Hooton on poverty and income inequality

July 28th, 2013 at 1:00 pm by David Farrar

writes in NBR:

Since then, activists and academics have emphasised inequality. 

In New Zealand, the Child Action Group says 270,000 children – half of them Maori or Pasifika – live in , around a quarter of the total.

Otago University says 400,000 New Zealanders suffer fuel poverty.

Depending on the measure, the welfare industry tells us that around 760,000 New Zealanders live in poverty.  Our is said to be a bit better than the hellhole of Canada but a bit worse than the paradise of Greece.

So the aim of the left is to have us more like Greece, and less like Canada!

In reality, all these measures are mere statistical constructs.

If every New Zealander’s income immediately doubled (ignore for the sake of argument any inflation effect) so-called poverty in New Zealand would remain unchanged.

If dairy farmers and tourism operators have a good year, more children would be said to live in poverty because the median income would rise.

Similarly, cut middle-class salaries, or slash the value of the Rich List’s portfolios, and child poverty apparently falls.

This is very true, and those numbers quoted are near meaningless. The far better measure of hardship is the survey done by eithers Stats and/or MSD every few years asking a representative set of households what items or services they do not have, that they wish to have.

This is nonsense and confirms Margaret Thatcher’s famous assertion that the left would rather have the poor poorer provided the rich were less rich.

That case was made just last week by Dr Geoff Bertram – the architect of the Labour/Green electricity nationalisation to combat “fuel poverty” – when he proposed chief executive salaries should be no more than three times that of a company’s lowest-paid worker.

If Fonterra employed even one factory hand on, say, $20/hour, its chief executive would be limited to a salary of about $125,000 a year.  It is impossible to see how that would help even one of the 760,000 New Zealanders apparently living in poverty.  It is a proposal solely motivated by the politics of hate.

Dr Bertram is the architect of Labour’s and Green’s power policy.

Could you imagine Fonterra being unable to pay any staff member over $125,000 a year?

There is an argument that, at a certain point, inequality can become harmful because it can become a barrier to economic growth.

In a system of pure feudalism, where all new wealth that is created is confiscated by the rich, or a system of pure communism where all wealth is redistributed, no one would have an incentive to do anything, with economic collapse following.

The question, though, is whether there is the slightest evidence that New Zealand is remotely approaching either extreme.  If there is, it would surely be towards the latter.

Under the current tax system, including Working for Families which John Key rightly described as “communism by stealth” but has kept in place, the top 3% of New Zealand households pay a third of all net income tax.

The top 5% of households pay half and the top 12% pay three-quarters.

In net terms, the 44% of households earning under $50,000 pay no income tax at all.  Their true net tax rates are below zero.

Even when taking into account GST, fuel taxes and tobacco and alcohol excise, the redistributive effects of the current system are overwhelming.  Just 12% of indirect taxes are paid by the poorest 20% of households and a third by the wealthiest 20% of households.

The current economy is one that is growing, where unemployment is falling, wages are rising, inflation is below 1% and even the constructed measure of inequality is marginally narrowing.

It is also a country where someone like Rod Drury can turn an idea into a $2 billion company, including quite a few hundred million for himself.

We should return to the values of the 1980s and celebrate him and all those who have made it honestly onto this year’s list.

They create wealth and opportunities for New Zealanders.  It is a lie to say they make children poor.

A great column.

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57 Responses to “Hooton on poverty and income inequality”

  1. Redbaiter (6,480 comments) says:

    One word currently gives the best reponse to leftists and their insane obsession with “equality”.

    Detroit.

    Where the productive were gradually charged with carrying an ever increasing weight of unproductive until they collapsed under the load.

    The sad part is that momentum for such a collapse begins long before it happens, and a similar outcome is probably due in many western countries and cities, with NZ not exempt.

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  2. Ryan Sproull (6,661 comments) says:

    Dr Bertram is the architect of Labour’s and Green’s power policy.

    Could you imagine Fonterra being unable to pay any staff member over $125,000 a year?

    Once again.

    1. Bertram said the 3:1 ratio was his preference, but it could be something else, like 10:1.
    2. Even with 3:1, Fonterra would be unable to pay any staff member over $125,000 only if it was unable to pay its lowest-paid staff member more than $42,000.
    3. It was presented as an incentive for companies who wanted government contracts (though obviously reflecting what Bertram thinks all businesses should do).

    Disagree with Bertram, by all means, but disagree with what he’s actually saying.

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  3. Scott Chris (5,678 comments) says:

    This is nonsense and confirms Margaret Thatcher’s famous assertion that the left would rather have the poor poorer provided the rich were less rich.

    What, and Thatcher’s (and by association Hooten’s) cynically asinine assertion isn’t nonsense?

    Pfft.

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  4. labrator (1,691 comments) says:

    1. Bertram said the 3:1 ratio was his preference, but it could be something else, like 10:1.

    Once again, who cares? He’s not even worth disagreeing with.

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  5. OneTrack (1,967 comments) says:

    Once again

    “Bertram said the 3:1 ratio was his preference”

    so if Bertram was in charge, then it would be 3 to 1.

    Yes,I do disagree with hard-left socialist views such as Bertram’s. He obviously would be much more at home in socialist nirvanas such as Cuba and North Korea, where everybody gets the same.

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  6. Black with a Vengeance (1,552 comments) says:

    All these measures are statistical constructs…

    Goes without saying really.

    But the reality is, for all the spin, people are suffering in greater numbers while the rich get richer and the poor get poorer.

    Return to the values of the 80′s…

    Sheeit when did we ever change to other values? The mantra is still “Greed is Good”.

    Good on Rod Drury though. We could always do with more entrepreneurs.

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  7. adze (1,695 comments) says:

    Now that employment volumes are becoming decoupled from economic growth due to technological unemployment, I do think it’s becoming a misnomer to continue to paint companies as “job creators”. The fact is that job creation has stagnated even as company profits have lifted since the end of the GFC, due to a reduction in the number of low to middle-skill positions as a result of automation, and flattening of management structures.

    http://andrewmcafee.org/2013/01/mcafee-technological-unemployment-us-manufacturing-econom/

    The conventional answer is more education, but people have different intellectual and vocational capacities – not everyone can be a systems architect or a robotics engineer.

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  8. hj (5,693 comments) says:

    @ Bedraiter
    One word currently gives the best reponse to leftists and their insane obsession with “equality”.

    Detroit.

    Where the productive were gradually charged with carrying an ever increasing weight of unproductive until they collapsed under the load.
    …………………………………..
    But Matthew Hooten would rationalise GM shifting it’s plants to Mexico in the same way he reduces everything to a simple formula- where everyone wins.
    By the way
    test -test- test
    Mathew Hooten doesn’t believe in AGW. ‘Taint in his model of the world (located between his ears).

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  9. Tom Jackson (2,235 comments) says:

    The only reason folks like Hootoff are employed by the NBR is that they’re the best that rags like the NBR can do. This is worrying for many reasons.

    Here’s an example:

    In a system of pure feudalism, where all new wealth that is created is confiscated by the rich, or a system of pure communism where all wealth is redistributed, no one would have an incentive to do anything, with economic collapse following.

    This is pure horse hockey. Systems like this have existed, some over long periods of time, and people continued to do stuff. More to the point, economic collapse is not inevitable, and is not the same thing as relative inefficiency. In reality, people have all sorts of incentives for doing things. For example, the left need to learn that one of the reasons that people want to run their own business is not because it will necessarily make them better off economically, but because they prefer to work for themselves. There are many sorts of incentives, and its a theoretical economist’s fantasy to think that they can somehow all be reduced to one thing. But let’s leave that aside for another day.

    Moreover, I’m willing to bet that Hooton doesn’t even understand why we pay tax, and why it’s generally a good deal for everyone. But let’s put that aside too.

    There are generally recognised to be two sorts of poverty: relative and non-relative. In the New Zealand context the latter would mean not being able to obtain goods that are necessary to function in NZ society (themselves a nebulous set). Relative poverty is how wealthy you are compared to the rest of society (again, it’s sometimes difficult to see whether particular things count as one or the other).

    A society can be poor in a non-relative sense, and relatively equal (i.e. pre-contact Maori societies), or the opposite. New Zealand is probably more to the opposite end: most people can obtain the things needed to function in NZ society, yet there is significant wealth inequality.

    The mistake made by Hooton and others is to assume that relative inequality does not matter to people. But we know it does, and there’s even experimental proof that it does (the so-called “ultimatum game”). Relative inequality has a depressive effect on people’s welfare, so even if “a rising tide lifts all boats” economically it does not automatically entail improvements in welfare for most people. Evidence of this is the epidemic of mental illness among middle-aged middle class men (honestly, most middle-aged men I know are on the happy pills – I’m the exception). These are hard working people who earn decent sums of money, but who feel that they aren’t getting ahead. In the past, their pay packets would have been relatively good compared to the really well off people, but that is no longer the case. In other words: a happy society is one in which the middle classes do relatively well compared to the top, and the lower classes tolerably well off compared to the middle classes.

    It’s alright to say that inequality is good when it actually does increase the general level of welfare, but it does so in spite of itself having a depressive effect on welfare. This means that it might sometimes in practice be better to hold off on increasing inequality. It’s completely moronic to say that we should give inequality free reign on the sole grounds that it will reduce non-relative poverty.

    I’m sure Hooton probably knows this, but I guess certain thoughts are best left unexpressed when you’re a shill.

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  10. Tom Jackson (2,235 comments) says:

    He obviously would be much more at home in socialist nirvanas such as Cuba and North Korea, where everybody gets the same

    During the Cold War the Soviet Union suffered from greater wealth inequality than countries like Sweden and New Zealand.

    Ya really…

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  11. hj (5,693 comments) says:

    All this criticism is just the pot calling the kettle black. You could turn it around and demolish a lot of the beliefs the right wing rely on.

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  12. hj (5,693 comments) says:

    Tom Jackson Says:

    The mistake made by Hooton and others is to assume that relative inequality does not matter to people.
    ………..
    You’re dead right people are social animals. Related to that, I’m not sure what proportions but apparently a lot of the white settlers kidnapped and raised by native Americans choose the Indian life over civilisation (e.g Cynthia Parker captured by the Comanche).

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  13. adze (1,695 comments) says:

    Tom,

    Evidence of this is the epidemic of mental illness among middle-aged middle class men (honestly, most middle-aged men I know are on the happy pills – I’m the exception). These are hard working people who earn decent sums of money, but who feel that they aren’t getting ahead.

    This I think is symptomatic of something else; namely that people are more unhappy when they perceive a lack of mobility in an economic sense. If someone perceives that they can do well through their own influence, they are less likely to be concerned about their own relative poverty. If people however believe that they either cannot, or are prevented from getting ahead, that’s when they tend to get pissed off.

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  14. Mike Readman (353 comments) says:

    “Could you imagine Fonterra being unable to pay any staff member over $125,000 a year?”

    Yeah, because they need big money. Working at a milk processor is really difficult work.

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  15. hj (5,693 comments) says:

    adze says:

    If people however believe that they either cannot, or are prevented from getting ahead, that’s when they tend to get pissed off.

    you mean when first home owners are outbid by an in-pouring of well healed foreigners?

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  16. Redbaiter (6,480 comments) says:

    Well, yeah, they had all these arguments in Detroit too, with commie educators like Tom Jackson monopolizing the discussion.

    And then not long ago you had Hooton whining and using the false concept of equality with as much gusto as any leftist. Then it was doubly false and in reference to traditional marriage redefinition.

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  17. adze (1,695 comments) says:

    hj, seriously I’ve literally only ever seen you discuss four things: the ethnic chauvinism of certain Green Party MPs, your stance on immigration, climate change, and the property market.

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  18. Griff (6,263 comments) says:

    Devalue the effort of working by paying someone to do nothing and accept that some will do nothing.
    The more benefits pay the more people will use them.

    Restrict immigration allow the country to absorb the numbers we have welcomed over the last few decades.

    Government immigration policy is about trying to increase the economic base to pay for the future retiring baby boomers.
    Future pension and health costs we can not afford with the present tax base.

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  19. hj (5,693 comments) says:

    Adze Says:

    hj, seriously I’ve literally only ever seen you discuss four things: the ethnic chauvinism of certain Green Party MPs, your stance on immigration, climate change, and the property market.
    …………
    with the exception of climate change my underlying theme is that elites control and elites don’t experience the world in the way ordinary people do.

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  20. Tom Jackson (2,235 comments) says:

    This I think is symptomatic of something else; namely that people are more unhappy when they perceive a lack of mobility in an economic sense. If someone perceives that they can do well through their own influence, they are less likely to be concerned about their own relative poverty. If people however believe that they either cannot, or are prevented from getting ahead, that’s when they tend to get pissed off.

    I’m not sure we disagree. I’m talking about clever guys with degrees (some graduate degrees) who have worked their asses off, and who have discovered that even if you do that, you are still nowhere near even a chance of getting to where the real money is. That, in my opinion, is bad for society.

    Some of it is because inequality at the high end is really insane now, and some of it is because mobility has declined. I can’t help but think that the low inequality/high mobility system of the 60s and 70s worked the best.

    Chris Hayes has an interesting book about where it all went wrong.

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  21. Tom Jackson (2,235 comments) says:

    Well, yeah, they had all these arguments in Detroit too, with commie educators like Tom Jackson monopolizing the discussion.

    Yes, because my relatively middle of the road comments – comments that would have me in many cases banned from The Standard as a heretic – are evidence of radical left views about everything.

    Shame on me for not swallowing the Kool-Aid about market liberalism or some of the wild conspiracy theories that have currency on this blog or its counterparts.

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  22. hj (5,693 comments) says:

    What about these statistics. They must indicate something?:

    Background of housing in NZ
    1.4 million houses
    Most houses inhabited for 70 to 90 years
    Many houses are old, cold and damp
    High level of deferred maintenance
    Relatively low building code standards
    Declining home-ownership rate
    Mäori home-ownership rates remain lower
    No wealth tax, capital gains tax or death duties
    Around 30% of people rent from private landlords
    5% of people rent social housing
    Public consequences
    • Untaxed increase in house prices helping to fuel
    wealth concentration and income flow
    • Increase in relative inequalities has social and health
    consequences at both individual and neighbourhood
    levels
    • Housing is probably our poorest maintained
    infrastructure
    • Poor housing leads to health problems that lead to
    greater health care utilisation
    • Poor housing leads to inefficient use of energy
    http://www.treasury.govt.nz/publications/media…/tgls-howdenchapman.pdf‎

    and this
    If you look at any of the World’s Richest People (US “Forbes 400 Richest Americans”, or Australia’s “BRW Rich 200 List”), you will see these people have generated their wealth from a wide variety of businesses and professions, and all invest in real-estate as an important Wealth creation mechanism.
    90% of millionaires get there by investing in real-estate.

    The attraction with New Zealand property as an investment is the low barrier to entry, favourable and stable exchange rates and the tax system. Property price growth is closely linked to population growth. Expected population growth in New Zealand’s major cities provides a sound basis for increasing property value. Property prices are also relatively undervalued compared to its trading partners and closest neighbour Australia.

    http://www.propertymarketnz.com/1_22_Why-Invest-in-Property.html

    and of course it is land inflation that makes these people wealthy while becoming a debit to those outside the loop….. and nobody made land, yet everybody needs some land (in one way or another) for their survival.

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  23. hj (5,693 comments) says:

    Griff Says:

    Government immigration policy is about trying to increase the economic base to pay for the future retiring baby boomers.
    Future pension and health costs we can not afford with the present tax base.
    ……..
    the Australian Productivity Commission called that a “sugar hit” as those new workers age and need looking after.

    http://www.theaustralian.com.au/national-affairs/immigration/immigration-link-to-economic-growth-yet-to-be-proven-says-productivity-commission/story-fn9hm1gu-1226179973978

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  24. ross69 (3,637 comments) says:

    So, Matthew Hooton thinks poverty is great. Like I never saw that coming…

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  25. ross69 (3,637 comments) says:

    If Fonterra employed even one factory hand on, say, $20/hour, its chief executive would be limited to a salary of about $125,000 a year.

    Hooton isn’t the smartest guy in the room. The CEO of Fonterra could be paid over a million bucks in Bertram’s model. (Whether the CEO would actually “earn” a million bucks is another matter.)

    Hooton needs to engage his brain before he interviews his PC.

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  26. Redbaiter (6,480 comments) says:

    “I’m talking about clever guys with degrees (some graduate degrees) who have worked their asses off, and who have discovered that even if you do that, you are still nowhere near even a chance of getting to where the real money is.”

    So what Tom? A degree and working hard provides no guarantee of being rich. If you are not born rich or fortunate in some way, the only path to riches is to produce something in great demand and/or in short supply. That could be a skill or a product.

    Then again, you could always fall back on being a socialist cronyist or a crony capitalist. Like Obama, Al Gore or the Clintons, (for a few examples from many available) self enriching creeps who were all worth fuck all until they maneuvered their way to wealth through their socialist political networks.

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  27. bhudson (4,720 comments) says:

    @ross69,

    There is a world of difference between ‘absolute’ poverty and ‘relative’ poverty in NZ. And you know that.

    Max Rushbrooke and the like would have us believe that not having Sky TV is an indicator of poverty.

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  28. thedavincimode (6,122 comments) says:

    Goodness Russell at 7.00pm! New meds? You made sense.

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  29. Bob R (1,250 comments) says:

    I’ll take the Child Poverty Action Group more seriously when they get serious about encouraging use of CONTRACEPTION by parents who can’t afford kids, let alone multiple children.

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  30. Redbaiter (6,480 comments) says:

    “You made sense.”

    Like you would know?

    What are you going to do with your obsession now I’m blogging again at Truebluenz.

    I think its you who will need to upgrade the meds.

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  31. Griff (6,263 comments) says:

    :lol:
    We shamed the old duck into revisiting his first love.
    So now we will see endless link whoring.
    and
    Masterbaitery proxy self visits 24 /7 in order to deceive himself.

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  32. adam2314 (377 comments) says:

    It is not our income structure that lacks equality.. It is out Tax Structure..

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  33. Redbaiter (6,480 comments) says:

    I’ve been posting for four days loon, so if I’m “endlessly link whoring” I’ve got some catch up to do.

    Not that I ever get more than about 5% of my hits from Kiwiblog anyway.

    Truebluenz is a bit too cerebral for the kind of clapped out hippy dropkicks, hillbilly progs and urban liberals who proliferate here.

    Make sure you stay away too Grief, you know I don’t tolerate cowardly demented trolls.

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  34. nasska (9,526 comments) says:

    So Baity’s cleaning the shopping bags & tumble weeds off Trueblue.

    Once again it will prove therapeutic for fruit loops & those fresh off the turnip truck. :)

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  35. Redbaiter (6,480 comments) says:

    “Once again it will prove therapeutic for fruit loops”

    Yeah well, I only posted the link to help Thedavaselinemode cope.

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  36. Psycho Milt (1,975 comments) says:

    Hooton writing on poverty and inequality? What next – Sue Bradford offers investment advice?

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  37. eszett (2,271 comments) says:

    Under the current tax system, including Working for Families which John Key rightly described as “communism by stealth” but has kept in place, the top 3% of New Zealand households pay a third of all net income tax.

    The top 5% of households pay half and the top 12% pay three-quarters.

    The only “inequality” that the right will constantly complain about is the “inequality” of tax payments.

    They never ask the question how much of income do those top 3% or top 5% or 12% share, which is the actual reason why they pay so much of the tax burden.

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  38. eszett (2,271 comments) says:

    Truebluenz is a bit too cerebral for the kind of clapped out hippy dropkicks, hillbilly progs and urban liberals who proliferate here.

    Make sure you stay away too Grief, you know I don’t tolerate cowardly demented trolls.

    ROFTL, ah yes, truebluenz, that haven for liberty, freedom and free speech.

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  39. RRM (8,988 comments) says:

    “A bit too cerebral…” :lol: LOL that’s a good one!

    The last time I visited Truebluenz the first thing I saw was pictures of Helen Clark, John Key and Shearer lined up with the giant word PROGRESSIVE over the top.

    It was not quite up to the standards set by “faye” on her superb website “the hairy armpit” (Cf: http://thehairyarmpit.blogspot.co.nz/2008/06/johntard-key-strikes-again.html ) but it was not bad.

    Then there was one with photos of DPF, Cactus Cate and Cameron Slater with some sort of rant about how fake they are.
    Then there was a thing about having a firing squad to get rid of enemy collaborators.

    I was left thinking how… cerebral it all was. :-)

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  40. Redbaiter (6,480 comments) says:

    “ROFTL, ah yes, truebluenz, that haven for liberty, freedom and free speech.”

    Eszett, the most common identifying factor among all commies is that they’re dumb, and they frequently say things that betray this dumbness.

    Just as you have done above in making it so clear you do not understand what free speech is all about, which is actually a pretty common failing among dumb commies.

    You obviously think that if I subscribe to the principle of free speech I must therefore provide you with webspace that I pay for so you can insult me with knuckle dragging contributions such as you make here on Kiwiblog.

    Not right dumbarse. Completely wrong.

    What it means is I support your right to go and set up your own blog and write whatever you like on there.

    Now if the gummint came along and closed us both down, that would be an infringement of free speech.

    Get it numbnuts? It is only gummint that can limit free speech.

    No charge for the lesson. I make them free for I know that as far as commies like you go, its in one ear and out the other anyway.

    If you had any real ability to absorb and discriminate on information, you wouldn’t be a commie.

    Why the left hate free speech

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  41. Redbaiter (6,480 comments) says:

    “Then there was a thing about having a firing squad to get rid of enemy collaborators.”

    Actually, that was about the Vichy Police.

    You probably don’t know who they were, or get the point of the reference.

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  42. eszett (2,271 comments) says:

    You obviously think that if I subscribe to the principle of free speech I must therefore provide you with webspace that I pay for so you can insult me with knuckle dragging contributions such as you make here on Kiwiblog.

    Says a lot about you, red, that merely having an opinion contrary to your own would insult you.

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  43. Redbaiter (6,480 comments) says:

    No no, its the stupidity of your opinions that insults me.

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  44. eszett (2,271 comments) says:

    lol, red, but any opinion different to yours is by definition stupid. By that 99.9% of New Zealanders have nothing but stupid opinions.
    Explains why you are so angry, you constantly get insulted.

    Maybe you should complain to the Human Rights Commission.

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  45. Tom Jackson (2,235 comments) says:

    So what Tom? A degree and working hard provides no guarantee of being rich.

    No one said that it does, but for a society that doesn’t want trouble it ought to be a ticket to the middle class. Otherwise, you’re telling ambitious, talented people that no matter what they do, they won’t be able to get ahead. How do you think communist and other revolutionary parties came into existence in the first place? How long do you think that medicating the problem will keep it under control?

    And you an intellectual? lol

    Pull the other one.

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  46. Black with a Vengeance (1,552 comments) says:

    Its more about keeping the other guy down than getting ahead these days.

    Oh and while they’re down there…

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  47. Tom Jackson (2,235 comments) says:

    Redbaiter is really a member of the NZ Communist Party on a secret mission to discredit NZ conservatism.

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  48. Redbaiter (6,480 comments) says:

    “How do you think communist and other revolutionary parties came into existence in the first place?”

    Mostly through murder and bolshevikism. However to suggest that the conditions that existed then are in any way similar to what exists today is silly.

    You lefties have to stop asking everyone else to pick up the tab for your own bad judgment. And you also have to stop threatening society with violence if they do not.

    If you go to university and get a degree in sociology when there is no demand for that profession then you can’t expect that degree to make you rich no matter how hard you work. On the other hand, some engineering disciplines today are well paid.

    Why should the engineers be compelled by corrupt socialist politicians to give part of their earnings to the sociologists?

    It was the sociologists own damn foolishness that condemned them to low wages in the first place?

    The sociologists just have to live with their decisions, and there are many more honest alternatives to raising their income before they need to start voting for cynical socialist politicians who will steal the engineers’ income for them in return for the sociologist’s vote.

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  49. Redbaiter (6,480 comments) says:

    “Redbaiter is really a member of the NZ Communist Party on a secret mission to discredit NZ conservatism.”

    One thing that always makes me laugh Tom is commies and other assorted left wingers trying to tell me they understand what Conservatism is.

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  50. Tom Jackson (2,235 comments) says:

    On the other hand, some engineering disciplines today are well paid.

    The people I’m talking about majored in the hard sciences, numb nuts.

    Once again, you fail.

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  51. MikeS (20 comments) says:

    “if dairy farmers and tourism operators have a good year, more children would be said to live in poverty because the median income would rise.”
    - Utter crap. How does he get the median rising from the stated case?

    “In net terms, the 44% of households earning under $50,000 pay no income tax at all.”
    - Again utter crap. What about all the people on less than 50k that are single or have no kids?

    @Redbaiter – Your comment about Detroit clearly shows you have absolutely no clue at all.

    Must be a bitter pill for many of you guys who worship economic growth, that since the very first labour government, economic growth has been higher under every single labour government compared to the corresponding national government and overall, economic growth is on average 3% higher under labour than under national.

    That said, economic growth under our current economic and monetary system is not a good thing. You only have to look at the first law of sustainability and understand the exponential function to see that. It is a mathematical certainty that our economic system will collapse entirely if we continue as we are.

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  52. Psycho Milt (1,975 comments) says:

    - Utter crap. How does he get the median rising from the stated case?

    Simple – either he doesn’t know the difference between median and mean, or he’s willing to bet a lot of the NBR’s readers don’t. Given that he quoted it, I guess DPF is also willing to bet a lot of Kiwiblog’s readers don’t know the difference (which, when you read the comments, seems a fairly safe bet).

    - Again utter crap. What about all the people on less than 50k that are single or have no kids?

    A lie that’s believable if you don’t actually think about it is the propagandist’s stock-in-trade.

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  53. tas (527 comments) says:

    Tom Jackson: It’s true that people don’t like inequality. All else being equal, I’d definitely prefer a more equal society.

    The problem is that the left is obsessed with inequality and have completely the wrong approach to it. They seem to think that hurting the rich will help the poor. Their measures of inequality and poverty are utterly perverted. If Bill Gates has a heart attack, the the left’s numbers would have you believe that 100 children would magically be lifted out of poverty. In reality, Gates is a philanthropist and the poor would be worse off without him.

    That’s why the left are obsessed with maximum wages and taxing the rich. The left should instead worry about improving the lot of the poor. And, no, that doesn’t mean handing them a stack of cash that you confiscated from some rich prick. If you want people to lead fulfilling lives (which is the concern you highlighted), then welfare is not the answer.

    Equality of opportunity is what matters, not equality of outcomes. The latter is an entirely artificial communist fantasy. If you have more equal opportunities, you will get more equal outcomes (in a natural way), but not the other way around. Redistributing wealth does not address the causes of inequality.

    We need to focus on education. Inequality starts early. There is huge inequality in educational achievement of children. If you want a better society, help poor kids get better opportunities, don’t hold back successful adults.

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  54. itstricky (1,139 comments) says:

    I don’t imagine many read and understood the median vs.mean – they would have been just drinking the cool aide. Hoot. Pulling the wool over the eyes of esteemed accountants and business men who read the NBR? Not likely. That he does not need to pull the wool? Likely.

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  55. itstricky (1,139 comments) says:

    And in turn, tas, you are drawing an incorrect correlation suggesting every high earner is akin to Bill Gates.

    Trickle down doesn’t work any more than communism does. This ain’t the 80s; one can’t be conned again with stories of riches beyond belief. Esp. When the chief of Fonterra earns literally millions more than his important subordinates and plebs. Pyramid scheme, anyone?

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  56. Tom Jackson (2,235 comments) says:

    The problem is that the left is obsessed with inequality and have completely the wrong approach to it. They seem to think that hurting the rich will help the poor. Their measures of inequality and poverty are utterly perverted. If Bill Gates has a heart attack, the the left’s numbers would have you believe that 100 children would magically be lifted out of poverty. In reality, Gates is a philanthropist and the poor would be worse off without him.

    That’s a fair comment. I despair of supposedly left wing people who believe stupid things like that.

    That’s why the left are obsessed with maximum wages and taxing the rich. The left should instead worry about improving the lot of the poor. And, no, that doesn’t mean handing them a stack of cash that you confiscated from some rich prick. If you want people to lead fulfilling lives (which is the concern you highlighted), then welfare is not the answer.

    The current fashionable answer is called “predistribution”. However, I don’t share the visceral objection to welfare that some do, mainly because it’s often the cheapest and easiest way to solve the problem (and it also comes in many forms).

    Equality of opportunity is what matters, not equality of outcomes. The latter is an entirely artificial communist fantasy.

    A couple of things. First, despite what you might expect, the communist countries have tended to have worse problems with inequality than capitalist countries. The Soviet Union was more unequal than countries like NZ and Sweden.

    Secondly, I think that EOO has been found wanting. Part of the problem is actually equalizing opportunities. If we really wanted to do this, it would require massive intervention to stop wealthy people buying their kids an advantage. For example, the standardised testing scheme in the US was designed to be an EOO system, but has now become so thoroughly gamed by wealthy people (the test prep industry) that it has become more of a nuisance than a help. If you really want to make opportunities equal (which in practice is supposed to mean correcting for all inequalities other than talent and effort), you would end up with a much higher degree of wealth egalitarianism than we have now.

    Personally, I think there’s not much that can be done without creating other, horrendous problems. I’d settle for having material inequality acknowledged as a social and moral evil and to be factored into policy decisions. That doesn’t mean that it takes precedence over other factors, and the result might still be quite unequal – I just think it should matter.

    On the other hand, if you really wanted to go the EOO route, I can only think of one solution, and that is lotteries. In other words, anyone who wants to go to law school has to meet a certain standard, and then goes into a lottery with everyone else for the limited number of places (perhaps a small number of places could be reserved for truly exceptional students). In the end, nothing is fairer or more equal than a lottery.

    But that’s just my two cents.

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  57. tas (527 comments) says:

    Tom Jackson: Thanks for your thoughtful response. I agree that inequality is a bad thing (at least inequality that is derived from unequal opportunities). My gripe is with the way it is addressed.

    There is an argument to be made for limited income redistribution (as we have with working for families). But I do not accept that this is anything resembling a remedy to inequality. On paper, redistributing wealth fixes the problem. But it does little to change inequality in terms of opportunities and education.

    I was talking to a teacher at a decile-1 high school. He said that the real reason so many of his students fail is that they don’t try. They don’t value education, because their parents don’t value it. Eventually, they just stop attending.

    That’s a really hard problem to solve. It’s an inter-generational attitude problem. Throwing money at it won’t fix that, even if, in the short term, is evens out your graph.

    Perfect equality of opportunity is impossible. Rich parents will always find ways of helping their children. But that’s a second-order problem. We should be more concerned with getting poor kids decent opportunities and educational outcomes.

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