Inequality bias from The Listener

A year ago, The New Zealand Listener editorial “On the Road Again” waxed sceptical on inequality.

…Much is made, for example, of the gap between rich and poor, even to the extent of it being the subject of a partisan documentary presented by the all-purpose television guru Nigel Latta…

Sorry Listener, and your multi-billion dollar corporate owner, but Nigel, as a psychologist, is as qualified as anyone to understand the effects of inequality. More qualified than the hordes of economists, commentators, and politicians who’ve flogged the neoliberal dream for the last few decades and turned it into a nightmare for many. His argument holds water, apart from the fact that he doesn’t seem to know that the banks create most of their mortgage lending money out of thin air.

…Thus Winston Peters proposes to help families by removing GST from essential food items (an idea previously abandoned by Labour) and assures us that the $3 billion in lost revenue can be recouped by targeting tax dodgers, as if pursuing evaders has never been tried before…

Hello? Yes, Winston has had the opportunity to deal to the tax-dodgers before and hasn’t fronted. Politicians of all stripes keep promising to deal to the thieves but—just like their mates in the rest of the OECD—when they gain power it seems to go on the back burner.

Ever wonder why?

Yes, you’re correct. Follow the money.

I disagree with Winston about the GST (VAT), I suspect that scheme would be counter-productive, but the recouping of tax is another matter. It’s estimated that at least $5 billion in tax is evaded every year in this little country and when you add the legal evasion (a.k.a. minimisation) by the likes of Apple and Google the actual figure is probably a lot higher.

This editorial was not inaccurate, but it only told half the story. For instance, when pointing out that the top 15% of earners pay more tax than the bottom 60%, there’s no mention of total income figures for either group, so the statement is meaningless. No mention of the subsidisation of the rentier class by the middle class. Nothing about the “middle class welfare” that John Key conveniently forgot about once elected.

Watch Nigel Latta’s TV1 report, The New Haves And Have Nots, for yourself and tell me which part of it is wrong.

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Two other must watch videos on this subject:

Inequality hurts the rich too

Richard Wikinson’s TED talk right here on Alan’s Fridge Door.

Here’s an international view:

Mind the Gap

Bryan Bruce’s excellent TV3 documentary on Inequality in New Zealand: Mind the Gap.