Ill fares the land, to hastening ills a prey, where wealth accumulates, and men decay. Oliver Goldsmith, The Deserted Village, 1779
This is the by-line to the 2010 book entitled “Ill Fares The Land” by Tony Judt on the growing inequalities of wealth and opportunity around the world.
I recommend the book, which David Cunliffe and Shane Jones each recommended to me. It examines the different outcomes for social cohesion and equality of social democratic cf conservative policies.
It describes well what is obvious to many in Labour. “We have entered an age of insecurity – economic insecurity, physical insecurity, political insecurity. ….. Insecurity breeds fear. And fear – fear of change, fear of decline, fear of strangers and an unfamiliar world is - corroding the trust and interdependence on which civil societies rest.”
There is much in this book which is worth reading. It has relevance to debates about total tax, our unjust tax mix, NZ’s appalling corrections policy, wealth inequality and the reality that our best assets now can only normally be afforded by NZers lucky enough to inherit wealth (and overseas investors from societies with concentrations of wealth).
We now see the differences between left and right playing out most weeks in parliament. This very week in parliament we are considering an Infrastructure Bill which has a rotten amendment by the government. It is another example of the sort of change in society caused by right leaning governments, which are described in the book.
The Bill as introduced by Labour included provisions relating to affordable housing. Now I concede there is a proper debate to be had between Labour and National whether all of those provisions are appropriate. Labour says yes, National no. But there should be no argument about the provisions in the Bill banning restrictive covenants in subdivisions against low cost housing
Make no mistake, in effect National are saying they see nothing wrong in the developer of land being able by private covenant to exclude those who can only afford less expensive housing from a new suburb. These sorts of restrictive covenant are new in New Zealand and ought to be stamped out. Allowing private planning to exclude those less fortunate from living near them is not right. National thinks that gated communities of wealthier New Zealanders are the way to go. It is yet another practical example of National’s right-wing values. It is wrong makes New Zealand a worse country.
It shows what a flawed set of values guides their decisions.
Affordable housing good
But you need a rich exclusive suburb to support a rich exclusive school. Where else will fund managers come from.
“The Bill as introduced by Labour included provisions relating to affordable housing” I had the opportunity to ask Helen Clark to define for me what Affordable Housing means, she could not or chose not to. This is great speek but is meaningless. Within Auck the land available is not flay and requires expensive geotech solutions to stabilise this, then the foundation costs to build on slopping land costs exceed $40k, sections are smaller yet the costs are just the same. In many cases a 1000m2 section costs less to develope than 450m2.
Just like a livable wage which I have asked and all except Trev M could not or would not define at least Trev admitted that he did not know.
Daviv please investigate the costs of land development town planning and the time taken. It is within the industry accepted that from farmland to the 1 st section takes about 10 years. No one is making money in housing at the moment, builders are aselling spec homes at cost, banks will not fund development of land so land sites there consuming interest.
You can postuer regarding this topic but the facts behind the scene say something else. We have for example town planners who will not allow cul de sacs within their new plan changes, yet everyone I have talked to with children prefer a cul de sac.
When wuill you learn (Even the NZ Herald is on to it) we live in a low wage and high living cost society.
I hiope you have discussed this issue with more than wellington civil servants as there are many issues that Wellington is not aware of that we face living in the real world. e.g final comment Trasit objects to any new development within Auck as it has a neg effect on the motorway, and I have been told that developers are now forced to design, consent and build motorway ramps to enable their development to proceed, as transits is unwilling to provide a solution. This cost tens of millions additional cost.
‘economic insecurity’
Well that’s one of the downsides to the free market isn’t it. With economic growth comes inflation and with inflation comes economic decline.
@Richard Shaw the fund managers could come from poor suburbs and backgrounds like Allan Hubbard…
A listener article a few months back compared poll results from 1992 to 2009 and it found that NZers increasing are not worried about inequality and support flatter tax rates… I was quite suprised, the results were especially pronounced in my age group – the under 30s…
Globally inequality and poverty have been falling. Have a look at this Parametric estimations of the world distribution of income From above see this graph of world inequality. Here’s another series of graphs: It’s getting better and We’ve got to admit it’s getting better
Dylan – I don’t think that is necessarily true at all. A quote from Mises:
QtR but how about intra-country measures only i.e. UK only, NZ only, US only measures of inequality?
You know, if the incomes of the bulk of the people in OECD countries was effectively cut over time, and the wages of people in third world and developing countries crept up over time, the inequality gap could be said to be closing.
Doesn’t help us though, does it.
@JMH: that is, unless the have-nots start saluting Che Guevara and resort to closing the wealth gap with AK-47s and Semtex.
@Quoth: that data appears to be between nations, rather than within nations, which is the whole point of this post.
Herodotus said:
“The Bill as introduced by Labour included provisions relating to affordable housing” I had the opportunity to ask Helen Clark to define for me what Affordable Housing means, she could not or chose not to.”
There is no way that Helen could not, or would not define what affordable housing means. Her intellectual capacity together with her phenomenal memory makes a mockery of such a claim.
She sure is one formidable woman
Why shouldn’t the richies pay more, it’s not like they’re broke.
@Jeremy that’s scary,
@Anne: ‘affordable housing’ to a certain extent includes building upwards, rather than outwards. Unfortunately, it’s been hampered by a unholy combination of suburbanist Dickensian-era attitudes towards anything taller than a few storeys, and flash-Harry shoebox developers.
Anne, it was on newstalk ZB a 2-3 of years ago so somewhere within the dark dusty archives there is a record. All I got from memory was what “we” labour had done to help correct the gap, there was definitely no definition.
Then it is a very wise well structured question when the polly has been caught unaware to get an answer!!
I await still an answer either in speel or a calculation/formula. As I would be surprised to see any section within Auck selling for $225k so then a land and house package would be $400k at best, unless you go up and have appartments or terraced housing with no active land. Which would not conform to any town planning requirements that I have ever seen, & $400k is hardley afforbable based on avg full time wage and ability to obtain funding from a bank, le alone save a deposit in this low wage/ high cost country we live in !!!
Loota – Here’s the second paragraph of the post again:
@ Herodotus @8:08pm.
Perhaps you have forgotten Helen Clark was Housing Minister during the term of the Fourth Labour government, so to claim she got caught out not knowing how to define affordable housing is pure stardust.
She would know more about the subject – and indeed many other subjects – than most of us. And it’s no use trying to bamboozle with largely meaningless rhetoric.
Great book. I gave it to Lianne for her birthday.
QtR sorry about that, didn’t mean to shift the goal posts on you there.
Anne 8:45 My question was based on the then proposed housing development at the airbase, and she did not define affordable housing as the then define policy that is being discussed on this post. As I am unable to fine this definition perhaps you could assist me in obtaining this definition or anyone else involved. As it is easy to throw away such terms without saying what is affordable. Is $400k , $500k $250k being 5 yrs of avg wage?
I also did not say Helen was caught out, all I was saying was that this term was not defined by her when I posed the question.
@Quoth
‘The advocates of public control cannot do without inflation. They need it in order to finance their policy of reckless spending and of lavishly subsidizing and bribing the voters.’
What? Inflation occurs in the free market it creates instability and insecurity and it’s easy to understand why and how it occurs. No clue as to what that comment is trying to say.
Dylan – He’s referring to monetary inflation. Which isn’t occurring on the free market because of the money monopoly of the the state and it’s this which creates instability and insecurity.
@Spud, generally wealthy people re-invest their wealth which supports economic growth… The argument between left and right is ultimately about whether them having the money they’ve earnt or invested is better than the government…
Ultimately wealth is the transfer of money from those without patience to those with patience… The best thing we can do to reduce inequality is to provide financial literacy classes from Form 3 to Form 5 at minimum and support access for those from lower socio-economic groups to entreprenuers… NZers should know at 13 the best way to be very wealthy is to start companies and the best way to be financially independent by retirement is through lifelong saving and investment…
@ Jeremey M Harris – they are the exceptions, I think u know that
How come those in Belgium, Germany, France, Hungary, Sweden etc are such a happy, prosperous, healthy, well educated lot and yet have the highest tax rates?
http://en.wikipedia.org/wiki/Tax_rates_around_the_world
Shouldn’t they be at the bottom of the OECD ratings if low personal taxes are so bad for a society and an economy?
Doesn’t really stack up?
Should be – Shouldn’t they be at the bottom of the OECD ratings if high personal taxes are so bad for a society and an economy?
Did the housing/property development bubble fueled by cheap investment capital support “economic growth”?
Did wealthy shareholder investors demanding that corporates take ever increasing risks to gain ever increasing earnings per share
“support economic growth”?
Did these same corporates, in the rush to satisfy wealthy investors’ demands for increasing profit margins, offshoring all our jobs and manufacturing “support economic growth”?
Remember, many of these wealthy investors are not looking out for the wealth of their country or its peoples, just their own family’s wealth.
@Richie, in many of those countries it is the people who make the economy not the policy… People talk about Scandinavia as though that proves that socialist paradise’s are but a high tax system away, yet if you look at the Swedes (for example) in any country they have immigrated to they far out perform the median… It is the Swedish people who make the Swedish economy not the Swedish government, but I support a streamlined progressive tax system to pay for universal health and education systems – we should just copy the best in the world and do what they do…
@Loota, on your points:
- Talk to the Reserve Banks but Yes
- Shareholders demand managed risk – it’s called investment
- Yes
JMH
So what exactly do you mean by economic growth? Because that is where we seem to be having a little difficulty.
1) Did you take into account all the housing value lost in the last 2 years as well as the costs of that property boom to be paid for by rate payers and tax payers (leaky buildings?) What kind of economic growth is that?
2) Shareholders don’t demand managed risk. And if they do, what are the chances they will get it? Especially when they demand returns higher than that of other investment classes and even of other corporations in the same sector. Tell me what the World Financial Crisis tells you about ‘managed risk’ and ‘economic growth’? Ah that’s right, tax payers were used to manage the risk so that wealthy investors could keep their capital when all bets went wrong.
3) I see, its finally become clear, you view ‘economic growth’ as ‘capital growth for the asset wealthy which is from time to time bailed out and supported by the everyday tax payer when it all goes badly wrong’. This is the only logical conclusion since ordinary workers just end up poor and disenfranchised as their jobs are offshored but you class it as economic growth anyways.
A true neocon to the heart.
@Jeremy – I was thinking the same thing, but in a different way, they are so rich that their money makes money and they can reinvest it – and yes they do creat cool things, but they’re not going to be thrown into a poor house for paying tax
Quoth inflation is not the money supply, Not all inflation comes from monetary inflation. An increase in the money supply can result in increased quantity instead of price and a rise in price can result from an increase in the velocity of money in the economy which is how fast each dollar is being spent as it goes around the economy. So weather your theory of a big public conspiracy is right or wrong it’s only accountable for some inflation that occurs which is bad for your conclusion where you say the the free market NEVER causes inflation and it’s all the govt.s fault.
I watched the video there are several problems with it but I will just go over the main one that bugged me. I could talk about this for a very long time but I will put this as simply as possible, When the government sais Yo banks heres an extra $200 bill, and the banks decide to take it and lend it to firms, yes it’s true that in that moment there is more money than there are goods/services in the economy. But the fact is that every economy has unutilised capacity. Before the firms start building 700 bill in houses, they will have to buy the capital goods and factors of production involved in that First, i.e the productive capacity of the economy must increase, or production must edge closer to full possible production, before you actually start producing more. So the guy in the video is missing the extra step of the increase in possibility of production. And no each cent that is saved does not rely in any way of there being unpurchased goods/services out there in the economy, the extra goods/services can be exported and what he is saying would only be right if each firm experienced complete inelasticity, if people start saving firms can go Oh less people are buying our stuff and they will produce less soon after.
After reading your argument and watching this video I have one question, you aren’t one of those zeitgeist people are you?
@Jeremy M Harris
Our views aren’t miles a part, Ive recently started reading about the Swiss.
There is a trap of the chicken and egg argument using the Swiss as an example. There democracy works in the modern age because they are wealthy, healthy, and well educated, how did they evolve to that point?
The Swiss have a cultural homogeneity that goes back 900 years or so and the development of there political system comes out of that shared cultural identity and set of values.
What is the starting point for NZ and how do we start, although with a commitment to a universal “Citizen Rights” based Health & Education system the transition would not be as painful as the 1984 revolution.
I not writing it off; Switzerland is a rather unique country and they have an envious socio-economic position in the world.
I’m not sure our business and political elite would be quite so willing to give up the reigns of power.
What happened to the devolution of power movement in NZ?
Actually Richie, you raise a good point – we have to avoid mistaking what these wealthy successful countries are doing right now as being what we need to imitate – and instead study more closely the trajectory which got them to this point.
Tena Koe David,
Great post. The NACT “Maori Party” Corrections Policy is appalling, and I am very pleased to see you raise it.
Recommended by Shane Jones eh! Did he recommend any good movies?
OK, the Shane Jones jokes were funny at first, but a bit like David Brent now.
Shane has deservedly suffered great shame for bamboozling use of taxpayer money, but 90 per cent of men watch/have watched vuvuzela movies.
Hi Loota – I think the debate needs to stripped back to fundamental rights and obligations as “citizens” first.
Then we can begin to discuss inequality and what it means in the New Zealand context. I don’t think we use or think about about the term and meaning of “citizen” enough. This is where collective power starts.
I think the sucessful central euro countries probably sorted this out post WWII with the suffering still fresh in their collective minds.
Indeed Richie, if people were just a little more aware of the varying roles of consumers vis a vis investors vis a vis citzens, the political conversation in this country could really move forwards.
The Right has conditioned the NZ public to see themselves primarily as Consumers and Investors.
I believe this partly explains Nationals astronomical poll ratings compared to their less than stellar performance to date.
(Interesting the Right will occasionally use NATs high poll ratings as ‘proof’ that the Govt is performing well)
@Comrade Loota, just calling me a neo con doesn’t make it so, I don’t hate the wealthy people in NZ and recognise the economic growth that is provided by their re-investment of their capital… I guess I just don’t have as much hate as you do…
1). The BIA (Central Government) and Local Government was responsible of the approval of monolithic cladding and untreated timber, Labour conveniently disbanded the BIA after the leaky buiding problem first surfaced and failed to sue James Hardie, therefore due to government and council stuff ups we are all going to have to foot the bill… I fail to see how you blame the wealthy for leaky buildings (is it their fault when it rains too..?)…
The property boom is in part the fault of the middle class for accepting cheap credit to buy massively overvalued homes… The property market has fallen 12% in adjusted terms and has a ways to go yet but while the boom was on developers created construction jobs through risking capital in the construction process, these people working in the construction industry spent those wages supporting retailers, etc…
2). I don’t support bailouts, never have, for $700 Billion the US Government should have taken significant ownership positions in those banking and automotive companies… If people take the risk of investment with open eyes they deserve the gains they receive and also should not be compensated if those investments fail… You really have no evidence that wealthy investors do not demand managed risk, it is in fact why they are wealthy, at some point them, or in 1/3 of the cases one of their ancestors, saved and took a risk by investing those savings seeking safe returns, these returns were then reinvested seeking safe returns, consumption was delayed until large amounts of capital was built up… It isn’t really a hard formula, it takes discipline, time and delayed gratification and since those investments support new and expanding business, creating jobs and wealth for the country, resenting wealthy people really is stupid…
3). That’s not my position at all and open your eyes Loota, out of the two of us, one belongs to a party that supports free global trade which does off shore jobs but results in cheaper jobs and a shift to more productive industries inside NZ and it ain’t me…
You really make me laugh, in one thread you say we need to encourage business people to grow billion dollar export companies and not stop when they have the big house, the bach and the BMW and then you resent the crap out of those who do and then you require different standards for the wealthy when you say most have the interests of their families before the country… So what..? When was the last time someone in the middle or least wealthy groups took a job that was in the best interests of the country before the best interests of their family..? The first question out of the overwhelming majority of people’s mouth when discussing a new job is, “What does it pay”… What a hoot…
JMH – but where is the ‘economic growth’ from the property boom you refer to? The building industry created jobs but due to the leaky buildings problem those jobs were all heavily subsidised by rate payers and tax payers. How can the expansion during the boom part of a boom and bust cycle be considered ‘growth’.
And where is the ‘economic growth’ from the banking/financial sector you refer to? Again, completely subsidised by the tax payer.
By the way – I definitely do not resent those who built their wealth by generating productive value for the country (e.g. exports of high value goods and services I have referred to in previous threads). They can fly private jets for all I care. But those who built their wealth by skimming and gaming the system? By cutting corners?
No, no respect for them.
And just notice you are talking about employees here whereas I was referring to business owners and those who invest and employ capital.
And how many of these leaky homes are in suburbs with limited or no public transit? If that’s the case, we’re effectively subsidising car dependency.
@ Jeremey H Harris
Your thing is transport/planning do you see business/monied groups wielding more power in the city planning process or subvert it to their will because of the resources they have available? I think we see it in Hamilton.
It is a question about political power, is inequality born out of power imbalances.
I’m interested in you views as part of the wider socio-political institution debate around social equality.
Dylan – My conclusion wasn’t that the free market never causes inflation it was that monetary inflation isn’t being caused by the free market, but the state. Monetary inflation is not inflation sui generis however it causes inflation. The arguments on velocity of money and “unutilised capacity” is well-trodden territory and I’m not going to wade into that complex area, which is off the topic of this post, so here are a couple links addressing them: Is Velocity Like Magic and The Role Played by Unemployed Factors of Production in the First Stages of the Boom
In your first comment you said “with economic growth comes inflation” again this is not necessarily true as periods of growth have occurred during deflationary periods in the past. Some theories may sound nice but fitting them to the empirical reality of an economy is another matter.
This is not about conspiracies or “zeitgeist” it’s just recognizing the system we have and the damage that a money monopoly, like any monopoly, does to an economy.
QTR, some questions about the stated “money monopoly” of the state.
How does this reconcile to the US system where the state does not control the banking system aka the Federal Reserve (according to Ellen Brown of globalresearch.ca “Its shareholders are private banks. In fact, 100% of its shareholders are private banks. None of its stock is owned by the government”).
Does this imply that the owning entities do not operate in a free market and are merely monopolists preventing the efficient market principle? Or is it still the malign inflationary state to blame?
Might we not more accurately see inflation as the tension between the profit motive and public interest?
@Richie, yes business does have an influence in Transport, the RTF is case in point in the tragic over-expenditure on roads in Auckland over the last 55 years but this is nothing compared to the power in the Transport sector weilded by politicians, for example we are about to waste $1,600,000,000 to $2,300,000,000 on the Puhoi to Wellsford “Holiday Highway” because Joyce thinks it’s pretty, the feeling I get from the NZTA is, “we know it’s stupid but the boss wants it”…
My personal opinion is government should lend no favours to any business, nor group of investors… Whenever I hear the words subsidy or protect jobs all I think is; look out consumers, and it should also sell down non-monopoly SOE’s to NZ citizens only…
The government’s role as I see it should be to stick to what we agree it should do accross political lines (apart from ACT) and then do this well by copying the best in the world and keep taxes as low as possible via a shallower progressive system while building some foreign reserves via a sovereign fund, namely:
- Shamelessly copy the French health system and how it’s funded
- Shamelessly copy the Singaporean and Finnish school systems and cover costs from Early Childhood to the end of Uni
- Shamelessly copy the Australian Superannuation regulations
- Reform welfare for those it’s failed
- Turn the Cullen Fund into a shameless copy of Temasek
If this was put in place we wouldn’t have to worry about inequality because we would know that every NZer at 21 had an equal oppurtunity to be happy, healthy and educated and what they made of their life after that was up to them and we as a country would be practicing the principals of wealth creation…
Quoth
Some of the links you have made have been about American’s talking about America and their federal reserve bank. Let me clear something up real quick
http://www.globalresearch.ca/index.php?context=va&aid=10489
‘The Fed is privately owned. Its shareholders are private banks’. So that’s that. The state isn’t responsible for US monetary inflation.
In NZ the reserve bank isn’t really owned by the govt. or privately, it’s just the reserve bank, it’s an institution which is monitered by the govt. and there are ministers in it’s management but it is not an actual government insitution. And the RBNZ doesn’t even print that much money you realise. Most of the money we print is to replace broken notes and coins.
And yes inflation doesn’t always come with economic growth. I do believe though that inflation is responsible for boom and bust theory and all the instability that comes with it. And I don’t think it’s the governments fault. Just wanted to clear that up coz our argument so far has been a little hazy.
‘Monetary inflation is not inflation sui generis however it causes inflation’
It is only one of the countless causes of Inflation, many of the others being free market factors. Your saying that the govt. is somehow responsible for some but that doesn’t discount the comment I made about inflation being a downside to the free market which is what you argued against.
@Jeremy M Harris, Cheers interested as it frames your comments.
Again not far off my own thoughts, I have significant frustration at our ideological approach to problem solving rather than using internationally evidence based solutions.
Although maintaining the level equal society is the hard part, not that no one should get a head but groups can tilt it in their favour.
For me throw in some additional adult education to assist in future proofing workforce, tackle our pyramid scheme monetary system, a constitution with a bill of right that is superior law, and most of the boxes are ticked for me. Nor am I afraid of collective action or responses to challenges that a involve the state as the organiser/implementer.
@Richie, I’m a committee member for the Republican Movement… A Constitutional Parliamentary Republic is where we should end up, with citizen initiated binding referendums… Until then the politicians are just denying us what should be basic rights at this point…