Some things never change.
The rich have always claimed that their good fortune is a recognition of and reward for their superior virtue –
with the inevitable corollary that the poor have no one to blame but themselves.
myth of the undeserving poor has a long and discreditable history. It has underpinned social policy over
long periods in both the UK and New Zealand, from the workhouses of early industrial England to the present day. It
is heard even more insistently in a society like New Zealand which has recently and rapidly become much more unequal –
where, sadly, some people have incomes two or three hundred times those of others.
The frequently told story that poverty is a lifestyle choice – promulgated as it is by the rich
and powerful – commands more attention in the media than other (perhaps more credible) accounts of how and why inequality
in our society has widened. An enhanced access to the media is, after all, an important aspect of privilege.
It is not that those telling the story deliberately invent it. They are no doubt quite genuine in
believing it to be true. The capacity to protect oneself from an unwelcome reality is, after all, one of
the privileges that the rich enjoy.
This is because an inevitable feature of an unequal
society is that the privileged, without even trying, insulate themselves from the less fortunate – and the wider the
gap, the more substantial the insulation. They use their wealth to live in a separate part of town, to
send their children to exclusive schools, to pursue expensive leisure interests and travel to different destinations –
in short, they live quite different and separate lives.
Exclusivity then becomes an end in itself.
The rich feel that belonging to an elite, distinct from the common herd, is a valuable and legitimate element in the
enjoyment of their wealth. Their ignorance of the lives of the poor becomes a badge of status.
It is then all too easy to believe what one chooses about those whom one rarely comes across in the flesh.
It is on this flimsy basis that common sense flies out the window, that unthinking judgments are made – even
by Prime Ministers, and that issues of social justice are disregarded.The
consequences are of course damaging to our society. The social cohesion – that sense that we are
all in this together – that was such a marked characteristic of New Zealand society in the past is gravely weakened.
And the evidence that widening inequality leads inexorably to social ills – crime, drug abuse, prostitution,
gambling – is now established beyond real doubt in The Spirit Level, the hugely authoritative study by British
social scientists, Kate Pickett and Richard Wilkinson.
But the price we pay for the ignorance of the
rich concerning what it means to be poor may extend well beyond social factors. It may be that we - including
the rich - suffer not just in terms of a fractured society but in economic terms as well.
notion that the rich, even in hard times, should be generously treated, so that their well-being improves even while the less
fortunate lose ground, has been given an extended trial over recent decades. We see recent instances in
the tax cuts for the well-off while the poor bear the burdens of unemployment and GST increases. We see
it too in the self-serving doctrine that international competition requires that, while wage rates for ordinary workers are
held down, top earners’ salaries must go up so that “the best talent” can be attracted.
The theory is that the increased wealth will “trickle down” and that it will therefore – over a period
– benefit everyone. The evidence, however, offers no support for this comforting view.
The increased resources of the rich – whether as individuals or as corporations – do not “trickle
down”. They stay firmly in the hands of those who control them, doing little to benefit the economy
as a whole. The big corporations who were bailed out by the taxpayer after the global financial crisis
used the billions they were given to rebuild their balance sheets and to go on paying themselves huge bonuses.
And increased individual wealth is typically used to reinforce privilege. The barriers that separate
the privileged from the rest of us are built higher. The insulation from the reality of the lives of ordinary
people, and of the poor in particular, is made more complete. And our economy is not stimulated but stultified.
Isn’t it time that we rejected “trickle down” for what it is – a piece of special pleading by
those who already have much more than their fair share? What about an economic policy based on “bubble
up” – an approach that would put more spending power in the hands of the less well-off, in the confident assurance
that they would spend it immediately on real goods and services, providing a direct stimulus to economic activity and wealth-creation
for all of us and a hopeful way out of a recession that will otherwise be around for a long time to come.