When I went on television to launch my new book about wealth inequality in New Zealand, I didn’t expect much of a backlash. The core of my book is straightforward information: new data showing that the wealthiest 10th of New Zealanders own more than half of all assets, while the poorest 50% have just 4%.
My book fires no angry salvos at the affluent, calls no-one to the barricades. It simply presents some facts about who can enjoy the opportunities and benefits that wealth brings. And it links us into a growing international discussion about wealth.
Best-selling French economist Thomas Piketty has brought the issue centre stage in his discipline; Berkeley’s Gabriel Zucman is exposing wealth hidden in tax havens; Columbia University has a whole centre dedicated to “the study of wealth and inequality”.
Looking at wealth is an orthodox and increasingly important activity.
So I was a little surprised to find that only a couple of days after my book’s launch, I was described on social media as “consumed by hatred”. Others labelled me a “dangerous communist” and a “depressive leftie”.
Why this response? Some people find any focus on wealth and the wealthy unsettling. Most of the talk to date about “inequality” has actually been about poverty, the problem of the poorest families falling behind the middle.
Inequality is also about the most affluent households pulling away from the rest. This matters because the two trends are connected: we can understand poverty only by understanding affluence.
Wages are so low because in the last 30 years the workplace balance of power has shifted away from salary earners and towards the owners of capital, such as shareholders, investors and banks, allowing them to take a growing share of company income. The average New Zealand working person earns $10,000 less than they would if they had kept their early 1990s share of income.
Similarly, our benefits are much lower than those in other countries – for single people they replace just a third of the average wage, whereas in the Netherlands that figure is 70%. That is partly because we don’t generate enough tax revenue from our wealthiest citizens.
We don’t tax wealth, gifts, inheritances or, except in limited circumstances, gains made from selling assets. That stance is justified by the idea that allowing some people to become very wealthy is the best route to raising incomes for all. So just as a seesaw makes no sense if we look only at one end of it, neither can poverty be understood without considering both ends of the spectrum.
For some people, these facts are confronting. While poverty can be “othered”, or held at a distance, talking about wealth forces people to see inequality, in Linda Tuhiwai Smith’s words, as “a whole-of-society problem”. They have to consider their own position of power and privilege.
Some find that deeply uncomfortable. Hence their attempts to deflect attention from the issue itself and shift the debate into the arena of abuse. Those attacks degrade the debate, turning off people who would like to get involved in political discussions but shy away from such abrasion.
Wealth matters because it lends stability and security to our lives; it is something to draw on when times are tough, a foundation that allows us to plan for the future. It is concerning that half the population is largely shut out of those benefits.
Most people who become wealthy in New Zealand have worked hard, but they have also drawn on what we might call a common pool of resources, driving on roads we all paid for, passing information through government-funded communication networks, employing a workforce educated at everyone’s expense.
If that common pool is to nourish future generations, it needs to be replenished, and that replenishment may well have to come from those who have drawn from it most liberally.
We need to be able to discuss these issues, calmly and rationally, because we are seeing patterns of wealth which we struggle to understand, like the emergence of a young, monied elite whose inherited wealth is highly visible, while many other young people are being locked out of home ownership by soaring house prices.
If we can’t talk about these issues, we have little chance of knowing how to respond to them – and we will become ever more isolated from the growing international debate on wealth. For either of those things to happen would leave New Zealand all the poorer.
- Max Rashbrooke’s Wealth and New Zealand is published by Bridget Williams Books.