back

An Egalitarian Society?

Brian Easton

Once upon a time New Zealand identified itself as egalitarian. Phrases like ‘a classless society’, ‘jack’s as good as his master; ‘a working man’s democracy’ were bandied around, often without much critical thought.

A distinction was made between ‘egalitarian’ and ‘equalitarian’. Certainly the aim was that New Zealanders were equal before the law, in access to health care and in educational opportunity (in each case it was necessary to overlook the way wealth could improve chances). Even so, using the words of the 1972 Royal Commission on Social Security, in an egalitarian society everyone is able to participate in and belong to the wider society. Sometimes willingly, sometimes reluctantly, measures were taken to reduce the importance of some differences – such as for those with disabilities.

There were oversights but, pressed, there were confident, complacent responses. Jack may be as good as his master, but what about Jill? (Women are different of course, and we were the first country in the world to give them the vote.) What about Haki? (They are happy in the pa and, anyway, we have the best race relations in the world.) It was a bit of a shock when Jill and Haki joined urban working life.

Under pressure, the final defence was that this was a country of equal opportunity. There are plenty of anecdotes intending to prove it, for – as in other countries – boys from low status families were sometimes successful (and the girls married well too). But there was little attention to those who did not succeed, some of whom may have been equally talented.

Perhaps the most charitable interpretation was that New Zealand as an egalitarian society was an aspiration, how New Zealanders wanted their society to be.

The last sentence is in the past tense. Is it still true? If asked, most New Zealanders would still commend ‘equality of opportunity’ and take it for granted that New Zealand is reasonably successful in attaining this goal.

What about the Royal Commission’s objective? Today the public rhetoric quickly lapses into the notion of the deserving and undeserving (ignoring that the children of undeserving parents may be deserving). However, the rhetoric still sees New Zealand as a land of opportunity where, as Peter Fraser and Clarence Beeby might have said, every person has the opportunity to pursue a life of the kind for which he or she is best fitted and to the fullest extent of her or his powers.

Is this true in recent decades? An answer necessarily looks at inequality on many dimensions. As Tony Atkinson has written, it is not possible to address (dynamic) inequality of opportunity without addressing (static) economic inequality. One dimension is not contested: women today have a lot more opportunity than their mothers who had, in turn, a lot more than their mothers.

Do Poverty and Inequality Matter?

Suppose the rise in poverty was all due to a fall in (perhaps relative) the living standards of the elderly. There might well be some unease about their state, some moral outrage. Would such indignation be ameliorated by assurances that they (or the vast majority) had an adequate income to sustain life and health, but had insufficient income to participate in and belong to the wider community? Fortunately the evidence is that the vast majority of the elderly – entitled to New Zealand Superannuation and other support – are generally not in such poverty (after allowing for the frailties of age).

Instead, the rise in inequality at the bottom of the household disposable income in the early 1990s fell mainly upon children and their carers. Poverty measurement is a complex exercise, but according to relative poverty line, poverty among children doubled between the pre-1990 years and the post-1990 years, following the cuts imposed by the 1990 Economic and Social Initiative. Add their carers, and most of the increases of those in poverty involved households with children.

The public outcry against child poverty two decades after the rise of the early 1990s tends to overlook this. New Zealand had been facing high child poverty for a quarter of a century – by 2010 children dumped into poverty in 1990 had become adults, many with their own children in poverty.

Why did it not show? The short answer is that no one looked or, rather, those who looked were ignored. When such issues that were identified they were addressed with income supplements they were targeted on the deserving poor – broadly, those that were employed. The first was the National (Bolger-Birch) Government’s Independent Family Tax Credit in 1996. At the time the Labour Opposition were extremely critical: ‘a simplistic tangle of bigotry and ignorance … barely disguised attack on beneficiaries … mean spirited, ill thought through and punitive … unholy product of National’s deeply held view that everyone on a benefit is a bludger and Treasury’s new right agenda … based on highly questionable incentives arguments’.1 When in government a decade later Labour chose a similar approach with their Working for Families tax credit.

Another defence was that the poor were Maori and Pasifika. In fact, while the proportions of Maori and Pasifika in poverty are higher, there are more Pakeha who are poor because they are a larger share of the population.

The (sadly limited) social science research effort reported that those on low incomes had poor health as a result of a lack of access to good nutrition and medical care and poor housing. There is plenty of evidence, throughout the world, that health status – usually measured by mortality – is related to class.

There is less evidence on the impact of inequality on opportunity, but it matters. Hugh Lauder and David Hughes showed that a child from a working class background had to, on average, have a significantly higher IQ than in order to get to university. But this was based on 1980s data and we do not know whether things got harder or easier after 1990; the increased access to tertiary education may have ghettoised the poorest.

Perhaps the most persuasive conclusion is from the OECD, based on many studies from many countries (none specifically New Zealand). It concludes that inequality inhibits long run economic growth. The causal mechanism is largely that poor children do not acquire the skills required for a modern economy which drags down subsequent economic performance. (The OECD does cite one econometric study suggesting that the effect of the rise in New Zealand income inequality reduced its economic growth rate.)

Why might a young person in poverty not acquire skills? (There may also be underachievement on other dimensions of the Fraser-Beeby objective to enable people to pursue a life of the kind for which they are is best fitted and to the fullest extent of their power).

It may be that these who are poor have parents (or a parent) less able to bring up children, although the source of the deficiency may be contested; it may not be due to poverty or it may be that they too were brought up in deprived circumstances which leads to poor health, poor formal education and poor informal education (such as books and computer power, additional lessons to cover some deficiency or even adequate space to study). Lack of funding may also prevent the student from participating in out-of-school activities enjoyed by classmates from more affluent backgrounds. Students learn informally from their peers enhancing – or not — their formal education, and adopt the peer group’s ambitions.

Many of the processes just listed, especially the last, require the family to have an adequate income for the student to be able to participate and belong to their community. Providing only sufficient to maintain life and health will mean the young person will end up (increasingly) behind their successful peers.

Thomas Gray reflected on the ‘rude forefathers’ in a country churchyard who suffered ‘chill Penury’ and wondered whether ‘some mute inglorious Milton here may rest’. A quarter of a millennium later we may wonder the same.

 


  

This is an extract from Not In Narrow Seas: A Political Economy of New Zealand’s History to be published in 2016 by Otago University Press.

1 Cullen, M. (1996) Hansard.

Categories: History, Inequality, Poverty
Brian Easton
About the author

Brian Easton

Economist
Brian Easton is one of New Zealand’s leading economists with a unique profile as an economic development practitioner, consultant, journalist and commentator. A former director of the New Zealand Institute of Economic Research and a one-time member of the Prime Minister’s Growth and Innovation Advisory Board Brian has numerous awards to his credit including being a distinguished Fellow of the New Zealand Association of Economists. Dr. Easton is an adjunct Professor of the Auckland University of Technology and is currently writing a history of New Zealand from an economic perspective, Not In Narrow Seas: A Political Economy of New Zealand’s History to be published in 2016 by Otago University Press.
Logo Header Menu