not every household had a phone
    Not every household had a washing machine
    Not every household had a TV
    Not every household had a fridge

    Now compare that to today and add all the extra toys we have.
    Remember to include overseas holidays…..etc
    EDIT: Now is the best and most prosperous time in human evolution.

    • Jaffa

      Now, is the best time in the history of the world to be alive!

      And this is the best Country in the world to be alive in!

      And there are still moaners!

      • dgrogan

        Hmmmm. Yes and no. I’d prefer a bit better weather…but I guess that’s being picky. or moany even.

      • fergus

        Air fares…We flew to London for the in laws 40th wedding ann.
        Around $2000 return each….price today…Between $1900 and $2400.
        Seems more affordable today.
        Maybe houses would be more affordable if youngsters would stop spending money on toys, fun and holidays…saving for their house instead?
        EDIT Opps…40th wedding was in 1988.

        • sin-ic

          My mother flew to London in 1955. 6 days, with only daytime flying, (no night aids) Flying boats Solent airfcraft to Sydney, Super Consellation (KLM), overnight in hotels. NZ Pounds 5000 !! Only for the rich or desperate! Let’s count our blessings.

          • dgrogan

            Compare that to today: Wellington/Auckland/San Francisco/Amsterdam/Frankfurt/Vancouver/Auckland/Wellington for two – $7,042 including a cash/back of AirPoints.

          • sin-ic

            Exactly!

      • Bartman

        Well, not all of us, just the socialists and commies who aspire to insipid equality nirvana!

    • Sooty

      And the young ones wan’t it all now and brand new!

      • fergus

        I remember in the mid 70’s, we lived in Wainuiomata, one of our neighbours won…”the golden Kiwi”…remember that?
        $60 000, they spent it all, and all they got was a swimming pool (dug into the back yard), and a family holiday to Australia.

        • Benoni

          They could have bought 2 houses in West Auckland with that money that would be worth $450 k each now.

          • Platinum Fox

            $60,000 was a lot of money back then – my first salary post-university in 1977 was under $8000; I turned down a job in the public service that paid less than $6000 p.a. to start.
            They could have bought two houses in Ponsonby, Grey Lynn, Freemans Bay or St Marys Bay for that money in the mid 1970’s! There are at least a couple of recent examples of sale prices starting with “1” and a comma for old houses in Greater Ponsonby that have never had any work done on them.

          • dgrogan

            Better yet, two houses in Mt Eden’s double Grammar Zone -which would now be worth $2.3 million each.

    • kehua

      You may well be correct but I often wonder how much is paid for?

  • Hard1

    “Clearly if social equality is good for economic growth…”

    Social equality has never been seen in our over 200,000 years of history. The hypothesis is pure bunkum.

    • dgrogan

      I believe you are right. In fact, “social equality” is a human construct, that flies in the face of natural selection and evolution.

  • I keep looking at the world through very a long term lense, and i’m wondering if perhaps we’re not seeing early signs the limits of government at country level. By that i mean, if you think backwards, small villages were governed as we would govern a whole country, as things got bigger many of its governance levels were passed up to a barons or lords domain. Which did the same and multiple Lords created kingdoms. The kingdoms eventually, after hundreds of years the countries we know now. What i’m thinking now is are we still viewing and governing the world in a Nationalistic way when connections to the wider world would make that less than optimal. Greece/Germany would make a good study of that, both in the EU, one doing well, one not.

    • phronesis

      Kingdoms are ruled by Kings, Empires are ruled by Emperors, Country’s are ruled by C……

  • kiwirog

    On a slight tangent I wouldn’t go too far in praising the Herald — how about this sentence from a story on South Canterbury Finance director Edward Sullivan today:

    “Justice Heath praised the references bought before him Sullivan.”

    I can forgive the missing words, but I doubt Sullivan paid for the references! Bring back the subs.

  • Kevin

    Income inequality has never bothered me. It’s inequality of opportunity that concerns me. I’d rather live in a meritocracy than some kind of false socialist society where everyone is “equal”.

  • JC

    Those who can.. do. Those who can’t.. teach.

    Go back 50 years, educated women had few jobs outside the home and those jobs were in factories and low level jobs.. but there was one escape route and that was teaching the Three Rs.

    But now an educated woman can aspire to just about any professional job like science, medicine, the law and so on but the less ambitious can still teach. Inexorably bright women have moved on from teaching to higher paying jobs and whats left go to teaching, ie, the quality of teachers represents the less bright and the unadventurous. You can see this in the primary sector which is almost a women’s club, 100% unionised and resistant to change, they portray themselves as victims and in lieu of higher wages for quality they push for total security and demand that someone else run the tools of a modern society like computer based pay systems.

    If you go back a few years teachers were up in arms against the old pay system right up till Novapay arrived. Novapay might have been buggy but its real feature was it required teachers to correctly input the data of hours, pay rates, leave, sick days etc.. it was too much for the poor little victims.

    In short our education system is in the hands of some not too bright people unaccustomed to increased demands, new technology and multicultural classes. Give them a choice between higher pay with more requirements and responsibility and they’ll go for lower pay with total security and limited responsibility every time.

    I cant be bothered making the usual disclaimers that they’re not all like that and most are brilliant and caring etc.

    JC

    • Bartman

      “But now an educated woman can aspire to just about any professional job like” … Prime Minister, UN Deputy, President of USA (prediction), etc.

      • Wallace Westland

        Yeah, I was trying to think where the “just about” fits in too. In this country women ar enot excluded from anything including the milatary.

    • phronesis

      A smart 10 year old could give your average primary school teacher a serious run for their money in many subjects. I remember a teacher apologising to me at primary school after they had gone away and discovered that I was indeed right. It was in many ways a watershed moment in my attitude towards education and in retrospect I am impressed that they admitted they were wrong.

    • Aucky

      I wondered how long it would take JC for someone to take up the old sport of teacher bashing. Let me make it quite clear that I’m not a teacher nor employed in any associated profession. I do, however, have regular professional contact with the primary teaching sector and would like to dispute some of your very sweeping & inaccurate statements. I have no truck either with the NZEI.

      ‘Those that can, do…………those that can’t, teach’. An old worn adage that has no substance and is an insult to the many fine young graduates that study either towards a B.Ed or take a regular degree followed by a post-grad Dip. Ed. They then spend three years on probation.

      ‘100% unionised’. Another very wrong assumption. Less than 50% of young teachers are members of the NZEI. Older teachers retirement is an issue that the NZEI does not discuss publicly. Our local primary school has just two NZEI members on the staff.

      ‘Poor little victims’. Teachers have nothing to do with inputting their pay. That process is handled by the school’s admin staff.

      ‘In short our education system is in the hands of some not too bright people………………’. That is a gratuitous insult to many fine young dedicated teachers.

      The vast majority of teachers that I have dealings with work 50-60 hours per week and well over 50% of their seemingly generous holidays. They get to earn a tad over $70k and if they wish to earn more have to abandon teaching and take on a management role. Yes, the NZEI still dominates the primary sector but their days are well and truly numbered as more and more young graduates move in. Do young teachers want performance pay? Do they what!

      The profession isn’t perfect but tell me one that is. I have great faith in the calibre of young teachers and their dedication to our kids. They will make the necessary changes but it takes time to turn around or preferably sink the ‘Titanic’ that is the NZEI. In the meantime they need your support not your insults.

      • Mikex

        This comment heartens me considerably, I just hope you are right.

        • Aucky

          I’m talking mainly about new generation teachers under the age of 40 who are more than receptive to performance pay and do not like the NZEI doctrines. The myth of a job with working hours of 0845 -1520 plus three months annual holiday is a relic of the past. I was talking to a young teacher the other day – She’s 28, taught for five years and earns about $60k. She has an excellent degree that could earn her another $30k a year but she wants to teach and is devoted to her kids. She had just finished her school reports in her own time – that’s 26 x 5 page reports that take over an hour each. The days of a single page with six subjects marked ‘VG’ or ‘Could do better” are well and truly over. She coaches and takes sport every weekend and attends meetings after school three days a week. There’s the usual prep work to do as well. A 55 hour week is the norm.

          There are so many more like her Mike and it really annoys me to read ill-informed posts from people like JC particularly at a time when we should be encouraging graduates into the profession not denigrating them as ‘less than bright’ and using other insulting epithets.

          Our kids are our future and we need the best people to teach them.

          • andrewo

            If you’re right, then it’s wooonderful news!

            Consider: Teachers make up about half of the total number of union members. So a roll back in teachers joining the union would be an absolute disaster for the likes of Little & McCarten.
            I wait with baited breath!

  • idbkiwi

    Income inequality is part of the price of freedom. Beware the alternative.

  • Charlie

    Inequality doesn’t matter a damn. The important factor is how well off our middle and lower earners are.
    You probably have really good equality in countries that are in the crap. I would imagine that the likes of Cuba or the third world countries where most people are in severe poverty should be a good example.

    • Kiwibabe

      The Heralds editorials vary according to the editor. I think the chief editor is more neutral and investigative giving both sides rather than the left bias perspective which is tends to rubbish National with spin While advocating the ill conceived answers from the left.

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