Inequality vs Social Mobility

May 24th, 2010 at 9:38 am by David Farrar

The left tend to measure most things by talking about , and how anything that increases is bad. , being the gap between those on the lowest incomes and the highest incomes.

This of course means that most of the focus grows on how to divide up the cake, rather than grow the cake.

But even putting that to one side for a moment, I want to make the case for focusing on rather than merely inequality.

In many cases inequality is a normal and good thing. It is a good thing that a 50 year old with 30 years of experience gets paid more than a 16 year old with no experience.

It is also a good thing that someone who spends six years at medical school and four years of specialisation gets paid more than say a parliamentary researcher.

For the vast majority of New Zealanders, they start their working life earning a lot less then they finish it. And this is good – otherwise you extra skills and experience are not valued.

So I reject many measures of income equality as unsophisticated and even counter productive.

The measure that I would like more emphasis placed on is social mobility. I don’t have a problem with a 19 year old earning $10 an hour as a kitchen hand if when they are 30 they are earning say $25 an hour as a cook. However I will agree that someone who spends their life earning just $10/hour is going to have a relatively deprived life.

But for me the solution is not to raise the minimum wage to $25/hour, but to have a society and a labour market which will help people on $10/hour gain skills and experience so they move up the pay scale.

In the UK social mobility has historically been difficult with such a class ridden society. In New Zealand I think it is far less so. Few people really care about where you were born (unless it was Palmerston North) and what your parents did.

In a society with very low levels of social mobility, I can understand why reducing inequality is more important. But in a society which does have opportunities, I want the emphasis to go increasing social mobility, rather than merely the blunt instrument of inequality. If you take inequality to extreme measures, then you end up like the old USSR where cleaners and surgeons get paid much the same.

The data on social mobility in NZ is fairly sparse – partly because you have to measure it over extended periods of time. But that is where I would like more focus to go.

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116 Responses to “Inequality vs Social Mobility”

  1. Scorpio (415 comments) says:

    Well said. It never made sense to me, when the lefties go on about inequality. Everyone should have the opportunity to improve their life, and not be clobbered for it. My first job paid $1/hr.

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  2. krazykiwi (9,186 comments) says:

    Not so sure about this social mobility idea DPF. The closet Marxists here will bitch about financial inequity because it involves state intervention to ‘redress’ the balance. It is intervention and control, not equity, that are their real objectives.

    I believe equity is best measured by equity of opportunity, where outcomes experienced are the direct result of the individual choosing to invest their time, energy and ability, and being satisfied with the outcome they experience. New Zealand has a very high level of equity of opportunity.

    Of course this personal choice theme doesn’t play well to the victim-manufacturing industry that is so active on the left. They just love to manipulate the weaker members of society into thinking they’re beyond setting their own path, and that they’re hopeless without the ‘help’ of a powerful socialist state.

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  3. LC (162 comments) says:

    $1 an hour – luxury! I had to lick road clean wit tongue for my first job.

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  4. mjwilknz (605 comments) says:

    @krazykiwi, well said, mate. If the left are using difficult-to-measure concept of inequality when they’re really just after intervention and control, any ideas of a suitable reply? Would it best to point out that intervention, at least in the way often recommended by the left (for example, more welfare), won’t be sufficient for achieving their concept of equality?

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  5. artemisia (242 comments) says:

    Some 30 years ago, a young man and his family emigrated from the north of England. He was astounded to find out he could go to university here, and promptly did, starting part time alongside the day job. Successfully too and has a good professional career. He had gone to a secondary modern school and university was just not a possibility. The overwhelming path was to the local factories. No-one from his school had been to uni (that he had ever heard of anyway) and it was never even mentioned as an option. Neither was any sort of post school education. Maybe it is different there now, but it was a revelation to me back then that education we take for granted could be such an impossible path there.

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  6. JC (955 comments) says:

    Some years ago I read a US article about the official poor. The bottom line was that only 9% stayed poor, the rest moved on and upwards into better circumstances.

    We need to do that research here as a matter of priority, otherwise we risk trying to cater to a problem thats either transient or non existent for the vast majority of people.

    JC

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  7. Falafulu Fisi (2,179 comments) says:

    Wealth Inequality is a natural phenomenon and anyone who argues otherwise or can’t accept that reality and fact of life is deluded (ie, mostly those from the lefty). This is highlighted in the following article (by author Richard Schmalbeck) under the subsection, Increasing Income Inequality and Wealth Concentration.

    THE DEATH OF THE EFFICIENCY-EQUITY TRADEOFF?: A COMMENTARY ON MCMAHON’S THE MATTHEW EFFECT AND FEDERAL TAXATION

    The simulation that the author of the article above (Richard Schmalbeck) referred to, is the following article from 2002 that appeared online in American Scientist (a 7 page article).

    Follow the Money (by Brian Hayes)

    It is pointless to try and devise policies to address this issue, since in reality this gap will always exist. The best that the government can do is to get the hell out of the way of wealth creators so that they can get on with what they’re good at, ie, creating wealth and in doing so they can take the low income portion of the society along with them as they seek to make profits.

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  8. mjwilknz (605 comments) says:

    @JC, why do we need to prove there isn’t a problem? Wouldn’t it be more proper to prove that there actually IS a problem before we start doing something about it?

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  9. Fisiani (1,039 comments) says:

    Equality of opportunity is an aspirational goal.
    It is obviously impossible to fully meet but as a modern society we have to allow people the chance to better their circumstances of birth by leaving doors open to education and employment.
    People should be free to make choices. This should be irrespective of gender creed or colour or any other differentiation.
    This is the ethos of the National Party of New Zealand.

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  10. krazykiwi (9,186 comments) says:

    People should be free to make choices. This should be irrespective of gender creed or colour or any other differentiation. This is the ethos of the National Party of New Zealand.

    Fisiani – so why does the the National Party endorse apartheid-like provisions for Maori? Is there a reason beyond pork politics and re-election certainty?

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  11. malcolm (1,952 comments) says:

    Social mobility is just another stick for your own back. People inherit traits from their parents so it’s entirely possible that you can have society with equality of opportunity but very little social mobility; a meritocratic yet stratified society. But that wouldn’t be acceptable if we use social mobility as our measure, so silly and counter-productive measures would be taken to fix the ‘problem’.

    There is no perfect society. Governments shouldn’t get into nebulous areas such as trying to engineer the perfect level of social mobility. Just stick to the basics, ensure the government is minimal and well run and let everyone make their own lives.

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  12. malcolm (1,952 comments) says:

    Is there a reason beyond pork politics and re-election certainty?

    No.

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  13. Sector 7g (240 comments) says:

    mjwilknz “If the left are using difficult-to-measure concept of inequality when they’re really just after intervention and control, any ideas of a suitable reply?”

    Sure. To me it is obviously about control due to the simple fact that not one of these so-called “equality crusaders”, actually do anything themselves to help fix “this problem” they pretend to care about. Kiwiblog is riddled with many leftie crusaders who spit hate at all world governments that reduce taxes (therefore as a percentage giving the highest tax cut to the highest contributors) yet not one of them is willing to go out their, earn big money themselves or as a group and then give it all away to help close this gap.

    The Phil Ures of New Zealand even steal off the poor through welfare while at the same time hating on “rich” for not giving enough of their own money to his cause.

    It is nothing to do with closing the gap, it is nothing to do with helping the poor, it is all about control otherwise they would be out there helping themselves.

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  14. Vinick (216 comments) says:

    “I don’t have a problem with a 19 year old earning $10 an hour as a kitchen hand if when they are 30 they are earning say $25 an hour as a cook.”

    The problem Mr Farrar, is that this Government is happy for your example to be illegal.

    Hon Sir Roger Douglas: Can the Minister advise whether she will be supporting my Minimum Wage (Mitigation of Youth Unemployment) Amendment Bill, which would enable young Māori, who are currently suffering almost 40 percent unemployment, to earn, say, $400 a week rather than to receive $160 a week from taxpayers in welfare; or has the Minister joined the unions in arguing for existing members over young workers?
    Hon PAULA BENNETT: No, we will not be supporting the bill, as we are not convinced it would reduce youth unemployment, plus it would be a distraction from the really important work of improving productivity and growing the economy in order to create long-term jobs, which will keep young people in New Zealand.

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  15. Murray (8,847 comments) says:

    Stupidity and laziness increases inequality. Why don’t they get to work on that for a bit and stop taking out people for achieving?

    Just an idea.

    Conservatives goal: Richard Branson
    Left wing goal: Phil U.

    You decide.

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  16. Brian Harmer (687 comments) says:

    It is also a good thing that someone who spends six years at medical school and four years of specialisation gets paid more than say a parliamentary researcher.

    There are other factors at work, of course. One of these is obviously scarcity value (Econ 101) … many people who have spent far longer than that being educated, will still earn far less because they chose a different profession.

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  17. toad (3,674 comments) says:

    DPF, have you read Richard Wilkinson and Kate Pickett’s The Spirit Level?

    They have analysed data from various developed world countries and compared rates of problems such as crime and imprisonment, violence, drug and alcohol addiction, mental illness, and poor educational achievement to the size of the gap between rich and poor. Their conclusions are unequivocal – all of these problems are all worse in the more unequal societies.

    I’m not arguing for extreme measure to address inequality such as those implemented in the former USSR that you cite. Of course talent, qualifications, and experience should be rewarded.

    But in New Zealand we have extremes at both ends of the scale, the difference between those extremes has widened over the years, particularly between 1986 and 2000, and Bill English’s Budget will have the effect of widening it even further.

    This is not “leftie crusader” stuff – there is a sound body of evidence that suggests that extremes of inequality have a negative impact on all of society – not just on those in poverty.

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  18. krazykiwi (9,186 comments) says:

    Poverty is not a lack of wealth. It is a lack of choice. The most impoverished are those who are subjected to Green/Marxist-style directives about how life must be lived.

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  19. JC (955 comments) says:

    “@JC, why do we need to prove there isn’t a problem? Wouldn’t it be more proper to prove that there actually IS a problem before we start doing something about it?”

    Well, we already define who is poor by income. The important bit is to see how many stay poor.. the “core poor” if you’ll excuse the pun.

    The other thing we know from America is that economic mobility is increasingly constrained for each recent generation, with good family and good schools becoming the determinants to better opportunities, ie, there is a developing “class” where the opportunities are fading away.

    You can read about it here:

    http://tinyurl.com/2dff7e

    The Brookings Institution is slightly left of centre for the US, which makes it about centre right in NZ, so its findings are useful and not too skewed one way or t’other. Updates to the “Economic Mobility Project” are showing that one way to improve the situation is to concentrate on kid’s education from age three.. if you concentrate funding on tertiary education as we do, you have already lost the battle.

    JC

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  20. Pascal (1,969 comments) says:

    Toad, if you had the opportunity to change New Zealand’s laws overnight, what would you change to address that “problem”? I’ve seen a lot of rhetoric, a lot of policy waffle, but I’ve yet to see a simple, fact based solution.

    Just as an example:

    “I would put 100% tax on any income above the average wage, with the tax redistributed proportionally to those earning less than the average wage”

    “I would … ”

    Stuff like that. I’m genuinely curious.

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  21. KiwiGreg (3,255 comments) says:

    “Of course talent, qualifications, and experience should be rewarded.”

    @ toad Just not TOO much huh?

    Interesting that they are all inputs, not outputs, like success, achievement and production.

    Funny how the left think.

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  22. nickb (3,687 comments) says:

    “and Bill English’s Budget will have the effect of widening it even further.”

    All the budget did was give some of the highest taxpayers back some of their own money.
    Every single NZ adult will get a tax cut and bludgers will get a top up from incresed benefits etc.

    So how will this budget increase inequality?

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  23. Murray (8,847 comments) says:

    Taking money from those who have earned it and giving to those who have not earned it is the goal.

    Proving that it is a virtue to do so is the methodology.

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  24. nickb (3,687 comments) says:

    All this budget continues to do in my opinion is take from the 51% to give to the other 49%….

    The problem in NZ is that next year it will be taking from the 50% to give to the other 50%, then the year after taking from the 49% to give to the 51% and so on it will go, meanwhile more and more of our talented young will leave overseas to more attractive and rewarding countries, our ETS will kick in making everything more expensive etc etc…

    There seems to be no end in sight to big government,

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  25. david (2,557 comments) says:

    Interesting that among the most unequal of societies on pretty much any count were/are: Tribal Societies, Soviet Russia, North Korea, Communist China. In all these cases a small coterie have been able to exercise traditional, legislated or militarily enforced power to enrich themselves while keeping the vast majority who make up the balance of the population in a state of ignorance and poverty. By most measures of course the poverty did not register that high because it is established by reference to the average wage so international relativities become invalid.

    Poverty will never be eliminated as long as it is defined as those whose income is a proportion of the average.

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  26. emmess (1,428 comments) says:

    Poverty will never be eliminated as long as it is defined as those whose income is a proportion of the average.

    Yeah, that always pisses me off, when these pompous left wing academics produce fancy reports concluding the poor are worse off because even though their incomes have risen substantially, it is a smaller percentage than the rich pricks, and therefore poverty is increasing

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  27. toad (3,674 comments) says:

    @Pascal 11:29 am:

    Mind the Gap

    @Murray 11:34 am:

    Taking money from those who have earned it and giving to those who have not earned it is the goal.

    Are you seriously suggesting that CEOs of big corporations “earn” their multi-million dollar salaries? The don’t. They have hunderds, if not thousands, of employees and contractors who do almost all of the actual work that “earns” the CEO’s salary.

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  28. tom hunter (4,811 comments) says:

    I’ve looked to the cultural aspects of this problem for some time – rather than the classical dialetic on bloody materialism – which is where the left always want to have the debate.

    To that end this article about the US is of interest – Is There A Culture War or What?.

    Key quote came from a linked article within this one, in which a commentator listened to a Professor of Sociology talking about all this and observed:

    …..During the Q&A, she was asked about growing income inequality, and she said that the attention given to the culture wars takes attention away from that issue, which is something we should be addressing.

    With this the picture became clear. People who declare the end of the culture wars have their own agendas, in this case, income redistribution, and are shortsighted as well.

    Perhaps the major factor behind poverty, unemployment, underemployment, crime, imprisonment, and so on, is the fatherless household. The liberal view for many years was to diminish the importance of the intact two-parent family and to promote single motherhood as equal if not superior, with the effect of greatly enlarging the underclass and multi-generational poverty and dysfunction. Is it rocket science to see this connection and others like it, between cultural choices, economic well-being, and expanding the middle class

    And Yes – it’s Rousseau at bottom – again

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  29. nickb (3,687 comments) says:

    “Are you seriously suggesting that CEOs of big corporations “earn” their multi-million dollar salaries? The don’t. ”

    Why is that a problem toad? They are private companies and your opinion has (and should have) 0% influence over their decision making.
    They are paid more because they are far more valuable than a normal employee. How many people are there in New Zealand that could satisfactorily answer calls in a Telecom call centre?

    And how many people are there in New Zealand that could satisfactorily run a billion dollar company?

    And no, I am not defending Paul Reynold’s performance, if I was a telecom shareholder I would be spewing at his current level of salary, and spewing even more if he was paid a bonus for this year.

    All I am saying is that politicians and government have no place in commenting on the rights or wrongs of a PRIVATE company’s affairs. It is simply none of their business to comment on and (even more) legislate over.

    If you don’t like it, then don’t use Telecom products. See, isn’t the free market great?

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  30. hj (6,995 comments) says:

    I agree (overall) with the thrust for a more equal society but when I hear Meteria Turie say (on National radio) that the children of beneficiaries are entitled to health, (secure warm) housing and education “the same as everyone else” I see a problem…. (the person pushing the pram). Their behaviour wont be included amongst negative [thingies]

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  31. Sector 7g (240 comments) says:

    Toad- “Are you seriously suggesting that CEOs of big corporations “earn” their multi-million dollar salaries? The don’t. They have hunderds, if not thousands, of employees and contractors who do almost all of the actual work that “earns” the CEO’s salary.”

    If it is such an easy position Toad (looking after thousands of people) why don’t you and your green mates get these positions and donate your salary to the poor?

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  32. KevinH (1,227 comments) says:

    The left tend to focus on fairness and opportunity because those are the two ingredients to move on with.DPF can be forgiven for spouting the usual waffle about inequality vs social mobility.
    Bill’s budget rewards the wealthy particularly property developers.This budget will create the largest income disparity seen in New Zealand for the last 25 years and make a complete mockery of the 2025 Taskforce brief of closing the gap with Australia.
    Bill English didn’t have the courage to axe LAQC’s thus leaving the door open on the vexatious issue of a grossly distorted housing market.Bill may have been scared of precipitating a housing collapse and has therefore played safe.This of course doe’s nothing to prevent the wealthy from transferring their tax savings into the security of trust funds where they can be sheltered more effectively.

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  33. Lance (2,654 comments) says:

    @toad
    Toads words are ignorance in action.
    So CEO’s don’t actually earn their money? It’s all just a vast right wing conspiracy!

    Let me guess toad… you have never actually run a decent size business?

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  34. nickb (3,687 comments) says:

    Take all Toad’s claims with a healthy does of skepticism, remember the Greens are the party with the most against freedom:

    http://www.greens.org.nz/search/google/ban?query=ban&cx=014757201645500763386%3Aeyveduyvguo&cof=FORID%3A11&sitesearch=#922

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  35. toad (3,674 comments) says:

    @Murray 11:19 pm

    Richard Branson, huh. This will really piss you off:

    He told the BBC Gordon Brown had been a brilliant chancellor, but said Labour had continued Tory policies.

    “The difference between having a Labour government for business to having a Tory government has been fairly negligible,” he told Newsnight.

    Mr Branson said he liked Mr Brown a lot, but said much of what he had done could have been expected if the Tories had controlled the Treasury.

    He also had admiration for some in the Conservative party, he said in an interview with EasyJet boss Stelios Haji-Ioannou.

    “Labour have introduced things for big business that we should be doing anyway – better paternity leave, more protection for individuals who will be fired.

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  36. Bevan (3,924 comments) says:

    Gee toad – missed his actual point by much?

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  37. real independent (30 comments) says:

    This argument falls over the minute you start looking at the inequities in payrates. For example there’s no logical reason why a lawyer should earn 5 times more than a qualified master builder. It is absolutely absurd that any public servant should ever be paid more than the Prime minister. There are so many long held biases to payrates that benefit the white collar sector that these imbalances are always going to need to be addresse3d in any society that purports itself to be fair. The fact of the matter is i’ve known many workers on close to the minimum wage who are much more productive than some of their better paid, incompetent counterparts in middle management. The wealthiest NZers gained the same benefits at each tax band as the lower paid and then exponentially more the higher their income is. You can twist the statistics whichever way you like, (such are their chameleon-like proprties) but the fact of the matter is that 3 months ago the economy could only afford a 25 cent per hour increase in the minimum wage, but the same government can now reward the already well paid with massive increases. New Zealand isn’t a hard place to live if you earn $150k, but its an increasingly difficult place to live on $50k or less which the overwhelming majority of the population are. Wages should more accurately reflect productivity, not some intangible theoretic value. But NZ does indeed posess a great deal of ‘social mobility’, otherwise known as a Boeing 747 and many middle NZers are using this mobility to establish a better life on the West Island. But that’s ok, because they are so easily replaced by low quality immigrants, (we can’t be fussy) who in turn will probably leave for Australia once they qualify.

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  38. toad (3,674 comments) says:

    Thought it was amusing Bevan, especially in the context of some of the vitriol that shit that go poured on Brown here during the recent UK election campaign.

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  39. nickb (3,687 comments) says:

    Real independent, have you ver heard of a paragraph?

    “For example there’s no logical reason why a lawyer should earn 5 times more than a qualified master builder.”

    Well why do people continue to pay for lawyers? Do you think it is because of 4 years of law school and a highly specialised training?

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  40. Falafulu Fisi (2,179 comments) says:

    Toad said…
    “Labour have introduced things for big business that we should be doing anyway – better paternity leave, more protection for individuals who will be fired.

    Branson said that because he is already at the apex of the wealth pyramid since it wouldn’t make much difference to him if those policies are being implemented or not. If he is a small business owner he would say the opposite. Besides the point Nickb is arguing for is that the government has no legitimate mandate to meddle in the affairs of private industries (private properties) and you should deal with that fact.

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  41. david (2,557 comments) says:

    “For example there’s no logical reason why a lawyer should earn 5 times more than a qualified master builder.”

    Oh yes there is, it is the same reason that it costs your bank balance and your first born son to get a drainlayer or plumber out in the weekend.

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  42. tom hunter (4,811 comments) says:

    “Are you seriously suggesting that CEOs of big corporations “earn” their multi-million dollar salaries? The don’t. They have hunderds, if not thousands, of employees and contractors who do almost all of the actual work that “earns” the CEO’s salary.”

    A common thought – and the people who hold it will swear to you that they’re ‘not communist’, mock the very idea that they’re still wedded to those notions.

    What they really mean is that they’re not into all that totalitarian state stuff with secret police and so forth – at least not until they are sadly forced to impose their ideas on a recalcitrant segment of the population who don’t agree and don’t have the votes, a regrettable necessity toward the greater good.

    But they are still wedded to some of the core ideas of Marx and Engels – the Iron Law of Wages and The Labour Theory of Value being the two most common, probably because they fit “common sense” notions of economics (e.g ignorant prejudices).

    Think about it this way – you could run all the way down the line from CEO to ‘team leaders’ and make exactly the same claims at every level – a reducto ad absurdum that actually has occurred in real life once you step down that philisophical path.

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  43. krazykiwi (9,186 comments) says:

    If he is a small business owner he would say the opposite

    @Falafulu Fisi – Hmmm, not so sure. I you read his various biographies you’ll see that he placed a very high value on the ‘team’ and supporting each other’s life goals as an integral part of starting businesses. He also had no problem firing the lazy, but perhaps more importantly got better at not hiring them in the first place. I recommend Loosing my Virginity, Business Stripped Bare and Screw It – Let’s do it.

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  44. RKBee (1,344 comments) says:

    There will always be the have’s a the have not’s… inequalities… the problem with this country is there’s to many have not’s that have.

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  45. Nefarious (533 comments) says:

    I’ll give Richard Branson one thing, he sure does make good pickle.

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  46. Rick Rowling (813 comments) says:

    @Toad: They have analysed data from various developed world countries and compared rates of problems such as crime and imprisonment, violence, drug and alcohol addiction, mental illness, and poor educational achievement to the size of the gap between rich and poor. Their conclusions are unequivocal – all of these problems are all worse in the more unequal societies.

    Correlation =/= causality.

    Do they investigate whether:
    (1) inequality leads to imprisonment, violence, drug and alcohol addiction, mental illness, and poor educational achievement
    or
    (2) imprisonment, violence, drug and alcohol addiction, mental illness, and poor educational achievement leads to inequality
    or
    (3) a separate factor leads to both results
    or
    (4) something else.

    The correlation is meaningless without that analysis.

    /I ain’t saying it hasn’t been done, just that it isn’t mentioned in this argument on this thread.

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  47. Bevan (3,924 comments) says:

    toad: Thought it was amusing Bevan, especially in the context of some of the vitriol that shit that go poured on Brown here during the recent UK election campaign.

    And I find it amusing that you flail wildly on multiple tangents during a discussion, hoping to gain some tiny little victory. Branson’s opinions have nothing to do with the comparison Murray made and you know it.

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  48. RKBee (1,344 comments) says:

    DPF.. It’s very hard to grow a cake.. when it’s already baked.

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  49. burt (8,269 comments) says:

    toad

    Are you seriously suggesting that CEOs of big corporations “earn” their multi-million dollar salaries?

    Have you seen many organisations with thousands of employees work well without strong and competent leadership ?

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  50. RRM (9,917 comments) says:

    I love it when the right talks about what the left supposedly wants, in an echo chamber!

    ;-)

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  51. burt (8,269 comments) says:

    toad

    I dare you to suggest the Green party leader gets paid the same as the office cleaners; Go on – if you seriously think this top of food chain stuff is crap then make a valid stand rather than just bleating commy BS about it.

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  52. Rick Rowling (813 comments) says:

    @Toad: They have analysed data from various developed world countries and compared rates of problems such as crime and imprisonment, violence, drug and alcohol addiction, mental illness, and poor educational achievement to the size of the gap between rich and poor. Their conclusions are unequivocal – all of these problems are all worse in the more unequal societies.

    The left would say that inequality leads to crime & poor education, so fix the income gap.

    The right would say that crime & poor education leads to inequality, so get hard on crims & stay in school…

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  53. featta (2 comments) says:

    If there is real equality of opportunity then there should be greater social mobility.

    According to the March 2010 OECD report Intergenerational Social Mobility: a family affair? :

    “It is easier to climb the social ladder and earn more than one’s parents in the Nordic countries, Australia and Canada than in France, Italy, Britain and the United States.”

    The stats for New Zealand are not in the article or the statistical annex but as we had among the greatest increases in inequality amongst the OECD in the eighties and nineties I wouldn’t advise holding your breath.

    If there is any doubt about inequality affecting social mobility (and you are statistically inclined) then this Harvard University research with the suitably cut-to-the-chase title of More inequality, less social mobility (PDF download) should remove it.

    So Nordic countries have better social mobility, consistently rate at the top of numerous indexes measuring life expectancy, education, economy and environment and are consistently found to have good health services, political freedoms, security against crime, greater access to education and a satisfying leisure time (e.g. the Human Development Report but take your pick of any reputable international research).

    DPF – you like to present yourself and your opinions as based on practical considerations of what actually works rather than ideology. A rational analysis of social mobility and the policies likely to improve it (along with just about every other measurement of what is important in people’s lives) would conclude that we should be following the policies adopted by the Nordic countries for decades that contributed to their enviable position.

    Or you could just quietly drop this thread about social mobility and keep looking for a progressive social measure that shows your ideological bent and this this government in a good light.

    Whatever.

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  54. trout (939 comments) says:

    What would be the most unequal society? I am guessing Saudi Arabia. They do not suffer from excess crime and imprisonment, violence, drug and alcohol addiction, mental illness, and poor educational achievement. Is that because they cut a hand off a thief?

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  55. Nefarious (533 comments) says:

    Have you seen many organisations with thousands of employees work well without strong and competent leadership ?

    how about the fifth labour government?

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  56. RKBee (1,344 comments) says:

    burt 12:55 pm

    So what should we really be paying the Prime Minister then… $400,000.000+

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  57. burt (8,269 comments) says:

    RKBee

    Interesting, who are they primarily working for? It seems the prime focus of the PM is getting their party re-elected so perhaps they should be paid by their party ?

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  58. RKBee (1,344 comments) says:

    Another way of saying it burt is… what do you think a single person that employees themselves is worth… $10

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  59. RKBee (1,344 comments) says:

    burt @1:06 pm
    RKBee
    Interesting, who are they primarily working for? It seems the prime focus of the PM is getting their party re-elected so perhaps they should be paid by their party ?

    Yes that would be nice… If that happened.. I would choose to be in the paid by Bob Jones party… would any other MP or political party exist.

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  60. Pascal (1,969 comments) says:

    Toad, that is very interesting. As it would appear you’ve based it off last week’s budget (Or adjusted for it, at least) with some rather interesting quotes from NZ Herald columnists – is there a single document that has a:

    “Green Party budget”

    in it applying all those benefit increases, etc.? I can see the CGT paying off in 15 years, but with all the other spending increases flagged in that package what are the proposals for the next 15 years to afford it all?

    So – is there a Green Party budget somewhere with that in it?

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  61. Lindsay (148 comments) says:

    Repeating what I wrote on my blog this morning, if we lived in a country where the vast majority of people worked, and they were getting pitiful wages I too would be jumping up and down about inequality. Had I been alive in the 1930s I would have been a socialist. But we have been down that track of government intervention to give everyone a fair shake of the stick and it hasn’t worked. The result has been the bedding in of a large group of permanently poor people.

    325,000 working age people are on a benefit and if their children are counted the number rises to over half a million. And even during the economic boom, when NZ briefly boasted the lowest unemployment rate in the OECD, the number was only 20 percent lower. That’s a major cause of New Zealand’s inequality.

    Curia pigeon, from the report you link to; “Childhood poverty is in fact a route through which disadvantage is transmitted between generations, so tackling it needs to be a priority. Doing so by helping parents work can be more effective than giving them cash transfers, as this may contribute to changed attitudes and behaviours. Indeed there is evidence that parental behaviours can be transmitted across generations, and that these seem to be more important than ‘intelligence’ in explaining the intergenerational correlation of income. Having a working parent as a role model is important.” P70

    In other words cash benefits act as a deterrent to social mobility.

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  62. tvb (4,418 comments) says:

    The Labour Party idea of reducing inequality is to pay them more in welfare but at a huge cost in terms of gross state intrusion in their lives and very high marginal abatement thresholds so they become trapped. They have punative taxes on people they define as rich to pay for it. Except the rich are not that rich at all but are quite ordinary people whom because of high taxes have to rely on the state for their retirement, education and health. THat is they could become economically independant of the state but the Labour Party through high cases drags their spare money out of them. The very poorest in NZ especially those on the DBP have extremely high state intrusion in their lives. But the Labour Party think that people will willingly trade-off freedom in favour of a permanent future of state dependancy. By having people highly dependent on the state the Labour Party can then control them including the way they vote by threatening them with starvation if they dare vote National. God I hate the Labour Party, just hate it.

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  63. RKBee (1,344 comments) says:

    “if we lived in a country where the vast majority of people worked, ”

    We would still be borrowing $240.000.000 a week today.

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  64. curia pigeon (191 comments) says:

    David:

    “one is better to target social mobility than just income inequality”

    But the evidence shows that the two are interrelated. I agree that for many reasons, some ineqality is desirable, but if you grow up lacking proper nutrition and a stable home environment (this can be created or accentuated by financial instability) then your educational outcomes are going to be worse than they could have been.

    So if you want social mobility to be optimally high, you’re going to need to tackle childhood poverty, and at the moment New Zealand has a huge problem in that area. It used to be much better when we had a regulated labour market, and more generous family benefits – but your crew went and screwed that up in the 1990s.

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  65. curia pigeon (191 comments) says:

    “In other words cash benefits act as a deterrent to social mobility.”

    oh right – so that would be why the Scandanavian countries have the highest levels of social mobility?

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  66. fredinthegrass (273 comments) says:

    Hands off Palmerston North – you’re getting predictable DPF.
    iPredict could offer odds on the frequency of you commenting/
    slighting P N.

    [DPF: Marton is nice though :-)]

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  67. toad (3,674 comments) says:

    @Pascal 1:37 pm

    The Green Mind The Gap package was released before the Budget, so couldn’t ahve been based on it, although it appears to have taken into account some well-flagged Badget decisions such as the increase in GST.

    It is a policy package – it doesn’t purport to be a full alternative Budget. And, yes, a Capital Gains Tax based on realised capital gain does take some time to phase in, so the package would’t pay for itself in the first few years and would have to be partly funded by borrowing or cutting other expenditure programmes.

    How about cancelling a couple of Steven Joyce’s “Roads of National Significance” projects to fund it initially? The Puhoi-Wellsford Holiday Highway and Transmission Gully, both of thich have benefit to cost ratios of < 1 would be my pick, as there is no economic justification for building them.

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  68. toad (3,674 comments) says:

    @burt 12:59 pm

    I dare you to suggest the Green party leader gets paid the same as the office cleaners

    I didn’t even imply that. Of course high skill jobs will and should pay more than low skill ones.

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  69. nickb (3,687 comments) says:

    “Green party leader”

    “Of course high skill jobs will and should pay more”

    Some here would dispute the assertion that bwing a Green Party leader is a “high skill” job!

    So are you trying to say by implication that Green Party leaders are more important to the economy that CEO’s of billion dollar companies? That is where your reasoning is leading to.

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  70. big bruv (13,885 comments) says:

    “Highway and Transmission Gully, both of thich have benefit to cost ratios of < 1 would be my pick, as there is no economic justification for building them."

    That is a bit fucking rich Toad, there is NO economic justification for the ETS yet I do not hear you calling for an end to it.

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  71. RKBee (1,344 comments) says:

    fredoffthegrass @ 2:48 pm
    Hands off Palmerston

    Nothing wrong with Palmerston untill you add North.

    toad@2:58 pm

    “there is no economic justification for building them.”

    What the hell do you think building good access roads to our main centers is then toad other than good economic sense.

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  72. GPT1 (2,121 comments) says:

    I think the PN quip is a bit hard – after all if people have the where with all to escape, er, leave Palmerston North then they deserve support. If anything refugees of this sort are often the most motivated to make a better life for themselvs and their families.

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  73. AlphaKiwi (683 comments) says:

    What I don’t like about all this leftist and rightist nonsense is that it becomes so dogmatic and ideological. Can’t we just be practical or pragmatic, while having a conscience?

    Would it be wrong if the NZ Government started to put a freeze on social welfare benefit increases and even start slowly lowering welfare benefits, while using the money saved by doing that to put into making education cheaper?

    Isn’t access to decent education one of the ways we could increase equality of opportunity to move up?

    Would it be wrong (too Socialist) for the Government put more money into education, making it easier and more attractive for people to upskill themselves?

    I wonder if this lowering of benefits and spending more in education for people would be vigorously opposed by both rightists and leftists along the political and economic spectrum because it doesn’t fit in with the right or left ideologies.

    What do others think?

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  74. Lindsay (148 comments) says:

    Curia Pigeon; ” “In other words cash benefits act as a deterrent to social mobility.”

    oh right – so that would be why the Scandanavian countries have the highest levels of social mobility?”

    Scandinavian countries have high rates of parental employment including single parents. Their parental benefits are universal and short term. Ours are targeted and long-term. Hence we have long-term workless households. In any case these countries are beginning to struggle with their existing social security arrangements as increasing immigration stretches them. Also Scandinavian countries do not have high teenage birthrates (unlike NZ) which contribute significantly to child poverty and intergenerational dependence on welfare.

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  75. jinpy (226 comments) says:

    featta,

    Your link titled: “More inequality, less social mobility (PDF download)” went to a File 404 error. Do you have another link for it?

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  76. RKBee (1,344 comments) says:

    GPT1@ 3:34 pm

    Agree in part…
    If all Ahmed Zaoui’s family own and work their own businesses the NZ taxpayer might have a better chance of getting some of their money back.. but they would do better setting up business somewhere other than Parmerston Nth.

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  77. curia pigeon (191 comments) says:

    Lindsay:

    “Scandinavian countries have high rates of parental employment including single parents. Their parental benefits are universal and short term.”

    The benefits are much higher than here, and parents are prioritised in the labour market, and sent into state-sponsored jobs. It’s all welfare Lindsay. These are policies that only the Green Party would back. The National Party hierarchy would spontaneously combust if these policies were put in place.

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  78. RJL (146 comments) says:

    burt (4225) Says:…
    Have you seen many organisations with thousands of employees work well without strong and competent leadership ?

    Are you seriously saying that all organizations with multi-million dollar CEOs have "strong and competent leadership"?

    Or that the only (or even best) way to find strong, competent, leaders is to pay them multi-million dollar salaries?

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  79. Lindsay (148 comments) says:

    Curia pigeon; “The benefits are much higher than here, and parents are prioritised in the labour market, and sent into state-sponsored jobs. It’s all welfare Lindsay. These are policies that only the Green Party would back. ”

    Green policy;

    DPB to be protected; no compulsory work-testing.

    Abolish stand-down periods, treat people aged 18 and over as adults for benefit purposes; no forced work for the dole.

    Replace the current Social Security Act 1964 with a simple two-tier benefit system consisting of a universal base rate that is enough to live on, with add-ons for specific circumstances, such as dependants, disability or chronic illness.

    http://www.greens.org.nz/policysummary/income-support-policy-summary

    Most certainly MORE cash transfers.

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  80. featta (2 comments) says:

    Sure jinpy – sorry about that. This one should work: http://econrsss.anu.edu.au/pdf/DP566.pdf

    Just in case the page with the download link is here: http://ideas.repec.org/p/auu/dpaper/566.html

    Also came across this study:

    Is High Inequality Offset by Mobility?

    “Conclusion
    As we suggested earlier, it is not unreasonable to hypothesize that there is greater relative intragenerational mobility of earnings and income in the United States than in Germany or Sweden. If the hypothesis was correct, the degree of inequality in the United States would not be so high relative to the other two countries when we shift from a measure of inequality based on earnings or incomes aggregated over a single year to a measure aggregated over many years. However, our data suggest that this is not the case — or at least that it was not the case in the 1980s and 1990s. High U.S. inequality was not offset by greater mobility.”

    http://www.u.arizona.edu/~lkenwor/ishighinequalityoffsetbymobility.pdf

    The evidence for inequality reducing social mobility is pretty overwhelming.

    You can get to Oslo from London from NZ$287 return DPF – if you actually want to find out how to increase social mobility.

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  81. philu (13,393 comments) says:

    “..What do others think?..”

    that you are presenting a far-right anti-humanist …and ultimatly illogical argument…

    phil(whoar.nz)

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  82. toad (3,674 comments) says:

    @big bruv 3:10 pm

    That is a bit fucking rich Toad, there is NO economic justification for the ETS yet I do not hear you calling for an end to it.

    Here we go, bruv – I call for an end to the ETS. It is likely to be completely ineffective economically (in the long term, as well as the short term). What’s more, the Budget contains huge subsidies for carbon emitters and we taxpayers who are paying the subsidies are not even allowed to know who is receiving them.

    Scrap the whole bloody thing and implement a carbon tax across all emitting sectors.

    BTW, if you had been paying attention to my posts here and elsewhere in the past, you would recall there is nothing new about that. I also opposed Labour’s ETS for the same reason (and for its implications for Tiriti forestry settlements, which the Nats have partially addressed) even though the Greens decided to support it.

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  83. philu (13,393 comments) says:

    “…Well why do people continue to pay for lawyers? Do you think it is because of 4 years of law school and a highly specialised training?..”

    no..it’s a price-fixing cartel/monopoly…

    ..that has been screwing the rest of us since..forever..

    (pity the ‘poor lawyer’…eh..?..)

    phil(whoar.co.nz)

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  84. RRM (9,917 comments) says:

    RKBee –

    Disagree, a good kebab joint would do well in Palmy, simply through lack of competition.

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  85. big bruv (13,885 comments) says:

    Toad

    So you want to remove the current ETS which you admit will not achieve anything and replace it with another that will achieve even less (apart from the economic destruction of the New Zealand economy, which has always been the real goal of the Greens)

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  86. krazykiwi (9,186 comments) says:

    @AlphaKiwi, agree that education is an important part of the equity equation, but simply pouring more money into education (as successive governments have done) isn’t in and of itself enough. My son arrived home from Uni last week and told this joke:

    Q: What did the BA (PolSci) graduate say to the BSc graduate?
    A: Would you like any fries with that?

    So the combination of “whatever fly’s your kite” education combined with the “no consequence” of being able to fall back into the welfare sun-lounger isn’t really a winner.

    Like it or not this debate is, and probably always will be ideologically polarized. Until, of course, people take to the streets rioting against the personal hardship caused by a sovereign default and bailout. Where has that happened recently? Hmmm.

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  87. philu (13,393 comments) says:

    “..RKBee –

    Disagree,..”

    i think he’s talking about the ‘you’re not from around these parts..are you?’ attitudes he will be walking into…

    (think a christchurch mini-me….)

    phil(whoar.co.nz)

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  88. toad (3,674 comments) says:

    @RKBee 3:12 pm

    Transmission Gully: Benefit-cost ratio: 0.6.

    Puhoi – Wellsford: Benefit-cost ratio: 0.8 (at best – and some pretty dodgy assumptions to get it up to even there).

    Investing in things that they already know will provide less economic benefit than their cost. Goodo!

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  89. philu (13,393 comments) says:

    “..(apart from the economic destruction of the New Zealand economy, which has always been the real goal of the Greens)..”

    shit…!…fat slug….!

    ..who told you..?

    who squealed..?

    phil(whoar.co.nz)

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  90. emmess (1,428 comments) says:

    Transmission Gully: Benefit-cost ratio: 0.6.

    Puhoi – Wellsford: Benefit-cost ratio: 0.8 (at best – and some pretty dodgy assumptions to get it up to even there).

    In the interests of fairness what are the Benefit-cost ratio’s from rail?

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  91. James Butler (74 comments) says:

    In the interests of fairness what are the Benefit-cost ratio’s from rail?

    I have to admit I’m cherry-picking, but this is the one I have available – reopening the Onehunga Branch has BCR = 3.1.

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  92. AlphaKiwi (683 comments) says:

    @krazykiwi

    You bring up a good point about what kind of education would help enable equality of opportunities.

    What do you think if the Government allowed students to study for free in fields which are needed in NZ such as medicine, nursing, teaching, engineering, and other skilled labour fields where there is a shortage and in return bonded the students to have to work in NZ in their field of expertise for 8 of the next 10 years after they graduate?

    I think that could have some positives for the country:

    1. Helps to meet the skill shortages by having Kiwis being able to fill the gaps.
    2. Reduce dependence on having to import skills.
    3. May slow the tide of skilled people moving to Australia.
    4. Encourage more students to take up sciences, etc.

    I’m sure there are flaws which people will point out. I’m just trying to get my head around some of these issues. I’m a newbie to Kiwiblog and so will probably have my arguments ripped to shreads and crapped on. However, I may learn something, too. :)

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  93. JeffW (326 comments) says:

    Labour and its allies do not realise that it is not possible to make everyone equally rich, but it is easier to make the vast majority of people equally poor.

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  94. toad (3,674 comments) says:

    Choice example, James Butler.

    Admittedly cherry picked. Keeping the North Auckland line open doesn’t look so good re BCRs, but that is because of years of neglect, most of which happened when it was privatised.

    In fact almost all of rail was run into the ground and/or asset stripped when privatised.

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  95. Viking2 (11,467 comments) says:

    What is poverty? good question for every person has a different interpretation.
    There are poor people who think that they are rich and rich people who think they are poor.
    Poverty is a mind construct relevant to the mind of the person making the judgment.

    Buddhist Monks are poor by any standard but they would never consider themselves poor for they train their minds and so intellectually they are wealthy.
    Actually arguing poverty in NZ is about bullshit as you can get. No in NZ needs be poor for at any time on any day there is assistance available. Oh we might not have all we want and we may not have money and may indeed be in debt, but we are not poor.
    The only poverty in NZ is the poverty of the mind, failure to learn and adapt as the world changes.
    A bit like Labour and National really. Still think we are uneducated and need to be mothered every day. Still think we can’t run our own lives and that we need punishing by having our wages taken.
    Its increasingly clear that those with poverty stricken minds gravitate to politics while the smarter move higher callings (and to Australia.)

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  96. philu (13,393 comments) says:

    “..Labour and its allies do not realise that it is not possible to make everyone equally rich,,..”

    we have got one of the biggest gaps between rich and poor…

    ..and that gap has increased since the rightwing revolution…

    what english key did with that budget has just increased that gap..

    and hey…!..if you want the ultimate destination of that route..

    ..can i suggest a visit to port morseby..in new guinea….

    ..there the poor roam the streets in gangs…hungry…

    ..and the elite have to live behind high walls…alarmed in all senses of the word…

    and with armed guards…

    creating such a permanent underclass….

    ..as so many of you want…

    ..will see your grandchildren living in a world like that..

    ..y’know..!..all polemics/posturing to one side..

    is that really what you want…?

    phil(whoar.co.nz)

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  97. toad (3,674 comments) says:

    JeffW:

    Stop being a dork. I’, not sure anyone has engaged here from Labour, because they have no more solution than the Natty-boys.

    All Cullen and Maharey’s WFF ever did was gentrified the poverty trap. Nice try, but from brains constrained by neo-liberal ideology, as are most here on this thread.

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  98. krazykiwi (9,186 comments) says:

    we have got one of the biggest gaps between rich and poor

    Y’know I was thinking the same thing while in Jakarta… as I was whisked in my clients’ chauffeur-driven Merc limo, out of her gracious home compound, and past the 100’s of rows of corrugated iron shacks while the ‘locals’ people cooked their dinners in the street.

    Liar-brary open late is it?

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  99. big bruv (13,885 comments) says:

    Toad

    “constrained by neo-liberal ideology”

    Not constrained Toad, freed!, released from crushing socialism as prescribed by the Labour /Green government.

    Let’s face it, your answer to WFF is to let dole bludgers get in on the act as well, that is hardly going to encourage the parasites off the dole.

    Thank goodness we only have to deal with your idea’s Toad, I shudder to think how much damage the Greens could ever do if this nation was ever dumb enough to let your lot anywhere near the countries cheque book.

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  100. Bevan (3,924 comments) says:

    BB So you want to remove the current ETS which you admit will not achieve anything and replace it with another that will achieve even less (apart from the economic destruction of the New Zealand economy, which has always been the real goal of the Greens)

    Bruv, you obviously don’t get what I call “Green party nuance”. Just think like a complete utter pretencious tool wanting to impose you will selectively on the public based on their wealth and you’ll get it.

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  101. big bruv (13,885 comments) says:

    Bevan

    Oh I get it alright, one only has to watch the house every once in a while to see the arrogance oozing from every pore of the ginger ocker and the ever increasing female co leader to ‘get it’.

    In their minds only they are right, only they have the answers and if we could just listen to them for a while we would be won over by their argument.

    Thank god this will be the last Parliament they are a part of.

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  102. Rufus (667 comments) says:

    “I don’t have a problem with a 19 year old earning $10 an hour as a kitchen hand if when they are 30 they are earning say $25 an hour as a cook.”

    Nice. Problem is you’ll seriously struggle to find a business that would pay $25/hr for a cook. Even one with 10+yrs experience, including some serious international cooking experience. Try asking for even a measly $20/hr, people think you’re mad.

    I know, I tried – and am now devoting all my energy trying to get out of cooking.

    It has to be the lowest paid trade there is. There is no recognition for overseas experience, or the quality of that experience.

    I see good guys leaving the industry all the time – I know of 3 good chefs that returned from overseas the same time as myself – 2 are now builders, and 1 is an electrician.

    Good luck to the industry.

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  103. krazykiwi (9,186 comments) says:

    For the vast majority of New Zealanders, they start their working life earning a lot less then they finish it. And this is good – otherwise you extra skills and experience are not valued.

    As KiwiGreg notes above these things are all about inputs. Productivity (which creates the wealth that pays the wages) isn’t determined by skills and experience inputs. It’s determined by actual outputs, yet despite years of technological advances we are, with a few exceptions, sadly lacking at measuring these outputs. And so we measure hours worked and pay based on that. Hopeless really.

    One of the exceptions was a business I co-founded, where we created a points-based profit share scheme. I have never seen staff motivation to delight customers work like that did. It was unreal!

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  104. philu (13,393 comments) says:

    “..Thank god this will be the last Parliament they are a part of…”

    dream on…fat slug…

    they are at about 8.5%…

    whereas your little rand-ite/act-ite cult is hovering at about 1.5%…

    who exactly is it that ‘this will be the last Parliament they are a part of…”…?

    all the time..fat slug…

    you prove with your mouth…

    ..what an utter deluded fool you are..

    ..eh..?

    phil(whoar.co.nz)

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  105. Falafulu Fisi (2,179 comments) says:

    The developer (Victor Yakovenko) of the model mentioned in Brian Hayes article (“Follow the money”) which I linked to in my previous message right at the top is described in this New York Times Magazine summary (from 2005).

    Summary:
    =======

    Victor Yakovenko, a physicist at the University of Maryland, happens to think that current patterns of economic inequality are as natural, and unalterable, as the properties of air molecules in your kitchen.

    He is a self-described “econophysicist.” Econophysics, the use of tools from physics to study markets and similar matters, isn’t new, but the subfield devoted to analyzing how the economic pie is split acquired new legitimacy in March when the Saha Institute of Nuclear Physics, in Calcutta, held an international conference on wealth distribution.

    Econophysicists point out that incomes and wealth behave suspiciously like atoms. In the United States, for example, beneath the 97th percentile (roughly $150,000), the dispersion of income fits a common distribution pattern known as “exponential” distribution. Exponential distribution happens to be the distribution pattern of the energy of atoms in gases that are at thermal equilibrium; it’s a pattern that many closed, random systems gravitate toward. As for the wealthiest 3 percent, their incomes follow what’s called a “power law“: there is a very long tail in the distribution of data. (Consider the huge gap between a lawyer making $200,000 and Bill Gates.)

    Other developed nations seem to display this two-tiered economic system as well, with the demarcation lines differing only slightly.

    To an econophysicist, the exponential distribution of incomes is no coincidence: it suggests that the wealth of most Americans is itself in a kind of thermal equilibrium. To change it, “you will have to fight entropy,” Yakovenko says. That people aren’t mindless atoms and that governments try limited wealth redistribution doesn’t really matter, he adds: large, complex systems have their own statistical logic that trumps individual, and state, decisions. In March, Yakovenko told New Scientist that “short of getting Stalin,” efforts to make more than superficial dents in inequality would fail. Recent increases in inequality in the United States, he adds, stem from the rising fortunes of the top 3 percent; there has been little change in the rest of the distribution.

    Anyway, Victor Yakovenko reckons that his model says that government action to address this inequality doesn’t make a difference.

    Yakovenko et al’s original paper appeared in the The European Physical Journal B – Condensed Matter and Complex Systems (Volume 17, Number 4 / October, 2000)

    There is a free downloadable PDF pre-print version that is available from the link below. Here is the abstract summary:

    Abstract:
    In a closed economic system, money is conserved. Thus, by analogy with energy, the equilibrium probability distribution of money must follow the exponential Boltzmann-Gibbs law characterized by an effective temperature equal to the average amount of money per economic agent. We demonstrate how the Boltzmann-Gibbs distribution emerges in computer simulations of economic models. Then we consider a thermal machine, in which the difference of temperatures allows one to extract a monetary profit. We also discuss the role of debt, and models with broken time-reversal symmetry for which the Boltzmann-Gibbs law does not hold. The instantaneous distribution of money among the agents of a system should not be confused with the distribution of wealth. The latter also includes material wealth, which is not conserved, and thus may have a different (e.g. power-law) distribution.

    Download : Statistical mechanics of money by A. Dragulescu and V.M. Yakovenko, Department of Physics, University of Maryland, College Park.

    Note that the application of physics conservation principles (momentum, energy, charge, spin, etc,…) in economics has been heavily criticized by other econophysicists, (such as Joseph McCauley). Here is a quote from McCauley’s paper “Response to worrying trends in econophysics”.

    McCauley:
    ======
    …it would generally be quite useless to assume conserved quantities in economics and finance (see [4], Ch. 1). There is no reliable analog of energy in economics and there are very good reasons why no meaningful thermodynamic analogy can be constructed (see [4, Ch. 7]). In particular, money is not conserved. Money is created and destroyed rapidly via credit. Leveraging leads to big changes in ‘money’. Are there any conservation laws at all in real markets, and if so do they have any significance for deducing market dynamics? Conservation laws follow from invariance principles [8], so one should not expect conservation laws in socioeconomic ‘motions’ like financial transactions or production and consumption

    Despite these physics theoretical arguments & counter-arguments about wealth inequality in a society, I think that Yakovenko’s model is interesting.

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  106. philu (13,393 comments) says:

    “..must follow the exponential Boltzmann-Gibbs law..”

    is that the original ‘ exponential Boltzmann-Gibbs law.’..

    or the later revised one..?

    (it does make a difference..)

    phil(whoar.co.nz)

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  107. burt (8,269 comments) says:

    Falafulu Fisi

    Socialists won’t agree with that. That in itself probably tells us it is correct.

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  108. Pascal (1,969 comments) says:

    toad: It is a policy package – it doesn’t purport to be a full alternative Budget

    Toad, what I’m after is a costing. It’s all well and good to say “I’d like to give everybody a base salary of $100,000″ and that we’d have income based equality after that, but it’s quite another to have the finances to back it up. If there is a policy document without the means to afford it the policy becomes meaningless. It’s just smoke and mirrors and bullshit, basically.

    So – again.

    Do the Greens have a budget that shows how they will afford their policies?

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  109. toad (3,674 comments) says:

    Pascal, if you read the package it appears to have costings for each of its components – eg the big ticket item (first $10K tax free) results in a net reduction in tax revenue of $3.2 billion per year.

    This, I might add, is an alternative rather than an addition to the income tax cuts announced in the Budget.

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  110. hj (6,995 comments) says:

    this discussion degenerated into a brawl.

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  111. Bob R (1,370 comments) says:

    ***Rick Rowling (45) Says:

    The left would say that inequality leads to crime & poor education, so fix the income gap.***

    That would mean Singapore & Hong Kong should have the highest crime as the ranked 1 & 2 for income inequality amongst developed countries (ahead even of the US) but come last in terms of intentional killings.

    http://www.geoexpat.com/forum/thread59357.html

    http://en.wikipedia.org/wiki/List_of_countries_by_intentional_homicide_rate

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  112. Pascal (1,969 comments) says:

    toad: Pascal, if you read the package it appears to have costings for each of its components – eg the big ticket item (first $10K tax free) results in a net reduction in tax revenue of $3.2 billion per year.

    Page 8 gives a fair summary. It indicates how much the package will cost. The best measurement in terms of affording that cost is “In 15 years capital gains tax can pay for it”.

    How will it be paid for by then? By dropping other expenditure? What? I know you’ve indicated infrastructure. But that’s Toad, that’s not Green Party. This is why I’m after a budget.

    ACT prepared an alternative budget. Where is the Green Party’s? If they want to lead and reduce this perceived inequality, how are they going to do it?

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  113. Response Ability (3 comments) says:

    “In the UK social mobility has historically been difficult with such a class ridden society. In New Zealand I think it is far less so.”
    “The data on social mobility in NZ is fairly sparse – partly because you have to measure it over extended periods of time. But that is where I would like more focus to go.”

    Is that true though? Is there any proof of social mobilty other than “I feel”? You don’t normally make unsubstantiated comments, so I was curious at whether there was any data to back this comment up.

    Just curious.

    RA

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