Sunday, August 31, 2008

NZ a leader in the race to 'perfect inequality'

An article in the Manawatu Standard on August 25 told us something we all knew: that in New Zealand, as in all countries that have succumbed to laissez-faire capitalism, the gap between the rich and the poor has widened dramatically during the past 20 years.

"Heard of the Gini coefficient?" the article by Barbara Phillips, Christchurch Supergrans' fieldwork co-ordinator, asked in the third paragraph. I had to confess that, if I had, it had slipped my memory.

Fortunately, Ms Phillips supplied a definition, though it's a little different from the one given by Wikipedia. "Named after an Italian statistician," her article continued, "the Gini coefficient is an international measure of income inequality. The bigger the number, the greater the distance between a country's haves and have-nots.

"In the 1980s, our Gini coefficient was down around 26, where zero is perfect equality and 100 is perfect inequality."

Wikipedia says the coefficient "is defined as a ratio with values between 0 and 1: A low Gini coefficient indicates more equal income or wealth distribution, while a high Gini coefficient indicates more unequal distribution. 0 corresponds to perfect equality (everyone having exactly the same income) and 1 corresponds to perfect inequality (where one person has all the income, while everyone else has zero income)".

Ms Phillips continued: "Then came Rogernomics [of Finance Minister Roger Douglas], National's 1991 'mother of all budgets', the slashing of welfare and other economic shocks. Suddenly we had the fastest-growing income gap in the developed world.

"By 1990, the Gini benchmark had leapt to 29. By 2004 it was more than 32. In contrast, Scandinavian nations like Denmark and Sweden were maintaining Ginis of about 24."

If New Zealand was ever the egalitarian society of popular belief, it no longer is.

NOTE: The Gini coefficient was developed by the Italian statistician Corrado Gini and published in his 1912 paper Variability and Mutability (Wikipedia).

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