New Zealand is a less egalitarian society today than it was when I was growing up in the 1950s.
American philosopher John Rawls. harking back to Jesus’s injunction to ‘do unto others as you would have them do unto you’, argued that society should be judged by the way it treats the least well-off. Earlier Walter Nash had said that ‘the young, the old and the sick should have first call upon the state’ – a very Rawlsian notion. Sadly, the Nash aspiration is obviously not true today, give widespread child poverty.
Another egalitarian aspiration was set out by the 1972 Royal Commission on Social Security which said that the aims should be to enable everyone to sustain life and health and to ensure that everyone is able to enjoy a standard of living much like that of the rest of the community, and thus is able to feel a sense of participation in and belonging to the community;
The first aim – to enable everyone to sustain life and health – is equivalent to setting an absolute poverty level. The second sets a relative minimum standard of living, with the notion that all New Zealanders should participate in rising prosperity.
In 1990, the New Zealand government abandoned the second target when it cut social security benefits to a level which it, presumably, assumed sufficient to sustain life and health (it hasnt been) but abandoned the principle of increasing the level with rising prosperity.
So the aspirations for an egalitarian society which were once deeply embedded in public policy were abandoned.
We once characterised New Zealand’s more-egalitarian society by claiming that it was ‘classless’. Keith Sinclair said ‘New Zealand is not a classless society. It must be more nearly classless, however, than any other society in the world.' So he was not denying there was class in his New Zealand. Bob Chapman talked about ‘social gradients’.
The perception of a (subjectively) classless Pakeha New Zealand – that ‘we were all in this together' – seems to have consolidated from the war experience and from the Great Depression.
But class was changing. Chapman wrote in 1962: ‘For different economic grades to be transformed into social classes it is necessary that separate patterns of life be elaborated for each class.’ His thesis was that in the 1950s there were social differentiations by income and spending, and while they may have had some objective significance, subjectively New Zealanders generally thought of the country as classless.
Chapman went on to argue that there were processes which were driving New Zealand's 'equal society' towards a similar level of inequality and class in Western Europe. He thought it was becoming more egalitarian – I am not sure of that. But he thought that New Zealand was converging to a similar level; he seems to have been broadly correct. Presciently, two decades before Rogernomics, he wrote, 'the concentration of control and ownership …. seems likely to persist providing there is a continuous widening and intensification of markets.' The gap between the haves and the have-nots slowly opened up.
Until 1984, New Zealand was governed by the ‘Depression’ generation; men who had grown up during the Great Depression and had fought in the Second World War. While they were now higher in the social hierarchy, they did not forget their origins; their social connections were wide except they were more strongly with the older generations.
In 1984, a new generation took over. It was born after the Great Depression and had benefited from the welfare state, especially the educational opportunities it offered. However, its members were not particularly working class, coming from the affluent middle class which Chapman had seen inching away from workers. Isolated in their classes, they were becoming disconnected from the population as a whole. This included the politicians who led Rogernomics.
One is struck by how little attention the Rogernomes paid to the people they were hurting. For instance, during the period when the New Zealand economy stagnated, the Rogernomes gave significant income tax cuts to those at the top of the income hierarchy. They were largely paid for by the cuts in government expenditure and the benefit cuts of the Richardson-Shipley 1990 package – that is, by the poor and by those dependent on government spending.
The income tax cuts to the rich were so substantial that their real incomes increased at much the same rate as they had done before 1986, even though the economy was stagnating. So the rich were hardly aware of what happened to others. They praised the traumatic policy changes as beneficial since they did not suffer.
But if the economy was stagnating, and the rich’s incomes were rising, the incomes of other people had to fall. Thus the sharp increase of household income inequality in the 1980s and 1990s.
So while those at the top income level recovered quickly from the initial turmoil, the other 90 percent of the population were on lower real household incomes in 1996 than they were in 1984. The bottom 30 percent did not recover the material living standard of the 1980s until the next century.
This represents a reversal of those Rawlsian aspirations expressed by Nash. The welfare state aimed to protect the poorer during an economic downturn, with those better off taking a greater share of the burden. Instead, the opposite occurred: those at the top were protected, while those below took a greater share of the burden..
It is a strange development of democracy that its leadership can pursue policies which are not in the interests of the public. Eventually the people revolted; in New Zealand introducing MMP.
In summary, over fifty years ago Bob Chapman detected an evolving class structure in New Zealand. The ruling class became increasingly out of touch with New Zealand aspirations, abandoning the post-war egalitarian of New Zealand in favour of principles which served themselves.
We no longer say that ‘the young, the old and the sick should have first call upon the state’; instead the slogan is that we may not raise taxes to fund any call upon the state that the young, the old and the sick may make. The rich and their principles are so powerful – another indicator of a strong class structure – that it is difficult to break out of the rules with which they govern, as this Labour-led government is finding.
So the nation’s egalitarian aspirations have been overwhelmed by economic, social and technological change. A crucial outcome, as Bob Chapman foresaw, is that the class structure has become less fluid and the increasing rigidities have disconnected the powerful from the rest of society.
This disconnection led to a rapid economic policy transformation – we call it Rogernomics – which ignored most people and favoured the privileged, embedding in a policy framework which has maintained that privilege. The income distribution shifted markedly in favour of those at the top – to greater inequality. Fundamentally, the purposes for which New Zealand has governed have changed.
I have known the broad outlines of this story for more than two decades, but there has been little done to reverse the anti-egalitarian policy framework. Bob Chapman was on the pessimistic side about our prospects; I join him.
These notes were prepared for a discussion group. They are a very shortened version of What Happened to Egalitarian New Zealand?
Some other aspects of the issue are covered in Have We Abandoned The Egalitarian Society?
Inequality And Mental Health elaborates the impact of inequality on mental wellbeing.