Let them eat cake
The worrying disconnect between the top echelon of the well -remunerated, and beneficiaries was nicely illustrated by two articles in the New Zealand business section last weekend. The first, Top bosses richer than ever following big pay rises showed us how grossly inflated the pay packets of CEO’s in New Zealand have become.
Even though for many New Zealanders recent times have brought crisis, uncertainty and trauma, a pay packet of over $6 million per annum is seemingly acceptable in these circles. While the top ten CEOs got increases of 44% and 150% for the 21/22 year, the average, that includes some who saw decreases, was still a massive 14%. On a typical $2-3 m package that is a $280,000 to $420,000 increase over just one year, a year in which when many Kiwis faced serious food insecurity and lacked basic affordable housing.
Is anyone really worth $3000 an hour (40 hours a week, for 52 weeks a year)? Is each hour of the top CEOs really one hundred and forty times more valuable than an hour of low paid workers who toil to ensure our health by cleaning the toilets and hospitals wards, a care giver who looks after the elderly frail and those with challenging dementia, a nurse who serves the most difficult of patients with inadequate resources, or teachers stretched and under-appreciated in our inadequately-funded schools and early education centres?
In the second article $2b for welfare – is that our best spending choice? Bruce Cotterill begrudges an inflation adjustment to those on benefits, making out it is absurd that we pay so much to people to ‘not to work.’
It makes good headline to push reactionary buttons, but hold on, the Beehive release actually says that the package is “to cost over $2 billion, including $311 million over four years to tie increases to inflation rather than average wage rises.”
Benefits and Superannuation are automatically adjusted each year to wage increases and normally this doesn’t and shouldn’t get any fanfare. This time, unusually, wages had not risen as fast as inflation. While not legally obliged, the government increased for inflation this time and for a very good reason. An inflation adjustment is absolutely critical to ensure that living standards of those on benefits don’t plummet yet further, forcing people into ever deeper despair and poverty. But let’s contrast this minor generosity with the CEOs stratospheric rises: the actual cost of the difference between a wage and price adjustment is a measly $78m a year and worth only about $5 per week per recipient.
The new benefit data, show a sole parent with 3 kids will get $472.79 a week of core benefit, a rise of $31.80. Her Working for Families payments for her children also increase for inflation as legally required. So with one child she has an extra $40 a week. However because the increased benefit and WFF counts in the Accommodation Supplement calculation she loses $10 and maybe other additional support if she qualifies for it. She is likely to be in debt to MND to IRD and to private lenders for past deficits she has had to cover and she must meet weekly repayments- a vicious circle. An another world completely to the CEO’s helipaded-mansion, jetboat, Mercedes, fine dining, multi-million dollar existence.
Contrast her possible $0- $1560 gain per year with the invaluable work she is doing on her own to raise a child. Or take a disabled person on the Supported Living Payment who may also be looking after children, some of whom may also be disabled, or people who have lost everything including paid work in the cyclone, or young unemployed people with unmet mental health issues and lack of opportunity. Does he want them all to just starve as inflation erodes their tiny portions?
He is quite happy that the CEOs on $6m will get NZ Super at 65 as they are the deserving as ‘having paid their way’. The sole mother who raised the child without paid work who becomes the nurse that looks after him in old age has no such value:
When it comes to the welfare bill, I’m a fan of looking after those on superannuation, particularly those who have paid their way throughout their working life. They’ve worked hard, paid their taxes and they deserve their time in the government-sponsored sun.
The workers Cotterill seems to like, the nurses and teachers, are themselves often only one accident, one mistimed pregnancy, one serious sickness, one pay cheque away from hardship and a downward spiral. Cotterill completely fails to see that social welfare benefits and ACC are the only social insurance New Zealand has on which workers must depend as a safety net. They are there to reflect and enable a societal commitment to broader prosperity and humanity for all.
I have personally always been in favour of an income cap of around $2,000 per hour which would include salary, bonus, and the value of all other benefits. This amounts to $80,000 per week, or $4,160,000 per annum. This would be before tax. The after tax amount would be around $2,950,000 per annum.
That sum would be awarded annually to our prime minister actually, paid in monthly installments. Everyone else would be paid less. CEO’s would have a salary cap of $2,500,000 per annum before taxation. There would be tougher rules regarding the number of shares CEO’s could hold.
To combat inflation, the goal is not to really increase any income too much, at any level. Spikes in the minimum wage, and increases in benefits, should be monitored as well.
It is the unspoken contraction that annoys me the most when business commentators use the phrase “paying people not to work”. Work is seen as the moral line by which we judge the value of others and those who do not work are deemed unworthy of any consideration – they are relegated to second class citizen without a second thought and deemed fair game.
Now consider for a moment what the same business commentators say about inflation and rising interest rates. What they will tell you is that the labor market is too tight and it is enabling workers to push up wages and adding to inflation. Demands are made for higher unemployment to weaken workers bargaining power – the reserve bank governor stated explicitly that he wanted to see over 100,000 people lose their jobs to bring down inflationary pressure.
In other words the unemployed provide the fear needed to control those in work. This apparent contradiction in despising the unemployed and yet demanding that there is enough of them to manage wage inflation is never discussed or acknowledged. A classic example of having your cake and eating it.
Short of a bloody revolution, the 97% are completely powerless to thwart the power capitalism bestows upon 3% to set their own remuneration.
And the threat of bloody revolution in Western capitalist society has largely been nullified by bread and circuses.
It’s understandable and indeed quite legitimate to be outraged at “the CEO’s helipaded-mansion, jet boat, Mercedes, fine dining, multi-million dollar existence”, but it’s worth keeping in mind what Leon Trotsky once wrote: “The fundamental evil of the capitalist system is not the extravagance of the possessing classes, however disgusting that may be in itself, but the fact that in order to guarantee its right to extravagance the bourgeoisie maintains its private ownership of the means of production, thus condemning the economy system to anarchy and decay”.
Latest figures show 100000 children living in poverty in NZ . The only way out of this trap is education but teachers are on strike for more pay so they can do a proper job. At the same time thousands can be spent on consultants so the money must be there so who is the more important to support with our tax money.