Why relative poverty matters too

Phil Chitty is puzzled. In his letter to The NZ Herald (Dec 27), he writes of seeing poor children scavenging for food in piles of rubbish in Bangladesh and asks the same question that has been on many people’s minds: how can so many of our Kiwi children be classified as poor when they clearly don’t suffer the same levels of deprivation as kids in the developing countries.

Jamie Whyte, former leader of the Act Party, in his comment for The New Zealand Herald (Jan 7) writes: “ There is no poverty in New Zealand, Misery, depravity, hopelessness, yes; but no poverty….”

We know, nationally, requests for basic food parcel aid has gone up by seven per cent. Government’s own figures show that 8% of our children live in “severe deprivation” based on measures such as inability to live in a warm house, inability to avoid rent and utility arrears, or replace worn out clothes.

Let’s not forget that if it was not for organisations like Salvation Army, Food Bank and City Mission, we could very well see more people scavenging for food in rubbish bins than we see now (yes, it happens even here).

Although extreme poverty is real and exists in New Zealand, it is true that not all children classified as “poor” (nearly one in every 3) necessarily suffer from the same levels of deprivation seen in the developing countries such as Bangladesh.

In New Zealand, as in most developed countries, poverty is measured relative to 60% of the weekly median income. The question remains: why measuring relative poverty matters when it does not necessarily relate to hardship the way absolute poverty does.

The answer is that, unlike in the developing countries, the main driver of social dysfunction in the developed countries, is the level of inequality within the society, not the economic growth.

Measuring relative poverty matters because it gives an indication of the inequality that exists within the society.

British social epidemiologist, Richard Wilkinson, writes: “As we looked at the data, it became clear that, as well as health and violence, almost all the problems that are more common at the bottom of the social ladder are more common in more unequal societies”.

Wilkinson’s data analysis showed that regardless of how rich a country is, more unequal societies produce lower scores across all important social indexes such as: life expectancy, children wellbeing, obesity, mental illnesses (including drug and alcohol addiction), involvement in community life, levels of trust (believing that most people can be trusted), imprisonment (proportion of population in prison), teenage births, homicide, child mortality rates, and social mobility.  

The interesting finding is that, in rich market driven countries, there is no correlation between GDP per capita and any of the factors above.

It appears that, general social dysfunction is closely linked with inequality within the society; and it is not just the poor that are affected by it.

At each level in social hierarchy, from education to general health, there seem to be benefits in living in a more equal society. But why is that?

Wilkinson believes that the reason lies in the psychosocial effects of inequality.

Feelings of superiority and inferiority, dominance and subordination, valued and devalued, respected and disrespected are all closely linked with our social status and where we perceive ourselves in relation to others.

Capitalism has manufactured a consumerist society through encouraging status competition that, in turn, creates status insecurity.

Our sense of self-worth and self-esteem is closely linked with our social status.

Social media, such as Facebook and Instagram, put us at more competition with each other than ever before.

We worry about how we are judged and perceived by others. We stress about how attractive, thin, clever, fit, healthy, young or successful we appear.

The affects of chronic stress from social sources, on cardiovascular disease and lowering immunity systems, are well researched. This explains the link between poor health outcome and inequality across the social hierarchy.

Research has also shown that antisocial behaviour in children, which sometimes becomes irreversibly embedded in their personality as they grow up, is a psychological barrier to feelings of exclusion and inferiority that is more prominent in unequal societies. This is why more inequality leads to more violence.

New Zealand has one the fastest rates of growing income inequality amongst the OCED countries. That makes us all vulnerable because growing levels of inequality threatens to destroy the social fabrics of our society.  

On Christmas day we woke up to find that all 4 wheels of my in-laws’ car were missing. The car apparently had low profile tyres making them more desirable.

I couldn’t be sure, of course, but the chances are that it was not absolute poverty that motivated this crime, but an industry that thrives on the appetite of its consumers for higher social status.

Neoliberal values have manufactured a false paradigm that links material possession and wealth to higher social status.

Mass tagging of fences, acts of mindless vandalism, violence and, many other anti-social behaviour, are all expressions of social ills that are rooted in inequality.

Even, the rising levels of terrorism, in the West and elsewhere, can be traced back to feelings of disfranchisement and low self-esteem that are prevalent in unequal societies.

It is no wonder that Obama called inequality “ the defining challenge of our times” while Pope Francis called it “the roots of social ills”.

Inequality, because of its link with increased consumerism, also affects our environment and the fight against climate change.

So what can be done to close the income gap and create a more equal society?

Many would argue that it is individual bad decision-making that leads to poor social outcomes.

Whilst it is true that plenty of people are able to achieve social mobility through positive decision-making, experts tell us that, human beings have deep-seated psychological responses to inequality and social hierarchy that greatly influence our self-esteem and the way we interact with and treat each other.

It is therefore, our policy makers’ bad decision-making that fails to reduce the differences between our incomes that leads to poor social outcomes for us all.

We can ensure more people fall above the threshold of relative poverty by transferring income from the very high end of the income scale to the lower end through a range of policies like progressive taxation, stopping tax avoidance, and tax credits for the rich, limiting executives’ obscene salaries and bonuses etc.

The sad sight of my in-laws’ humble car, resting at an angle on a plank of wood without its wheels on Christmas day, is a sobering reminder of our increasingly divided society where we care less for each other.

If we don’t want to end up living behind gated houses and are serious about tackling poverty, we need to push our Government to priorities tackling inequality above achieving artificial budget surpluses and economic growth.