From education flows wealth
Fairness in the way wealth and income is spread in our society is under the spotlight in this election.
New Zealanders share unequally in both and many of us feel deeply about it.
But it seems few of us understand the true scale of inequality.
AUT academic Peter Skilling surveyed just over 1000 people and it turns out that on average we think the top fifth of New Zealanders by wealth own just over half the pie (51.8 per cent) and that the next fifth down own 18.3 per cent of it.
We think the middle fifth own 14.6 per cent, with the rest of the wealth split among the bottom two-fifths, our poor. If only that were true. Skilling says the most recent data from Statistics New Zealand in 2007 indicated the split was that the richest fifth owned 70 per cent of the wealth, with 18 per cent in the hands of the next fifth and 10 per cent owned by the middle fifth.
Just 2 per cent is owned by the bottom two-fifths combined.
When asked how they would like the pie to be shared, people told Skilling a split of 30 per cent for the top fifth, 40 per cent for the next two-fifths with the final 30 per cent split among the lower echelons.
Skilling also asked people to estimate where they fitted in to the household income pecking order.
He found that while the poor know they are poor, many people in the top two income brackets thought they were in lower ones.
Just three in eight of people from the top 40 per cent of households by income thought they were in the top 40 per cent.
There’s a great deal of theorising that could be done on Skillings’ findings but the most tempting one is that we are a populace living in denial and ignorance.
That must make it harder for the ‘‘leftie’’ parties campaigning on increasing economic fairness through higher taxes for the rich, lifting the minimum wage and strengthening employee rights.
It must also make it easier for the current Government to laud our ‘‘rock star’’ economy without feeling it has to explain why so many people aren’t getting much benefit from it. Let’s be clear. National Party voters do care about inequality.
But their chosen party places a greater emphasis on equality of opportunity and worries less about unequal outcomes.
For me, Skillings’ survey has some profound messages for families in the bottom three-fifths of society, those without much in the way of wealth to pass on to their kids.
The first is that ignorance and denial favour political status quo, so don’t expect politicians any time soon to be given a mandate to come in and enrich you and your loved ones.
The second is that in such an unequal society, the financial consequences of ‘‘bad choices’’ for you and your kids are profound. Which brings me to the third. For the bottom three-thirds by wealth and income, education is probably going to be the only asset they can give their children.
From education flows wealth, be it a university degree or an ability to read, write and add up and good vocational training.
Life’s unfair – more unfair than we believe it is and more unfair than we want.
Harnessing a family’s energy and resources around the education of the youngest generation is one of the few routes poorer families have to seeing their kids prosper.
Idyllic views: Win a walking weekend in the Bay of Islands.