Income distribution

Are the left lying to us about inequality?

The left-wing parties claim that New Zealand is becoming less equal, that inequality is rising and that nasty Mr John Key, when he isn’t snacking on babies, is plotting with banksters to make things worse.

It is plausible to desperately stupid people but the reality is far from that:

New Zealand needs to “change its tune” on inequality, think tank The New Zealand institute says.

The group, which is supported by many leading business people, made the call following the publication of a Treasury paper which found inequality in this country has, with some variability, largely remained constant for the past 20 years.

The Treasury paper follows close on the heels of an ?OECD report which found income inequality in New Zealand was above average for the group, which includes many of the world’s most advanced economies.

Last December the OECD also said the Gini co-efficient – a broad measure of inequality – rose faster in New Zealand than in many other OECD countries between 1985 and 2011. Growing inequality meant New Zealand’s economy had only grown by 28 per cent between 1990 and 2010, rather than the 44 per cent growth it should have had.

The new Treasury report acknowledged inequality in this country did rise from the late 1980s to the early 1990s. But it said that since then inequality had – with some variability – remained either constant or had fallen slightly.

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About that income inequality thingy the left always bang on about

All last year we heard various Green and Labour politicians go on about income inequality…and how the “poor” of New Zealand are sooooo hard done by.

On top of that they claim that National is evil incarnate and the poor are being hammered by National just for shits and giggles.

They point to all sorts of weird economists who have written books that upon examination the facts don;t stack up.

Buy that has never stopped the left-wing pushing a massive lie on the people, just look at global warming by way of an example.

Since they like quoting reports and overseas facts how about they report this one…the one that says that inequality isn’t growing, it is reducing….and has been for 20 years. (Kind of like there has been no warming for 20 years also)

Income inequality has surged as a political and economic issue, but the numbers don?t show that inequality is rising from a global perspective. Yes, the problem has become more acute within most individual nations, yet?income inequality for the world as a whole has been falling for most of the last 20 years. It?s a fact that hasn?t been noted often enough.

The finding comes from a recent investigation by Christoph Lakner, a consultant at the World Bank, and Branko Milanovic, senior scholar at the Luxembourg Income Study Center. And while such a framing may sound startling at first, it should be intuitive upon reflection. The economic surges of China, India and some other nations have been among the most egalitarian developments in history.

Of course, no one should use this observation as an excuse to stop helping the less fortunate. But it can help us see that higher income inequality is not always the most relevant problem, even for strict egalitarians. Policies on immigration and free trade, for example, sometimes increase inequality within a nation, yet can make the world a better place and often decrease inequality on the planet as a whole.

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So-called OECD report into inequality slammed by Rodney Hide

In the NBR Rodney Hide does what no mainstream journalist apparently bothered to do, actually read the co-called report by the OECD into the economy.

Andrew Little and Russel Norman were involved donkey deep in slamming the government over the “report”, but it appears they didn’t read it either.

Rodney Hide did however.

[W]hat a proposition! That inequality hampers growth.

It sounds nonsense, but is it? I thought on your behalf, dear readers, I should wrap a wet towel around my head and find out.

The first thing I noted was that it?s not an official OECD report. It?s a working paper. ?The opinions expressed and arguments employed are those of the author.? ?OECD Working Papers should not be reported as representing the official views of the OECD.?

Ok so not a report at all, just a working paper from some womble.

The study itself starts badly saying it?s not known whether inequality has a positive or negative effect or whether it has any effect at all. The author has no theory. There is no testable hypothesis.

Undaunted, he dives into 40 years of data across 31 countries. His trusty computer and statistical package grinds away.

Aha, out spits a result. It?s significant! But it makes no sense. Especially the bits that didn?t make news.

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Oh no, another of Labour’s mantras of misery destroyed

Labour continues to run a mantra of misery about New Zealand, despite their claims of a positive campaign.

I think they think that if they say it enough it will become a truism rather than the Nasty party reputation they have built.

Unfortunately for them their campaign is built upon problems that are slowly coming right as the economy grows and their mantra of misery is becoming tiresome in teh face of facts.

One?area that they have harped on about, inequality is also coming right according to latest reports.

Child poverty has dropped back almost to pre-recession levels, as New Zealanders’ jobs and incomes finally climb out of a five-year downturn.

The Ministry of Social Development’s latest annual report on household incomes says the number of children in households earning below 60 per cent of the median wage fell by 25,000 to 260,000 last year, the lowest number since 2007 when there were 240,000 children in poverty. ? Read more »

Labour supporters believe that taxes are to punish the rich, not to raise revenue

Daniel Hannan blogs at The Telegraph about taxation and how Labour supporters believe that?taxes are to punish the rich, not to raise revenue.


Ponder the graph above. Sixty-nine per cent of Labour supporters would want a top rate tax of 50 per cent even if it brought in no money.

I?m sure they?d dispute the premise. I?m sure they?d insist that it did bring money in. And, on one level, they?d believe it; it?s human nature to start with the result we want and then rationalise it to ourselves with what look like hard data. I think their rationalisation would be false, obviously ? once the behavioural consequences of the tax are factored in, it becomes a net drain on revenue ? but I might be subject to my own confirmation bias in the other direction.

Anyway, this isn?t a blog about the statistics ? I?ve already posted one of those. No, this is a blog about the mind-set of people who see taxation, not as an unpleasant necessity, but as a way to punish others.? Read more »

Too stupid to get on in life

It is refreshing to have politicians like Boris Johnson…who tell it how it is.

Economic equality will never be possible because some people are too stupid to get ahead, Boris Johnson said on Wednesday night.

Natural differences between human beings will always mean that some will succeed and others will fail, the Mayor of London said in a speech.

Read Mr Johnson’s speech at the Margaret Thatcher lecture in full

Despite calling for more to be done to help talented people from poor backgrounds to advance ? including state-funded places at private schools ? Mr Johnson said some people would always find it easier to get ahead than others. ?Whatever you may think of the value of IQ tests, it is surely relevant to a conversation about equality that as many as 16 per cent of our species have an IQ below 85, while about 2 per cent have an IQ above 130,? he said.

Addressing the Centre for Policy Studies in London, Mr Johnson suggested that economic inequality was useful because it encouraged people to work harder.

He said: ?I don?t believe that economic equality is possible; indeed, some measure of inequality is essential for the spirit of envy and keeping up with the Joneses and so on that it is a valuable spur to economic activity.?? Read more »

Why the minimum wage shouldn’t be lifted

Labour has as one of its core policies that they will lift the minimum wage. The green taliban support that as well and if they have their way would lift it even higher.

Perennially the politicians of the left clamour for the lifting of the minimum wage claiming that it will lift workers out of poverty…of course they ignore the fact that the minimum wage is far higher now than it used to be and yet the workers at that level are still poor relatively. They are allowed to get away with it because right thinking politicians have poorly thought out rebuttals for the [il]logic of the left.

Worse still National had Kate Wilkinson as labour minister for a time, and she was overly?sympathetic?to union demands.

The same call is being made in the US to lift the minimum wage and Evan Soltas at Bloomberg says that must be resisted…and goes further and proposes an alternative to the minium wage…an extension of the modification of our Working for Families, but with much more aggressive abatement regime.

Liberal arguments?for increasing the minimum wage have a fundamental flaw: They restrict the set of policy choices to either a minimum wage increase or doing nothing. That means they overlook the single most important federal policy for the poor: the?Earned Income Tax Credit.

The?EITC?is a measure in the federal?tax code?to support the living standards of the poor without creating a “welfare trap” by diminishing the incentive to work. Economists?widely?consider?the credit a success for reducing poverty while increasing employment.? Read more »

Maybe things aren’t so rooted here after all

? Andrew Sullivan

A new book compares us with the seppos. Unfortunately we can?t project power with a carrier task force, and the Greens stop us from doing much of anything, but in other ways we are exceptional.

David Hackett Fischer stands up for New Zealand in his new book?Fairness and Freedom.?Benjamin Schwarz?reviews:

In some ways [New Zealand’s] achievements seem all the greater when compared with those of the United States. In 2010, its unemployment rate was nearly half of ours. Our economic inequality is the highest of any developed country?s; New Zealand?s hovers much lower on the list. New Zealand ranks first in Transparency International?s global survey of government honesty; the United States ranks 22nd?just ahead of Uruguay!

And comparable divergences, Fischer shows, are found “in trends and measures of political partisanship, legislative stalemate, judicial dysfunction, infrastructure decay, home foreclosures, family distress, drug consumption, and social violence.” …?The result: by virtually every measure, New Zealand has a more just and decent society than ours?while resorting far less readily to legalistic and legislative remedies.

That kind of paints a different picture from that which the Labour party scribbles.