Spiralling Inequality Proves National Not To The Left Of Labour – But Someone Arguably Is…
As some may be aware, New Zealand First’s official stance as applies David Seymour is to disregard the vast majority of what he says, on grounds that he is often axiomatically wrong. I’d previously considered this a bit overly partisan – even for me – noting Seymour’s strong contributions on both euthanasia and state compensation for those wrongfully imprisoned … but reading this weekend’s David vs Jacinda column, the reasoning for such a de-rigeur default position of disagreement with him suddenly snapped into incredibly harsh relief.
In Sunday’s piece, Seymour makes the utterly bizarre contention that National is, at present and in its modern form, to the left of the Labour Party. Now to be fair, this has historically been true on some occasions – in 1990, for instance, National campaigned on *rolling back Rogernomics* (before betraying the nation with Ruthanasia); and when it comes to the superannuation debate, we can sensibly argue that Labour’s previous advocacy for raising the retirement age placed it somewhat to the right of National’s (and New Zealand First’s) insistence upon maintaining it at 65.
But none of this exculpates Seymour’s assertion from being anything other than manifestly counterfactual.
The key piece of evidence which Seymour advances in attempted substantiation of his claim is that we’ve witnessed a shift in our nation’s tax base, which National are boasting about. Specifically, we now have a situation wherein the top ten percent of income earners in New Zealand pay more than thirty seven percent of this country’s income tax. And on the face of it, I guess you could naively presume that shifting the tax burden up the income-ladder so that the more well off pay more tax means that there’s some sort of deep and abiding commitment to progressive taxation up there in the Beehive these days.
Except there isn’t.
If anyone cares to remember, in 2010 the National Party made some fundamental alterations to our tax system – but they didn’t exactly make it more progressive. In fact, quite the opposite. They DECREASED tax rates for the wealthy, while INCREASING the regressive GST which we all pay (and which consumes proportionately more of lower income earners’ wages, because we don’t and can’t save as much). It also put a hole in the government’s books which has so far consumed somewhere over five billion dollars (there’s an approximate cost of $1.1 billion dollars a year in foregone revenue for the new tax levels) – but we’ll leave that aside for the moment.
So if National decreased the proportion of their income which the wealthy pay in taxes … but the proportion of income tax paid by the wealthy has noticeably increased over the last seven years, then there’s presumably one very obvious explanation for why this has occurred.
It’s simple – rising (indeed, skyrocketing) economic inequality.
How else could rich people who’re taxed less wind up paying more of our taxes, unless either i) they were making a lot MORE to be taxed on in the first place; and/or ii) the other, ‘bottom’ 90% of us were making so much less as to cause a noticeable drop in the share of tax that we’re paying.
And indeed, National’s own figures appear to somewhat bear this out. There’s been something like a twenty percent drop in the share of the nation’s income tax paid by the bottom 30% of our workers – which further substantiates the idea that those at the bottom of our economic pile are earning even less than before.
Indeed, given the bottom 42% of New Zealand households apparently require more in benefits, tax credits and other economic support measures than they pay out in taxes to be able to survive from day-to-day and week-to-week, it seems pretty resoundingly clear that the rewards for any slow pickup in economic growth are being DECIDEDLY unfairly distributed.
All of this fundamentally undercuts Seymour’s suggestion that National is noticeably or markedly to the left of Labour. For all its faults, it would appear fairly blatantly obvious that the last Labour Government didn’t preside over a situation of income inequality this bad.
Although one further item caught my eye.
Seymour cites John Key’s 2008 criticism of Labour’s last term in government being “communism by stealth”.
But when we think back to the sort of policies which might have earned Labour that particular sobriquet, I’m not entirely sure how many of them were actually Labour’s at all.
Consider: the 2005-2008 Parliamentary Term saw Labour and New Zealand First working together – during which time, we enacted such key and essential NZF initiatives as renationalizing several hundred million dollars worth of formerly private enterprise (in order to create Kiwirail); raised the minimum wage by an unprecedented amount (something like a dollar a year – while also effectively abolishing youth rates); opposed pernicious foreign trade deals; and delivered substantial personnel increases to both a key state service (the NZ Police) and a Ministry bureaucracy( MFaT).
So really, when you get right down to it, what the Neoliberal Right of New Zealand politics were seeking to criticize about the last term of Labour when they derisively referred to “Communism by Stealth” … was actually New Zealand First core policy (meaning if there’s anybody whom Seymour should be criticizing for having a track-record to the demonstrable left of Labour … it’s probably not National, but instead New Zealand First).
This theme was continued during the last Parliamentary term when a certain Government Minister (none other than Peter Dunne, if memory serves) referred to Winston as “The Hugo Chavez of the South Pacific” for the economic agenda which we wished to push forward from 2011-2014.
At the time, I took it as a bit of an unintentional compliment.
In any case, and all things considered … Seymour probably isn’t the person deserving of scalding scorn and opprobium here. He’s being a bit contrarian in pursuit of a headline and rather intellectually disingenuous in pursuit of getting his point across. ‘So what’, I’m tempted to say. That’s basically what he does – and it’s mostly harmless in this instance, because the only people who’d possibly take him seriously in his assertions are those who’d presumably never dream of voting for Labour anyway (except in 1987 – when the Reds came perilously close to winning Remuera).
Instead, if you’re feeling any considerable ire over this (and really, you should be) … then it probably and presumably ought to be targeted squarely at Steven Joyce and the rest of the National Government.
Not only have they created and presided over a situation of seriously escalating economic inequality in this nation … they have the utter temerity and arrogance to brag and boast about it as if it’s a key hallmark of ongoing economic progress. Madness!
There’s nothing wrong with operating to the economic left of Labour. But it seems fairly patently obvious that that’s not what National are doing. If there’s any dyed-in-the-wool Cold Warriors out there in the audience, they may perhaps choose to disagree – but running a fairly broadly social-democrat economic policy is not supposed to substantially increase inequality by benefiting economic elites at the expense of just about everyone else.
That would be the economic creed of the Right Wing that Seymour’s thinking of.
Not instead of. In addition to. The chump-change income taxes grow as does the capital wealth which is largely untaxed, as well as trust income which is counted fictionally as if it is a separate individual. The wealth gap is thus hidden in part by the vagaries of the taxation structure. Sorry, Andrew, you are still wrong. Actually more wrong.
“Wealthy” farming family? What makes you think they were, or indeed still are, wealthy?
We need some assurances of Quilty control. That if Winston says one thing and does something else after an election that there’s a mechanism in place that will give him the chop but also that pre election promises no matter what the hurdle can be over come.
Andrew, because the proportion of income tax paid by the top percentile is rising we can deduce one of two things. Either the top income earners are getting richer or the rest are getting poorer. Or both. No other explanation lends itself.
The cosmetic changes to taxation are expunged and much more beside by the runaway house prices, while the cosmetic changes you mention are easily avoided and have had absolutely no impact on proportional income which have largely benefited from the share and real estate prices which may or may not prove to be bubbles.
Your rhetorical proposition at the end of your contribution is not on the table and is therefore barely worth referencing, but it has been well established that a less unequal society is a happier society – even for the rich.
Easy to parrot, Gosman, hard to prove. Unexplained statistics are easily manipulated to justify just about anything. But what can be asserted is that if your income remains the same, but rents go up, you will be just as surely sleeping in a car whatever is happening elsewhere in society.
that’s funny Gosman USA people rated income inequality as there main issues your flat issue is way out of kilter just like our govt
“when it comes to the superannuation debate, we can sensibly argue that Labour’s previous advocacy for raising the retirement age placed it somewhat to the right of National’s (and New Zealand First’s) insistence upon maintaining it at 65.”
I struggle to see how this is a left/right issue, any more than something like drug law reform is a left/ right issue. There are a number of sensible arguments for raising the retirement age. People are living longer. Many are fit and healthy enough at 65 to continue working full time, and would prefer to, and arguably don’t need income support from the government until later in life.
Whether it kicks in at 60, 65, or 70, superannuation is a UBI for older people only. A left wing answer to this would be to bring in a UBI for everyone. Campaigning on keeping super at 65 (why not back to 60?) is not a “left” policy in any meaningful sense of the word, it’s just a way of handing out free beer to voters close to retirement at the public expense, for the benefit of NZ First’s share of the vote.
PS Gosman – I’ve missed you. Brave and provocative despite all the rotten tomatoes. Bless.
Easy to be provocative when all your comments are single line remarks that carry neither justifications nor explanations.
It doesn’t feel that way.
Maybe not ‘spiralling’; more like spilt milk on a tilted playing field? (To use that good ol’ management speak beloved of the comfortably conformist.)
Too much over-promise and under-deliver by the ‘Great and Good’ for certain sure, though.
Nick is wrong,
And Gosman is just being gosman as always!!! off its head.
We are “living beyond our means” now!!
The fiat system cannot survive on as negative interest policy nor can capitalism as it is based on someone else pays and is disadvantaged so I back you entirely CASTRO and leave the other Right wing zealots on the end of the plate.
Fiat Money -Toilet Paper Money
http://dailyreckoning.com/fiat-currency/
The history of fiat money, to put it kindly, has been one of failure. In fact, EVERY fiat currency since the Romans first began the practice in the first century has ended in devaluation and eventual collapse, of not only the currency, but of the economy that housed the fiat currency as well.
Like, “what have the Romans ever done for us, eh?…..”
You raise an interesting point Castro.
Certainly economic nationalism is more a Left position, wanting the best possible outcome for poorer people; but it depends how much of the picture you are looking at.
Small businesses in the States may support Trump with his brand of economic Nationalism in the hope that if they stop buying from abroad the jobs will come back home. This would, perhaps be true if you could actually make that happen. The problem is – and we know this all too well in New Zealand – if we did the same thing they are imagining, we would be bankrupt in a couple of months because we are way closer to the reality that we trade – and by that I mean with the outside world – or die.
The argument from Globalists is not “hey let’s do this trade thing, stuff poor people and laugh all the way to the bank”. In fact, if they think about poor people at all, they are imagining that globalisation and trade liberalisation should help poor people. Why? Because it increases the volume of actual trade and therefore grows the pie.
You can certainly see that the middle class in China has grown directly as a result of globalisation, so there is a little truth in the idea.
The problem is that the further down the food chain you go, the less advantage is obtained until at some level the whole thing is a complete disaster with stagnant or disappearing wages as more and more of the profits created by the forced move to greater efficiency that globalisation causes, is naturally concentrated more and more in the hands of the most successful traders and those best placed to take advantage of a growing pot of money: investors who already have money to use, professionals in short demand, owners and executives of successful, probably larger businesses etc.
None of this denies, though, that globalisation does increase actual trade flows. The trick is to find a way of sharing the advantage more equitably rather than simply slaughtering the golden goose. (And eating it today then fasting tomorrow). To say nothing, of course of tghe environmental consequences of an obsessive pursuit of greater trade volume.
It is a problem, though possibly not insoluble. It would be less of a problem if the largest, wealthiest economies could see enough of the picture to see the link between trade and national (potential) wealth, poverty and the environment. If only they could see what we can all see here in New Zealand….oh, no sorry…if it isn’t even obvious to us here, as it clearly isn’t, what hope of avoiding the spirit of Brexit spreading on and on until the anti-trade damage reaches New Zealand. Then we’ll maybe see what real poverty looks like.
My point, I guess, is just that if things were as simple as some here would claim, there would be a blueprint for paradise on Earth already.
The challenges are genuinely demanding. To deny that is to pursue a fantasy.
So true Curwen. Economic inequality has always been the plan from day one. But these guys forget the further it goes. The more dangerous things get for the elite.
As Robert Reich has said inequality can only go so far before one of two things. One society crashes together ie basically war. Or two they splot apart and live in two different worlds with ghettos created. This is where we are going at the moment. I think these guys need to look more carefully at what they are creating…