Category: The Spirit Level

On worshipping money and thanking the rich for being rich

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Just when I was thinking corporate media was starting to say some good things about inequality, I saw this infuriating defense of inequality from Damien Grant.

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.

The ideology of middle class struggle

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I thought this Sunday Star-Times article was quite interesting.

Three economists (from Infometrics, the NZ Institute of Economic Research and the University of Auckland) all agree that although the middle classes in the United States have been hit hard since the global financial crisis, it’s not accurate to say that the same is true here.

Despite the myth of the “middle class squeeze” and politicians’ attempts to appeal to the embattled middle classes, in New Zealand it’s the poor who have been hit hardest by the recession (and by government responses to it).  The middle classes, on the other hand, have “never had it so good”.  While the economists disagree about whether the rich are doing better or worse, all agree about “the growing level of inequality in New Zealand – it’s this chasm between our poorest and richest that’s probably the real issue“.

The article also provides eight stories from middle-class people about how they’ve been coping financially in recent years.  Karol at The Standard points out that this undercuts the above points somewhat, because they don’t give any stories of the people actually struggling.  Also, the stories are foreshadowed by this rather peculiar statement:

“Of course, this is about statistics – the average. This isn’t you, living from pay cheque to pay cheque, scraping together the school donation, the football subs, the car repayment, the Sky bill, the rent for the bach this Christmas.”

This might be an odd expression of post-modern skepticism about attempts at pure objectivity, and/or it might be ordinary garden-variety dumb reporting. It seems to be saying: never mind the facts, we know that you’re struggling, and an evocative description of your hypothetical woes can substitute for an argument. But maybe they just meant that you may be struggling even though on average the middle class aren’t.

Some of the stories do represent these exceptions… Those who have lost or quit jobs in manufacturing and the public service, or lost houses in the earthquakes, have indeed found things getting tougher, as you might expect.  However, they’re all pretty philosophical about it, and even their complaints are about first-world, nice-side-of-the-tracks problems:

“An expensive holiday is shelved and Mr Barton is holding onto his ageing television and car.”

“We were lucky to have steak at all. Sky was going to get the chuck. Any slight luxuries were gone.”

“they hid their financial struggles from their son and refused to withdraw him from private school”

So what’s behind the myth of the “middle class squeeze”?  Is it just lazy importing of American complaints, or is there more to it than that?

I think the best way to understand it is to see it as an ideology, in a critical or Marxist sense: it’s a worldview that functions to justify and support the present economic system and current unequal power distributions.

People from all levels almost always feel like they’re struggling to make ends meet, because their expectations rise with their incomes (usually staying just ahead).  That’s how market capitalism works; dissatisfaction and desire is what keeps the wheels turning.  If people were content with what they have, capitalism wouldn’t work, or at least not the way we know it (maybe it could work in a nicer, more sustainable way).

This malaise is always there; we’re born into it, and too often we let ourselves remain in it.  And I guess when we’re constantly hearing about tough financial times and how our class is supposedly suffering, it’s more socially acceptable for middle class people to express it openly.

The ‘Returning Kiwi’, Emily Swan, gives voice to this plight:

Does Swan appreciate that with that income and a house, many Kiwis would see her as well-off?

“Yes! The average household income is what, $30,000? Crazy. But then a lot of people are sending their kids to school without breakfast. We are grateful for what we’ve got.”

And yet . . . “I look at my age and think, I’m nearly 40 and I’m still living from pay-cheque to pay-cheque. What do I pass on to the next generation? Will I ever pay my mortgage off? I do feel like I’ve f—ed up somewhere along the way.

If she’s “f—ed up somewhere”, it’s not in not having enough money; she and her partner earn $130,000 between them, but people earning twice as much probably feel the same way (and some people earning half as much have learned not to feel that way).

Perhaps situations like this can serve as a reminder not only that perceptions don’t also match reality, but also of just how mouldable our perceptions, desires and expectations are.  Hopefully we can learn to mould them ourselves to what we think they should be, rather than letting them be moulded by advertising, conformity and the pressures of a consumer capitalist society.

Let them eat liver, or: It’s the inequality, stupid, or: A short note on poverty not existing

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).