on March 11, 2022 (Facebook Picture)
Venkat Raman
Auckland, March 16, 2022
A Report published last week by the Waitakere Ethnic Board in Auckland focused on the ethnic communities, placing their contribution to the national economy at $64 billion, accounting for a share of 20% in the Gross Domestic Product.
The Report, written by Shamubeel Eaqub, an Economist at the Wellington-based Sense Partners showed that Pakeha population contributed about $219 billion, accounting for 67%, while Maori, with $31.06 billion had a share of 10%.
The difference in the income earned by various communities demonstrates the real issue of income disparity. While the income per person among Pakeha was $67,264, it was $52,275 for the Asian communities (including Chinese and Indian), $36,343 for Maori and $27,375 for Pacifica. At the low end of the strata were the African communities, with $24,502.
An endemic problem
Income inequality is a problem that is endemic in almost all countries, which, according to the Organisation for Economic Cooperation and Development, has the potential for social and economic consequences.
Pew Research Center, a fact tank based in Washington DC says that people at the lower rungs of the income ladder may experience diminished economic opportunity and mobility and have less political influence.
Researchers have also linked growing inequality to greater geographic segregation by income.
In addition, there is evidence that rising inequality may harm overall economic growth by reducing consumption levels, causing excessive borrowing by lower-to middle-income families or limiting investment in education.
This measure of inequality, known as the 90/10 ratio, takes the ratio of the income needed to place among the top 10% of earners in the US (the 90th percentile) to the income at the threshold of the bottom 10% of earners (the 10th percentile). It is a simple measure of the gap in income between the top and the bottom of the income ladder and is commonly used by researchers and government agencies.
New Zealand’s performance
New Zealand performs poorly compared to other OECD countries. The 2020 OECD Innocenti Report Card shows that the country has room for improvement across all the educational measures. The estimated percentage of children aged 15 years who have basic proficiency in both reading and mathematics was just 65%. This ranks New Zealand 17th of the 39 countries where data was available.
New Zealand ranked above Australia, the United States and the United Kingdom which all have greater income inequality (as measured by the Gini coefficient). However, except for South Korea, the top ten countries with proficiency in both reading and mathematics had lower levels of income inequality than New Zealand.
When it comes to politics, inequality allows wealthy people to influence politicians, who rely on them for donations to fund their campaigns. That means some people get more access than others – a violation of the ideals of democracy.
