Economics is not my strong suit. Nor can I say I am particularly interested in it. I’m a micro person, not a macro person; a creative trying to get by in a capitalist world.
But even I can’t fail to note that the wealth gap is growing, not shrinking. Yep, even here in little old New Zealand.
I like this dummy proof breakdown:
“New Zealand, which had the developed world’s biggest increase in inequality from the mid-1980s to the mid-2000s, has seen more economic damage than most. According to the OECD’s calculations, our economy grew about 30% in the last two decades – but it would have grown by 45%, or half as much again, if inequality had stayed at 1980s levels.”
Inequality matters. It’s a no-brainer. It’s a drag on the economy, and I think the saying that “you’re only as strong as your weakest link” is perhaps relevant here.
“When families lack the income they need to pay doctors’ fees and keep healthy, or to fix their car so they can travel to a new job, or to give their kids the equipment and clothes they need to succeed at school, it’s obvious that economic growth will suffer. You could argue that these are problems of poverty, not inequality, but really the two are inseparable; the reason some people have so little is that the fruits of economic growth are going largely to our richer citizens.”
As someone who ostensibly belongs to the middle class, occasionally I feel a tremendous sense of guilt that I have it so much better than many other people, and gratitude to be lucky to be where I am. But the other 99% of the time I spend fretting that we’ll never be able to really get ahead.
Bridget at Money After Graduation sums up my feelings perfectly:
“Wealth inequality is a growing, terrifying problem and I don’t want to be on the losing end of the deal. I’d rather we live in a more equal society when it comes to wealth distribution, but so long as we don’t, my singular goal is to get as far away from the bottom as possible.”
When necessities take up more of your income, you may even need to borrow to afford them. I don’t believe in ‘broke yet happy’. I think it’s something people tell themselves in order to feel better. Nice idea – in theory.
So, what are we supposed to do? Same old, I guess. Hustle, hustle, hustle.
A key piece of the inequality puzzle in New Zealand boils down to that most basic of needs: shelter. The way I see it, so much of this hinges on property – stability, security and quality of housing. The status quo is a disaster in financial terms – and in health terms, for renters.
It’s good to see that our go-to economist for all stories on renting vs buying is finally starting to discuss the pragmatic downsides of renting in New Zealand. While the actual quality of rental housing isn’t a talking point (and thus, the problem with mainstream media and the limited perspectives of the typically privileged people within it) he acknowledges New Zealand has some of the most restrictive rules in the developed world for renters.
“New Zealand is strangely different in that we have made this almost special provision around renting of residential property versus other types of renting.” – NZ Herald
“The rental market is designed for students flatters. It is no surprise that it is the young couples with children who are most unhappy.” – Stuff
But the level of chatter around the state of rental housing is growing. Research shows that private rental housing is in worse condition than houses that are owner occupied, however, in a tight market, you have to take what you can get.
“One potential tenant, looking at a property, asked if the holes could be fixed and rodent droppings cleared before she moved in. “[The landlord] said: ‘If you don’t like it, there’s other people that want to live here’.”
Is it any wonder the typical tenancy lasts only just over a year?
Amazingly, here’s a rare mainstream newspaper editorial that hits the nail on the head.
Housing in New Zealand is not only scarce and expensive; for too many people, it is also downright unhealthy.
“Our national housing stock is of poorer quality than most OECD countries. In particular, too many houses are damp and cold – which means they contribute to our grim rates of infectious and respiratory diseases.
This is deplorable in an advanced country, and like our other housing problems, it needs to urgently change.
Extensive work has already been done, so there is no excuse for delay. Most recently, results from a pilot study on 144 rental homes showed 90 per cent failing the warrant. That number needs some qualification – some houses failed for such easily remedied reasons as flat batteries in smoke alarms. But other results were more deeply concerning – like the third of rental properties that lacked any form of fixed heating.
No-one in New Zealand should have to live in a dog of a house.”
In order for renting to life to work you need to be able to save and invest what you’re “saving” by not having a mortgage. The problem is, rents are not going anywhere except up and up.
- Renter demand in Auckland is forecast to increase by 63% over the next 20 years and it is unclear whether “mum and dad” investors will be able to meet this demand
- Rental affordability is a critical issue for low- middle income households in Auckland, and people who enter retirement renting are likely to face ongoing hardship
The prospect of continuing to have to pay rent throughout retirement is scary. I can kinda understand why suicide at 65 starts to look like a pragmatic option.
Recently, an acquaintance posted a photo on Facebook . In it, he and his girlfriend stood on the deck of their new house, all smiles. Of course, like all our other home-owning peers, they only managed this because their parents stumped up cash for their down payment. Heck, if mine offered, I’d swallow my pride and take the offer.
But is this what the future of our country looks like? Only the well off buying homes for their children and passing the privilege of living in a decent property on down the generations, while everyone else remains stuck in cold, damp rentals and suffering all the ill effects that poses?
Surely we can do better than that.