Julian Wood

By Julian Wood - 07/08/2018

Julian Wood

By Julian Wood -

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Sabotaging the lifts in New Zealand’s tower of wealth

If you haven’t seen the 2018 Side Eye Inequality Tower by Toby Morris and Max Rashbrooke, it’s well worth a look. By imagining all the wealth in New Zealand condensed into a ten story building that we all live in together it’s an accessible way to highlight who owns what in New Zealand today.

Unfortunately, it doesn’t paint a pretty picture. In total the richest 10 % own more than half the wealth (59% of the building) while over 50 percent of the New Zealand population own just 2 percent of New Zealand’s wealth. As highlighted this means a lot of people are crammed into a corner of the lowest floor.

Can people can move up and down floors?

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 story 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 percent 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.

We may well have to make sure we are not the person pushing the “close door” button

The real problem here is what researcher Richard Reeve from Brookings Institute refers to as the “dream hoarders,” people who instinctively 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 doesn’t lower “the tone” of the neighbourhood.

A capital gains tax might be part of the solution to our wealth imbalance, but it’s 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.

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Julian Wood

By Julian Wood -

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