Inequality is not inevitable, nor is it good for anyone – so what do we do about it?

16 Dec

Inequality in New Zealand has been a focal point of discussion in the media over the past couple of weeks, following the release of an OECD report, which, among other things, found the income gap inNew Zealand to have grown faster over the past three decades than for any other developed country. This measurement only looks at income, and were actual wealth, including land and other assets, to be analysed, in all likelihood it would reveal even greater levels of inequality inNew Zealand.

Meaningfully confronting inequality in New Zealand will involve some deep reflection and difficult discussions for New Zealanders. For a country that once prided itself on its egalitarian values, this is clearly no longer the case. While there is a lot of rhetoric spilling from politicians about tough times, and fiscal responsibility, and while much of the public seems content to follow along with this, what it really comes down to at the end of the day is priorities – whether or not New Zealanders are prepared to value all members of society and the contribution they make to it.

Fortunately, there are more enlightened groups globally that are providing evidence for the case to prioritise reducing inequality and further provide a framework for doing so. In September this year a summary of an international high level round table discussion on inequality and social justice was released by the Institute of Development Studies (IDS) in conjunction with the Millenium Development Goals Achievement Fund (MDG – F). This elevenhoursahead entry seeks to highlight key points addressed in the report that ought to form part of discussions on inequality and poverty in New Zealand.

Firstly, the report highlights the relationship between inequality and poverty, that is, inequality is both a cause and an outcome of poverty. Despite the Prime Minister’s recent dismissal of poverty in New Zealand, asserting that as ‘there is no strict measure of poverty in New Zealand it becomes subjective’, there is clear and irrefutable evidence showing that considerable hardship and indeed poverty is being experienced by a sizable number of New Zealanders. This can most clearly be seen in the well-being (or lack thereof) of our children.  On three measures of poverty, where poverty is defined as having a day-to-day standard of living or access to resources that falls below a minimum acceptable community standard, a considerable proportion of New Zealand children live in poverty, and in one measure finds as many as 1/4 of New Zealand children living in poverty (For more information see CPAG). Furthermore, children inNew Zealand are suffering from preventable diseases such as rheumatic fever, skin infections like scabies and respiratory illnesses – conditions that have been almost eradicated in other developed countries, but due to poor living conditions continue to prevail inNew Zealand.

Another point highlighted in the roundtable discussions was that the effect of inequalities accumulates overtime, leading to greater inequality. Illustrating this point, the report reveals that a child born into a family in the 20 per cent lowest income groups, compared to a child born in a family belonging to the highest 20 per cent income groups is:

• 3 times more likely to be underweight,

• 2 times more likely to be stunted,

• 2 times more likely to die before her/his fifth birthday.

Additionally, children who do not receive adequate nutrition early in life can suffer from permanent impairment to physical and cognitive development. Hence, unemployment and continued experiences of poverty and hardship, and even crime, amongst groups of people whose lives have developed out of poverty should not be so surprising. Nor should they be seen solely as an individual failing for a third point raised in the IDS/MDG-F report is that inequality and poverty are not inevitable but rather socially produced.

This point is cause for deep concern and regret; how is it, or perhaps more perplexingly why is it, that we, as a society have allowed the current situation to occur in New Zealand in which children are going hungry and getting sick from preventable diseases, and large numbers of the population are struggling to get by on a day to day basis (in a survey by Statistics New Zealand half of New Zealanders report they have ”not enough,” or ”just enough” money for food, clothing and housing) while others are amassing even greater billions during an economic recession.

This is not a matter just for the ‘poor’. In addition to strong moral reasons why we should be concerned with poverty and inequality, as was investigated in The Spirit Level, and reiterated in the September roundtable discussion, poverty and inequality not only affect the poor, but impact on society as a whole, even the wealthy. For those that don’t feel inequality is something they need be concerned with, the report provides a number of reasons why inequality matters and why everyone ought to be concerned with addressing it:

  •  More equal distributions of income are not antagonistic to but supportive of sustained economic growth;
  • High levels of inequalities can impede economic growth by reducing productivity and lengthening the period before recovery of growth resumes after downturns, inhibiting the evolution of economic and political institutions of accountability, and undermining civic and social life that sustains effective collective decision-making; and
  • Reducing inequalities can foster political stability and reduce the chances of conflict
  • Moreover, reducing inequalities is central to promoting fairness and social justice and enhances human dignity, self-worth, and fosters inclusive, active citizenship.

 Given that society has created inequality and poverty, then fortunately, society also holds the solutions for redress and there are some societies, such as Brazil, that are already on this path. How then mightNew Zealandbegin to meaningfully address inequality and improve the well-being of all in our country? A number of opportunities for reducing inequality were provided by the roundtable discussion. These include:

  •  Strong social protection and social spending programmes
  • Progressive and redistributive forms of taxation
  • Strengthening the resource base of marginalised groups and facilitating their active involvement in policy processes
  • Developing political intention and action around reducing inequalities – (governments need to prioritise reducing inequality in New Zealand)
  • Redistribution of power challenging entrenched vested political and economic interests

Some will undoubtedly resist some of the approaches listed above, such as changes to the tax system, and greater input into social spending and protection programmes. It should be considered, however, whether those that will likely be captured for greater contributions (i.e. pay more) in a revised tax system were ever entitled to the money in the first place. For one, the current tax system is highly flawed and has failed to tax a great portion of wealth. As economist Gareth Morgan has noted, “net worth individuals were now paying very little tax and a whole industry of tax advisers, accountants and lawyers were earning livings out of inconsistencies and loopholes in the various systems in place now”.  Additionally, the present systems fails to properly value the contributions of a great many who educate and care for our communities, and keep it safe and functioning, for example home-based carers, rubbish collectors and office workers, and at the same time provides grossly disproportionate payments and incentives to others. This is, in my opinion, beyond justification to anyone with any moral sense.

The reality is that in New Zealand we have enough resources for everyone to live free from poverty and with access to good health and education, proper nutrition, the opportunity to contribute positively to society and to live with dignity and respect. It is simply a matter of priorities, and requires New Zealanders to stand up collectively to make sure the government puts measures in places to ensure these outcomes are realised.  When this occurs, we will all benefit.

Laura Barrett

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One Response to “Inequality is not inevitable, nor is it good for anyone – so what do we do about it?”

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  1. Charter schools « elevenhoursahead - January 22, 2012

    […] recent elevenhoursahead blog post illustrated that increased inequality has a direct correlation to increased poverty. If these […]

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