Known knowns in the inequality debate

Inequality in New Zealand is shaping up to be the number one issue of this election year, and both the political left and right are firing their rhetorical bullets. Bryce Edwards provides a good review of some of these arguments here, noting in particular how the right have become much more concerned with the issue over the past months. This is surely a good thing.

An article by Brian Easton in the Journal of the Sociological Association of Aotearoa/New Zealand is particularly engaging. Easton is somewhat critical of Max Rashbrooke’s new book ‘Inequality: A New Zealand crisis’, alleging, somewhat cruelly, that Rashbrooke ‘recalls the story of the drunk who uses a lumppost for support rather than illumination.’  I will summarise the main point below.

Inequality is important for multiple reasons, and Easton cites 4:

Equity: Inequality is generally considered morally, yet a common view is that some inequality benefits the poorest. This does not, however, tell us how much inequality is ideal.

Plutocracy: Under conditions of great inequality then those at the top have an unfair influence in the direction of the governing of society, undermining the claim of a democratic society. Easton notes that this is issue is sharper in America and Britain than in New Zealand, however we must here pay more attention to the influence of offshore actors.

Efficiency: Borrowing from Wilkinson and Pickett unequal societies are generally suggested to have poorer social performance. They cite issues such as drug and alcohol use, infant mortality, educational performance, homicides, imprisonment rates, life expectancy, mental illness, obesity, social mobility, suicide, teenage birth rates and trust.

Macroeconomic Argument: It has been argued that financial instability (such as the GFC) was a result of increasing incomes among the richest in society being saved and lent to those below for housing purchases and subprime mortgages. Easton suggests that this does not apply to the New Zealand situation.

Household Income Equality

 

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