Wealth inequality
The Herald reports:
Despite what we like to think – wealth is not evenly distributed in New Zealand, in fact it’s the worst it’s been in over a decade.
Statistics New Zealand’s wealth share of individuals shows the top 10 per cent of people have almost 60 per cent of wealth.
The figures are for the year to June 2015.
Labour market and household statistics manager Diane Ramsay said it was the biggest divide between the rich and poor since 2003.
She said it was possibly worse, but when records began in 2001 slightly different questions were asked of slightly different demographics.
What was evident was the inequality of net worth distribution that continued to grow.
Divides across ethnic groups continue; European people have an individual median net worth of $114,000 compared to $33,000 for people of Asian descent, $23,000 for Maori, and $12,000 for Pacific people.
Our youth are amongst the poorest in society. People aged between 15-24 had the lowest individual median net worth of any age group, just $1000 and most young people have not yet accumulated assets but do have debt.
The most common debt is accumulated through loans for further education.
The numbers are similar per household, half the country’s wealth belongs to the top 10 per cent of households.
In stark contrast the bottom 40 per cent of households hold just 3 per cent of total wealth.
This has the usual suspects up in arms, upset that we don’t have a communist society where it is illegal to be wealthy.
The reality is the overall statistics are almost meaningless. Because it assumes all households are comparable. They’re not.
Take for example age. Here is the median net wealth for individuals by age:
- Under 25: $1,000
- 25 to 34: $26,000
- 35 to 44: 96,000
- 45 to 54: $182,000
- 55 to 64: $278,000
- 65+: $288,000
So when people complain about inequality, they may be complaining that a 21 year old doesn’t have the same wealth as a 55 year old. As in somehow someone who has never worked should have the same wealth as someone after 30 years of working.
Also look at median wealth per type of household:
- Couple no kids $489,000
- Couple one kid $248,000
- Sole parent: $26,000
Now is it any surprise that if a couple decides not to have kids, they have more money than a couple who does? Likewise any surprise that a one income household has less wealth that a two income household?
The focus should be on equality of opportunity, not equality of wealth. Communist countries claim to have equality of wealth (in fact everyone is equally poor except the rulers). Let’s focus on improving educational outcomes for the most disadvantaged families, not creating a mindset that wealth is static, and that a wealthy household has somehow taken it off a poor household.