Last Sunday, the Sunday Star Times surprised and delighted by leading, no less, with a story about a survey showing people are increasingly concerned at the growing gap between rich and poor in this country, God’s Own which once prided itself on being egalitarian. http://www.stuff.co.nz/sunday-star-times/news/4571307/Wealth-gap-divides-nation
Yesterday it followed up with a major feature http://www.stuff.co.nz/sunday-star-times/features/4594815/Mind-the-income-gap providing more detail, including a graph from the book The Spirit Level which shows NZ was 18th out of OECD 23 nations in terms of the gap between the richest and poorest 20%.
At Labour’s excellent Summer School over the weekend, Otago University academic David Craig reproduced GINI data which suggested in fact we are now the most unequal society. (He’s sending it and I will post up the link.)
Yesterday’s SST article quotes Brit Tory leader David Cameron as saying of The Spirit Level that it showed that “among the richest countries, it’s the more unequal ones that do worse according to almost every quality of life indicator…”
“We all know, in our hearts, that as long as there is deep poverty living systematically side by side with great riches, we all remain the poorer for it.”
Cameron is doing more than mouthing the words. Last year he appointed former Observer editor and long-time campaigner on equality and a ‘stakeholder’ society, Will Hutton, to head a pay equity review. (I am currently reading Hutton’s latest book Them and Us but more on that at another time.)
So you might think there is the chance for a reasoned debate here in NZ, if not Government pick-up? Accompanying the SST feature yesterday was commentary from both CTU economist Bill Rosenberg (agreeing) and Roger Kerr, director of the Business Roundtable.
I can’t find an e-version of Kerr’s comments (although the BRT website carries this http://www.policyexchange.org.uk/assets/Beware_False_Prophets_Jul_10.pdf but he starts by saying: “Other things being equal, I prefer less inequality in incomes and wealth rather than more…”
Kerr then goes on the pan the book and story and dismisses the idea of better equity by saying: “Equalising incomes, was, of course the socialist goal…” No one is talking about equalizing incomes, that’s stupid and out of line even with a Tory Prime Minister. What we are talking about is a more equitable society, where the gap between rich and poor is reduced because otherwise everyone suffers.
It is simply obscene, for example, for the Westpac chief executive in this country to be commanding a salary of $5m+ a year as we struggle out/through a recession for which banks have to take some responsibility. Banker JP Morgan had a rule that his executives should not earn more than 20 times that of his lowest paid employee. Westpac call centre people earn around $45,000 a year. That would take their CEO to around $1m.
That’s the sort of ceiling in place for state sector chief executives. Even then you have to ask why some SOE CEOs are earning twice + what the Prime Minster earns.
John Key is unlikely to follow the line taken by David Cameron. He is more likely to support Roger Kerr’s defence of the growing pay inequity gap and argues opposition is the politics of envy; that we should simply stop redistributing wealth (as if no redistribution has happened) and look at growing the economic pie.
No argument with that if the growth is sustainable but there’s no evidence provided that this is enhanced by paying someone 50 or 100 times what their workers earn.
Moreover, The Spirit Level graph of inequality appears to suggest that more equitable societies are more stable. Spain at tenth on the list of most equitable is the first truly troubled economy to be listed. The USA is second most unequal, just ahead of Portugal.
Neither our economic stability, nor our growing equality gap now perhaps the worst in the western world will be helped by tax cuts heavily favouring top earners. And another dose of state asset sales pushing up power prices won’t close the gaps either.