Policy change needed to end growing inequality of wealth

There’s nothing wrong with being rich, said the editorial in my local paper.

The comment was in reference to Statistics New Zealand’s latest survey of wealth distribution. The richest 10 per cent of New Zealanders now own more than half the country’s total wealth, having increased their “share” from 48 per cent to 52%.

The richer half of New Zealanders own 95% of our country’s wealth (up from 93% in the previous survey) and so the poorer half now own just 5%.

Most of us feel uneasy when we read statistics like this. New Zealand once prided itself on its egalitarianism. Early European settlers insisted that “Jack was as good as his master”.

Since the free-market economic policies introduced by Labour in 1984 inequality has grown rapidly and seamlessly with successive Labour and National governments. It will continue to grow while the same economic polices which rob the poor to give to the rich continue to be followed.

When Labour prime minister David Lange was confronted with this growing inequality as a result of “Rogernomics” in the 1980s his response was “economic inequality is the engine which drives the economy”. He was wrong, of course. It is people who drive economies.

So do the rich work harder than the poor? Setting aside the fact that many of the wealthy don’t work at all, the answer is still no.

Many business owners work hard but no harder than a security guard who works five 12-hour shifts each week on the minimum wage or a waitress on her feet nine hours a day.

Another myth is that most of the wealthy are self-made. No-one becomes a millionaire by their own work. They get there by employing people to work for them and by paying them less than the value of the work these employees do. The extra value accrues to the “self-made” wealth of the individual. The more people employed, the greater the wealth.

The role of employers is not a social role to benefit the community but an economic role to benefit shareholders.

As soon as difficulties emerge the workers are laid off, have their hours reduced or are tossed aside for a contractor to pick up on lower terms and conditions.

Employees are just another resource to be used. (Most companies have renamed their personnel managers as human resource managers.)

In their hearts, many people hold to an unspoken belief that the poor are poor because of some moral weakness on their part. This has been a common belief of the wealthy though the ages. It preserves the “natural order of things” and excuses their responsibility for the plight of others. It was the same justification used by slave owners.

It’s true that some of the wealthy take risks with their money but their living standards won’t change if they lose. Most risk is carried by small businesspeople as they establish businesses but for larger companies the risk is borne by those they employ or contract.

But surely we need wealthy entrepreneurs to show the way, increase our country’s wealth and standards of living? Absolutely not. If we pause for a moment and look around, everything we see in our houses, streets and cities was made by workers. None of it was made by shareholders, entrepreneurs or the non-working wealthy.

We do need good ideas, imagination and hard work. We have this in spades in New Zealand. The restriction we have is that the wealth is so tightly controlled by so few.

We also want to see technological advancement. The problem again is that the money going into research and innovation is only going into areas where profits can be made.

We live on a planet where resources are poured into lifestyle improvements for the tiny portion of the world’s population who can afford them.

Another myth is the level playing field. It has never existed. The socio-economic situation a person is born into is the strongest determinant of where they will end up in the wealth stakes. Yes, there are exceptions. John Banks and John Keys like to dine out on how they lifted themselves up by their bootstraps. If they could do it, so can anyone. Not true. Our capitalist economy allows only a small number of winners, with half our population now reduced to just 5% of the country’s wealth.

On a global scale the trend is the same. Over the past year the number of billionaires has increased from 793 to 946 with estimates of their wealth increasing by 35% in just a single year. At the same time income levels for the lower 55 per cent of the world’s population declined or stagnated.

Obscenity on this scale is hard to comprehend. When unease turns to anger we will get policy change, but not before.

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