Well, they’ve passed the youth rate bill… Certain workers aged under 20 can now be paid at 80% of the minimum wage; a pathetic $10.80 per hour before tax. This comes a month and a half after a living wage was calculated to be about $18.40 per hour.
One thing I’ve noticed from the Facebook arguments I get myself embroiled in… Every time a debate comes up about the minimum wage, somebody makes the same tired point: if you raise the minimum wage too high, employers won’t be able to afford to provide jobs any more, or people with no skills will be priced out of the market, or workers will be costing employers more than they’re earning them, etc.
That’s of course true, but all it shows is that that the minimum wage CAN be too high, it doesn’t show that (or when) it IS too high.
You can’t just point out that sometimes a minimum wage can be too high and conclude that NZ’s minimum wage in March 2013 is too high (or as high as possible). That’s not an argument, that’s just pure ideology without anything linking the theory to the present real life situation, therefore it can have no bearing on the present real life situation. An argument would need to demonstrate that this theoretical danger is likely to happen at current wage levels, here and now… using research and evidence from here and now.
In fact, the evidence shows quite the opposite. In the terse words of Treasury: the fear about minimum wage increasing unemployment “has not been true in the past. The balance of probabilities is that a higher minimum wage does not cost jobs”. Increases in the minimum wage have not increased unemployment in recent history (if anything the relationship is the opposite, though it’s not a causal one: minimum wage has been kept low and unemployment pushed up by poor economic conditions and neo-liberal economic policy).
If we accept that it is desirable to have a minimum wage, we accept that it should be high enough to provide a decent living, without being so high that it reduces jobs. The only matter for debate is where the balance is. The Living Wage research indicates that our minimum wage is currently failing to achieve that balance, but the problem is not that it’s too high for employers to pay, it’s that it’s too low for workers to live on (and, by the way, John Key agrees).
“Should the nation’s wealth be redistributed? It has been and continues to be redistributed to a few people in a manner strikingly unhelpful.”
– Kurt Vonnegut, Timequake, 1997.
Just like every summer, the Remuneration Authority has announced a back-dated pay-rise for MPs, and just like last summer, they’re claiming that we should actually be feeling sorry for politicians, because their pay is rising slower than average wages, and certainly slower than inflation.
This spurious justification completely misses the point that in the worst financial times since (arguably) the Great Depression, those who are earning at a luxury level – and can live without some of their excess – should be asked to sacrifice more than those who are struggling to make ends meet. Still more so when they are so-called public servants whose pay is symbolically significant.
Unfortunately, it seems that the current government’s stance is pretty much the opposite of this principle – they’re willing to protect a tax system that’s “very generous” to the rich and an environmental policy that’s compassionate towards polluters, even if it means they have to claw an extra $2 from poor people’s prescriptions.
All pay should rise by the level of inflation by default, but as long as politicians are earning more than 99% of their people, they should willingly exempt themselves from the right to a pay-rise in these difficult times, as Hone Harawira has done the last two years.
Better yet, surely this economic climate is a pertinent time to rethink the ridiculous salaries and perks politicians, CEOs and other high-status personages receive? Underlying the Remuneration Authority’s crude proportionalist argument is the assumption that what everyone earns is what they deserve, but the numbers are making that assumption less and less plausible.
Un-elected public service executives’ salaries are even worse than those of elected politicians, and in the private sector, worse still. Over the past ten years we’ve had very healthy economic times and then we’ve had a recession, but one thing has remained consistent: CEO salaries have continued to grow and grow, and are getting more and more out of proportion to workers’ pay.
We all know this, so why do we tolerate it?
Bosses’ salaries and child poverty are two of the most extreme symptoms of inequality, which is at an all-time national high. In order to fix either poverty or excessive salaries, we’ll need a massive mindset shift: we’ll need to stop pretending inequality, poverty and excessive wealth aren’t problems, we’ll need to put to death the delusion that people automatically deserve whatever pittance or fortune they receive, and we’ll need to develop an of the causes and effects of inequality. And we’ll need to gain more control over our workplaces and government, so that we can attempt to halt the banal and relentless redistribution of our wealth into the hands of a few.
This blog is intended to be read whilst listening to the below song. The above picture made sense in my head, if nowhere else.
Generally speaking, I think it’s a pretty good idea to internalise externalities, by taxing activities and products that impose a social or environmental cost on the rest of the world, and subsidising those that deliver a social or environmental benefit. So I support petrol taxes, mostly as a way to off-set the environmental damages of burning oil (particularly if the tax income is used for that purpose), and as a way of bringing the price of petrol as close as possible to the real cost (personal, social, environmental; past, present, future). This will hopefully reduce the use of petrol, as people who have to pay for the full consequences of their transport choices will be more likely to use public transport, cycle, carpool, etc.
So the latest petrol tax increase may have some accidental environmental benefits. Emphasis on ‘accidental’, because Gerry Brownlee doesn’t mention it in his announcement. He openly admits what Julie Anne Genter from the Greens exposed last month; that this tax rise is primarily about covering the $1.7 billion short-fall for the so-called “Roads of National Significance” plan. This is why the Greens oppose this tax increase; it’s not about reducing petrol use, but encouraging petrol use by sinking $14 billion dollars into un-needed, uneconomical highways.
Brownlee probably knows better than to spin this as an environmental measure, because it would illustrate a stark double standard: it would be the opposite of their stance towards business and agriculture. For these other major polluters (and National’s main backers), they’ve shown compassion in these tough economic times, and given them longer before they have to start paying for the social and environmental costs of their emissions. The taxpayer can pick up the tab for a bit longer.
There’s another double-standard whereby this government, who “want to cut taxes, not raise taxes” according to the John Key quote in the above Home Brew song, are relatively trigger-happy when it comes to increasing GST and other sales taxes. Some of these do off-set (or over-compensate for) external costs of harmful substances. But if they’re just income-gathering measures like in this case, it’s worrying that they’d rather earn income this way than by putting income tax back up, or by introducing capital gains or financial transactions taxes. Sales taxes tend to be regressive; disproportionately hitting the poor, while the latter are progressive; disproportionately hitting those with disproportionately high incomes and wealth.
IrishBill at The Standard points out another double standard, particularly pertinent to Brownlee; they’re happy to levy the ordinary motorist to pay for their idiotic motorway plans, but they’re not willing to implement a temporary, progressive levy for the Christchurch rebuild (because of the fragile economic climate, of course… not because of their priorities, choices and philosophies).
Actually, all of these double standards reveal a lot about the political philosophy underlying this government… Ordinary people are able to tighten their belts, while the rich need financial assistance. We all have to make sacrifices, apparently, but on a religious level, these are sacrifices to the gods of the neo-liberal market capitalism, and on a material level, they’re sacrifices to the rich. “Socialism for the rich, capitalism for the poor” indeed.
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).
Photo pinched from Frank Macskasy’s blog
So, inequality is at its highest ever, 270,000 kids are living in poverty, unemployment is still rising and thousands are moving to Australia where you can earn about NZ$25 working at a supermarket… what’s the problem according to National? Under 20s on the minimum wage are earning too much!
They’re currently inviting submissions on their euphemistically titled “Starting-out Wage”, which proposes to reduce the minimum wage to $10.80 per hour for certain young people and new workers.
Instructions on how to make an online submission are on No Right Turn. The deadline is this Tuesday.
My submission is here.