Inequality has become a central political issue in New Zealand and around the world. But there’s always been some argument, from the right, that inequality just happens, or provides an incentive for people to pull themselves up with their own bootstraps.
Now, a new OECD report is fairly straightforward about the issue:
New OECD research shows that when income inequality rises, economic growth falls. One reason is that poorer members of society are less able to invest in their education. Tackling inequality can make our societies fairer and our economies stronger.
New Zealand gets a specific mention:
Figure 2 shows by how much the GDP growth rate would have increased or decreased over the period 1990-2010 had inequality not changed between 1985 and 2005 (The most recent inequality trends since then are not taken into account as they affect future growth patterns).
Rising inequality is estimated to have knocked more than 10 percentage points off growth in Mexico and New Zealand…
As Grant Robertson put it on Morning Report, “This isn’t the Socialist International. This is the OECD – the conductor of the Trickle-Down Economics Choir – saying that the show’s over.”
So you might think that’s the end of it – surely this is an unequivocal explosion of the trickle-down economics theory, and we can all turn to finding actual solutions to reverse inequality and the real harm it causes in people’s lives.
But unfortunately, our Minister of Finance has taken the John Key line of saying he doesn’t accept the findings of the report. It’s one of the great strategies of this government, acting like there’s no such thing as objective fact and the only thing that matters is how you frame something.
We’re not going to see any kind of shift in their behaviour or policies (though I’m sure we’ll definitely hear them talk about inequality more, as we did in the lead-up to the election.) But what this report gives us is another tool to use against the National/ACT narrative – that the right are pro-growth, that tax cuts and penny-pinching will lead to prosperity, that there’s no alternative to their mean-spirited policies.