Anthony Robins has posted an unusually detailed economic analysis in Inequality – Treasury report – not his usual style at all.
Last week Treasury came out with a detailed and interesting report, Inequality in New Zealand 1983/84 to 2013/14. The web page is here, and the full document (pdf)here. From the summary:
The results indicate an increase in the inequality of market and disposable income per adult equivalent person (using the individual as the unit of analysis) from the late 1980s to the early 1990s. Subsequently, inequality has – with some variability – remained either constant or has fallen slightly.
It wasn’t widely reported. What coverage there was repeated the message of the The New Zealand institute, that inequality is supposedly not rising.
Dig beneath the surface however.
Someone has certainly done some digging.
One could almost suspect he could have help from his local MP, who happens to be the Opposition spokesperson for economic development and small business. But they say at The Standard that authors only ever post their own personal opinions without any party or Parliamentary input.
As we all know inequality increased sharply with the neoliberal reforms of the late 80’s – early 90’s. From the report:
It appears that the 1980s reforms – involving cuts in the top income tax rate along with benefit cuts and the ending of centralised wage setting [i.e. the ECA] – are associated with increasing inequality.
The measures level out (damage done) during the late 90’s. They begin to fall with Labour’s increase to the top tax rate in 2001, and Working for Families in 2004. The momentum of this fall continues until 2010, when there is another sharp upturn in inequality following National’s reduction of the top rate and increase in GST.
In short, the last Labour government acted to reduce inequality, the current National government has acted to increase it. Because of the slow (but cumulative) nature of such changes, it is almost certain that the full effect of National’s changes have not yet been measured.
In short, Labour good, National bad.
But there’s an unequal post by David Farrar at Kiwiblog – Despite the rhetoric, inequality not increasing in NZ – this looks at the Stuff article that Robins tried to refute.
New Zealand needs to “change its tune” on inequality, think tank The New Zealand institute says.
The group, which is supported by many leading business people, made the call following the publication of a Treasury paper which found inequality in this country has, with some variability, largely remained constant for the past 20 years. …
The new Treasury report acknowledged inequality in this country did rise from the late 1980s to the early 1990s. But it said that since then inequality had – with some variability – remained either constant or had fallen slightly. (Read the report in full here)
In a statement on Friday, NZ Initiative head of research Eric Crampton said “New Zealand simply has no problem of rising inequality”.
In contrast, income inequality had risen in may parts of the world and New Zealand seemed to have imported the narrative that the gap between rich and poor in this country had been widening to the same degree.
“The most striking finding in the latest Treasury work is that inequality in consumption is lower than it was before the reforms of the 1980s. While salary-based measures of income inequality have not declined as dramatically, a lot of work ignore the fact that the tax and transfer system already works to equalise incomes,” Crampton said.
“In the end, it’s consumption-based measures that give us a better picture of real differences in how people live.”
So when you take account of the tax and welfare system, there is less inequality in NZ than the early 1980s when for some bizarre reason socialists hark back to as a golden era.
There’s lies, damn lies, statistics, economic analysis, bloggers and political proxies.