Steve Baron: New Zealand's Titanic Problem

Imagine for a moment you’re in the middle of the Atlantic Ocean aboard the Titanic. You’re in the ballroom having the time of your life rubbing shoulders with other wealthy individuals—the few who could afford such an expensive first class berth on one of the most expensive ships of its day. 

Suddenly the ship lurches and you wonder what the hell happened. Then you bump into Professors Richard Wilkinson and Kate Pickett (authors of The Spirit Level). They’ve just come up from below deck and tell you there’s a massive rip along the side of the ship and it’s taking on water fast. The Captain then makes an announcement over the ships intercom; “Don’t worry, we’re just taking on a little bit of water but the pumps are working well. By the way, we’ve rearranged the deck chairs and the band will play its latest hit song, so you can all sit back and relax without a care in the world”.

Comparably, what a shock it was to hear the Captain of our ship, John Key, announce in his recent ‘Key Notes’ video blog that; “Income inequality has actually reduced”. The reality is that New Zealand society has a colossal rip along its entire side which was highlighted by the statistics in Wilkinson & Pickett’s book. For Key to simply spin such propaganda regarding this devastating social problem is to show a real lack of sagacity and a disconnection with society in general.

Of course it’s not surprising that Key wants to paint a rosy picture, after all it is election year and he doesn’t want anything unbalancing his ship. However, Key ignores this problem at the country’s peril. Income inequality is a curse on us all and certainly far more important than Key’s facile attempt to sidetrack the public with his magniloquent flag debate—surely hypocrisy at its pinnacle  given Key’s refusal to respect the public’s wishes in previous referendums.

Unfortunately wealthy people are often quick to dismiss income inequality as an issue, believing it has little effect on society and probably doesn’t concern them specifically. They often believe income inequality is simply a cunning socialist plan to take yet more money from the rich and give it to the undeserving poor… let the poor work their way up just like John Key and I did, from our humble State house beginnings. The difference is that back in our State house days, we had equal opportunity. Today it’s a completely different ball game for young people. The poor of today do not have equal opportunity to get themselves out of the poverty trap because the steps on the ladder are simply too far apart.

Even though the wealthy don’t realise it, income inequality affects them directly too. The hard part is trying to explain the significance of income inequality and getting politicians to come to grips with it as a serious social problem. It’s like a balance of payments deficit or inflation, it’s there but it doesn’t affect anyone does it? In fact income inequality produces ‘displaced aggression’ and that aggression gets played out in everyday life leading to: child abuse, spousal abuse, substance abuse, youth suicide, petty crime, violent attacks and increased taxes which we all pay to pick up the pieces. Like inflation that eats away at our wealth, income inequality eats away at our society—without us being fully aware of it or even connecting up all the dots.

It’s going to take a leader with guts and foresight to address the problem. It’s going to take a Paul Volcker (Chairman of the US Federal Reserve under Presidents Carter and Reagan from 1979-1987 who showed the world how to smash inflation) to smash income inequality. President Obama is beating the drum on income inequality in the USA, but in reality, whether or not he can do anything about it there, given the USA’s complicated political system, is yet to be seen. Even if Obama or his successors can solve the problem in the USA, their solutions will not necessarily be what New Zealand needs to solve the problem here. Income inequality is a cunning beast and the poison to kill it off in one country doesn’t always work in another. One thing is for sure, dismissing this problem as inconsequential is like saying the Titanic wasn’t in trouble.

Steve Baron is a political scientist, co-editor of the book ‘People Power’ and the Founder of Better Democracy NZ.