Why Inequality Is On The Agenda

In brief response to Paul Walker’s post “But why does inequality matter?” :

  • Inequality is on the agenda because the media are writing about it
  • The media are writing about it because envy is as old as the hills and journalists earn rubbish wages so anyone on a higher income is a fair target for them
  • Most journalists’ eyes glaze over when they see numbers so clear discussion is not possible
  • So despite a lot of evidence to suggest that maybe income and wealth inequality in New Zealand isn’t as bad as it’s made out to be, that conclusion doesn’t get page views so emotive language rules how the discussion is framed

Interesting examinations of relative shares of national income accruing to capital and labour respectively are unlikely to be examined in depth. This review by Branko Milanovic – The return of “patrimonial capitalism”: review of Thomas Piketty’s century “Capital in the 21st Century” – is very interesting.

I’m surprised that all of the people wanting to discuss inequality haven’t made the obvious conclusion of changing capital/labour income shares – you must do everything possible in your power starting with living below your means to accumulate capital or get into a position to earn very high levels of labour market income.

Any other policy proposals outside of your own individual actions are hilariously naive. Take for example the impossibility of solving housing affordability in New Zealand – if housing earns a return in the form of rent you would otherwise pay (Piketty includes housing as wealth) – then increasing the supply of housing lowers the wealth of property owners.

Obviously, with so many New Zealand households having no other wealth outside of their home equity, it is political suicide to introduce policy that does anything more than make some marginal increases of the housing supply possible. Recall that even the housing accord in Auckland will fast track a mere fraction of the additional housing units required to absorb the enormous increase in Auckland’s population both past and projected.

I’m not concerned about income inequality or wealth inequality. I am concerned about the shallowness of the discussion and complete suppression of any discussion around what capital actually provides to society in the form of enabling enormous advances in living standards and enjoyment of life. Simple minds will always be attracted to simple “problems” with simple “solutions” that absolve them of any responsibility.

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