Grant writes off Max Rashbooke’s book, and indeed all concern about inequality, as “the zero-sum fallacy; the idea that there is a set amount of cash in the economy.”
This is one of the worst straw man attacks I’ve seen in a while.
In fact, Rashbrooke et al understand better than our government that money is a relative measure, only meaningful insofar as it represents access to wealth/resources. It doesn’t matter how much total cash there is in the economy… what matters is:
a) how much resources/wealth there are in the economy, because that’s what determines how big the pie is.
b) how much cash you have in relation to others, because that’s what determines how big or small your slice of the pie is.
Total cash doesn’t affect the pie at all (if it did, Zimbabwe would be the richest country in the world).
Total cash and total resources are not ‘zero-sum’ phenomena. But percentage of access to cash and resources is (that’s the whole point of a percentage – it always sums to 100).
Rashbrooke (and, like, actual evidence and stuff) are concerned with inequality because when one person’s percentage of cash goes up, someone else’s ability to access available resources necessarily decreases. And when that’s too unequal (even when the pie’s huge) it causes numerous health and social problems across the whole society.
Grant is the one guilty of a fallacy: the idea that money is an absolute, not just a relative measure; so if there’s more total money in an economy, that automatically means there’s more wealth/resources available to people. This is more than just a fallacy, it’s a properly religious phenomenon – idolisation of money.
Post-script – extra responses to a few of Grant’s stupidest comments
“There’s no evidence that rising social and health problems are a result of income disparities.”
I’m actually astonished to see this much wilful blindness, even in corporate media. Huge amounts of research – very widely available – offer compelling evidence that inequality causes many social/health problems – from murder to community breakdown to high teen pregnancy rates. A journalist doing their job would acknowledge this evidence even if they disagree with its analysis. Grant doesn’t indicate whether he disagrees, whether he’s ignoring it, or whether he doesn’t know it exists … he simply says there’s “no evidence.”
The fact that the next sentence peddles an evidence-free stereotype (“Poor people get diabetes because they eat junk food, not because Sir Peter Jackson is rich.”) is the icing on the bullshit cake.
“Key to the inequality fantasy is that New Zealand is a neo-liberal rich-man’s paradise but the facts do not support this. Bill English said… [bla bla bla] Half the population are net beneficiaries.”
He goes on to uncritically parrot Bill English’s dishonest press release that I addressed a couple of blogs ago. If Grant was doing his job as a journalist and applying some critical thinking, he’d realise English’s figures show the opposite of what he claims.
Grant thinks workers should be grateful for being “net beneficiaries” of state assistance… grateful for a situation where their subhuman wages mean they don’t contribute much to the tax coffers, let alone to their own families, and Working for Families subsidises their employers to keep paying these sub-human wages. How much more grateful should the rich be for being “net beneficiaries” of a system that facilitates and supports such grossly unequal wealth?
“Economic growth is driven by innovative entrepreneurs adding to the total economy. They sometimes become rich by retaining some of the extra wealth they created.”
I don’t even know where to start with this statement, except to note that it’s pure ideology. He equates economic growth with ‘wealth,’ ignoring the fact that economic (GDP) growth doesn’t just include productive, wealth-producing activities, but destructive ones like crime, pollution and credit card debt. And he simplistically suggests ‘wealth’ is created by “innovative entrepreneurs,” rather than by the contributions of all workers; those who’re given the opportunity to utilise their creative/innovative skills, and those who aren’t.
The next sentence, where he uses a doctor as his archetypical example of a rich wealth-creating entrepreneur, reveals his ideological assumption that the rich become rich by doing good for the world. A better example of the very highest income earners would be a currency trader who makes much more than a doctor by producing nothing, just manipulating pieces of paper and numbers on computer screens.
Later in the article he again waxes lyrical about how much wealth the rich create, and how grateful we should be for their work. He also mentions how hard-working they are – predictably failing to provide any statistics linking hard work to high income. In fact, income and wealth distributions are way out of proportion to how hard people work… (unless the richest 1% percent work 10-16 times as hard as the average NZer).
“Poverty has many causes, welfare dependency amongst them, but blaming the hard-working for the failings of the indigent is not a solution.”
Grant is doing even worse – blaming the hard-working poor (like people working two jobs cleaning toilets on minimum wage to feed their families) for their own poverty. Despicable.
Have you noticed that every time someone confronts National with a statistic showing that things aren’t going well (it’s happening increasingly often), they have the same cryptic response? They feign disbelief, and reveal that according to “The figures I’ve seen,” or “the numbers [Key] had seen,” or “The advice his government had received,” or “some of the other indicators,” exactly the opposite is true!
Whatever this alternative information source is, it has such a powerful effect on the government that they were “very surprised” that unemployment rose again last month. According to the information available to the rest of us, of course, this is no surprise – it’s been rising all year. But apparently when you have “the information WE’RE seeing”, the job market is “jumpy” or “bouncy” or “grumpy” or some other anthropomorphic euphemism to render statistics, truth and accountability completely meaningless.
So, I’m really curious to know: What is this mysterious “information WE’RE seeing” that the government are getting their ideas from?
Or these – National Party Pills?
When I wrote my last blog on child poverty, I was planning to follow it up with a critique of ousted ACT leader Rodney Hide’s Herald column where he made the bold claim that there is no child poverty in New Zealand.
I was going to make all sorts of jolly yet incisive points about how I’m actually quite fond of Rodney (something I can’t say about more recent ACT leaders), but that he’s revealed an embarrassingly out-of-touch and simplistic understanding of poverty as a mere lack of money (“All kids are poor. Children typically don’t own much beyond a few toys”, “Poverty can’t be the cause … Liver … costs 70c a serve”).
I was going to point out that not everyone has grown up in the Protestant-work-ethic-Northern-European-stockpiling-rationalising-individualising tradition that he and I have, but that the economic system that’s been imposed here is set up to favour people with these values and shaft everyone (and everything) else.
I was even going to say that, despite all that, I’m considering trying out his suggestion of boiling up bones and getting a stew going for my lunches. Anyway, I didn’t get around to writing this blog, and now Hide’s “let them eat liver” column is old news.
Still, I think it’s worthwhile to address the most important point – the idea that poverty in New Zealand is ‘only’ ‘relative’ poverty and therefore isn’t ‘real’ poverty. Hide points to one common measure of poverty: living on less than 60% of the median wage. In Hide’s mind, all child poverty statistics can be summarily ignored, because this measure doesn’t measure what (supposedly) really matters: how much money the country has overall.
I suppose this poo-pooing of statistics is what enables Hide to state with a straight face that it’s the welfare state’s fault that kids go hungry, despite the fact that the child poverty figures began to skyrocket precisely when his friend Roger Douglas began to roll back the welfare state in the 1980s.
But this idea isn’t just touted by extremists living in a libertarian fantasy world; deputy prime minister Bill English used this very notion as an excuse to dismiss the Child Poverty Expert Advisory Group’s recommendation to set child poverty reduction targets, claiming that “such a relative poverty measure made no sense as it did not show how rich or poor people were in absolute terms”.
But hold on a second. Even if we go along with Hide and English and ignore the Advisory Group’s other poverty measures such as material deprivation or access to GDP growth, there’s something pretty fishy about such an easy dismissal of relative poverty, a.k.a. inequality.
This ignores a whole host of research showing that ‘relative’ inequality absolutely does matter. The book The Spirit Level compiles some of this research to show that unequal societies with high ‘relative poverty’ like New Zealand have significantly worse statistics for life expectancy, literacy and numeracy, infant mortality, homicide, imprisonment, teenage births, obesity, mental illness and social mobility than more equal societies – across the whole society, not just for the ‘relatively’ poor. Even though inequality or relative poverty is relative, it causes real, solid, objective, material, absolute damage.
The truth is that we’re relational beings, so it shouldn’t be surprising that how we’re doing relative to each other affects us – but neo-liberals indoctrinated into the “no such thing as society” philosophy seem to forget this.
Hide and English assume that what really matters is the ‘absolute’ matter of how much money people have. But since when was money ‘absolute’? Money only has meaning insofar as we give it meaning to represent the value of goods and services, and to say that this person can access this much goods and services, while that person can only access that much. In other words, it’s only meaningful as a relative measure; relative to real stuff and real power in the real world, and relative to how much stuff and power others have.
So, when Rodney Hide licks his lips about a “windfall that doubled all incomes” but “wouldn’t budge the child “poverty” figure”, that’s exactly the point. Doubling all incomes wouldn’t change what those incomes are relative to; it wouldn’t create any more resources. Inflation would soon ensure that each dollar was only worth half as much, so nothing would have changed at all. Poverty and affluence would be exactly the same as before.
Of course, if this ‘windfall’ was localised in New Zealand, it would give us relatively more access to resources than other countries; and that’s what National mouthpiece David Farrar, who endorsed Hide’s column, says we should be aiming for: “In these times of huge global economic uncertainty, the focus needs to be on economic growth, not [equality, which Farrar conflates with] increasing tax and welfare.”
But The Spirit Level shows that internal economic equality is far more important than economic growth for improving conditions in developed societies. Perhaps it’s because we care more about how we’re doing relative to people around us than about being even more relatively rich on a global scale than we already are.
So the fatal flaw of this spurious neo-liberal argument is that it absolutises the relative; money, while relativising the absolute; inequality.
Bill English and his government are repeating this error with devastating consequences by calling the real suffering of real children ‘merely relative’ while treating economic growth as the absolute to which all else must be sacrificed (and it isn’t even working).