Entry 1266, on 2011-02-07 at 16:44:33 (Rating 3, Comments)
I just read an article titled "Wealth gap divides nation" which stated that recent commentary and surveys showed that New Zealand is one of the worst performing countries in the developed world in terms of the gap between rich and poor. A survey, conducted by Horizon Research, showed increasing resentment from the "have nots" for what they perceive as government hand-outs to the rich, while the rich also increasing resent the poor.
The recent tax cuts did almost nothing for the poor, very little for the majority, but were a massive boost to those who already have the most. No wonder those who are worse off while watching the top earners get even more are becoming more outraged at current government policies.
And many of those getting the highest incomes are complaining about the drain those on welfare put on the economy. And they do have a point. In a simplistic sense those people are a drain and do contribute little to the traditional economy.
So there seems to be increasing inequality in New Zealand society and that is leading to an increased gap between rich and poor and that, in turn, is leading to resentment and anger.
Supporters of tax cuts and other assistance for the rich generally give two justifications: first, that the rich drive economic growth and tax cuts will produce more growth which will help everyone; and second, that the rich work for their money and deserve to keep more of it.
The "trickle down" theory that helping the rich will also help the poor has had a poor track record. That was one of the key ideologies during the 1980s when New Zealand went through its great economic transformation and it was then that inequality rose faster here than in any other country in the world. So much for that argument!
The "they deserve it hypothesis" isn't much better. Do they really? Who says so? The common statement is that the "market" gives people the salary they deserve but that's a rather circular argument (at best). They deserve it because they get it and they get it because they deserve it? That's supposed to be an argument?
If we want a truly free environment then let's have one where the oppressed can use the influence they have too. I would suggest armed rebellion might be an appropriate action (just making a rhetorical point, I don't really condone violence). After all, stopping that sort of behaviour is just government interference isn't it?
My point is that every "free market" and "open economic environment" isn't free or open at all. The free market is an environment designed by humans and enforced by governments. There's nothing more natural about it than any other political-economic system. It just happens to be the one which is dominant at the moment (to a large extent because large corporations which benefit from it have a lot of political power).
So we could easily choose a different system instead. I would suggest a "fair market" as an alternative. That would involve rules where financial systems are used to support greater well-being for the people rather than the other way around. It would ensure that the difference between the poorest and richest never exceeded a mutually agreed amount. And if someone wants to make more money they will be taxed heavily and the proceeds re-allocated to a worthwhile cause such as medical research or the arts.
What is the point of having a strong economy (under the current definition of the words strong and economy) if the vast majority are losing because of it? And what's the point of growing the economy if it results in more pollution, hazards related to global warming, and destruction of the environment New Zealanders supposedly consider really important? And what's the point of encouraging investment when the end result is profits disappearing overseas, lower quality services, and wages and conditions being driven down?
There's nothing fundamental or intrinsic about what we currently call free markets. There's no inherent advantage to them. The rich get rich because they know how to manipulate the system, not because they are superior in any other ways. Many poor people make a greater contribution to their society than the rich. Many poor people work harder than the rich. The reason we have inequality is not primarily because some people are just "hopeless" (although some are) - it's because the system just doesn't work. We need to change it. Now.
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