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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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story. When he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

They say that news is something that someone, somewhere, wants kept quiet. Cam Slater doesn’t do quiet and, as a result, he is a polarising, controversial but highly effective journalist who takes no prisoners.

He is fearless in his pursuit of a story.

Love him or loathe him, you can’t ignore him.

To read Cam’s previous articles click on his name in blue.

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