Auckland, August 6, 2018
If you haven’t seen the 2018 Side Eye Inequality Tower by Toby Morris and Max Rashbrooke, it is well worth a look.
By imagining all the wealth in New Zealand condensed into a ten-storey building that we all live in together, it is an accessible way to highlight who owns what in New Zealand today.
Unfortunately, it does not paint a pretty picture.
In total, the richest 10 % own more than half the wealth (59% of the building) while over 50% of the New Zealand population own just 2% of New Zealand’s wealth.
This means a lot of people are crammed into a corner of the lowest floor.
Begging the Question
This stark picture begs questions about the lack of Capital Gains Taxes in New Zealand, but it should also mean that we start asking questions in regard to the lifts in the building.
What can we say about people born in the bottom and top floors; are they trapped or alternatively destined to live out their existence always on the floors of their birth? Essentially can people can move up and down floors?
Because wealth is often stored income over time, one way we can build an inexact picture of the mobility between floors, or ‘how the lifts work’, is to examine how people’s income moves over time, once again by looking at deciles or via a ten-storey building typology (while being very clear that this is income not wealth mobility).
NZ research points out that people do move up and down the income distribution but not to the extent that we might hope. Around 22% of people remain on the same floor they were eight years ago.
Roughly the same amount again moved up one or down one floor. A small amount move from the bottom floor to the top floor, just as a few move from the top floor of income down to the bottom.
The real problem here according to researcher Richard Reeve are ‘Dream Hoarders’ or those who protect their or their own children’s position in the building by effectively sabotaging the lifts.
This can start young.
It might mean helping your child get into the rep Cricket team (over others with more natural talent) by using your personal relationship with the coach.
It might mean supporting restrictive school zoning, or offering preferential school positions to out of zone school children because their parents once attended the school. It might mean arguing against social housing nearby your house or community; so it does not lower ‘the tone’ of the neighbourhood.
Capital Gains Tax
A Capital Gains Tax might be part of the solution to our wealth imbalance, but it is useful to remember that it’s not going to be all of the solution.
For that we may well have to make sure we are not the person pushing the ‘close door’ button on the lifts to favour our own family, while unknowingly keeping down those hoping to improve their lot in the world.
Julian Wood is a Researcher at Maxim Institute based in Auckland.