Real Issues No. 349 - Equality, Relationships, Lecture event

Maxim Institute - Real Issues - No. 349 23 September 2009 www.maxim.org.nz

Equality isn't a magic solution Sandbagging the family

IN THE NEWS Lecture eventStepping In and Stepping Up The costs of rail

EQUALITY ISN'T A MAGIC SOLUTION What's the solution to our societal problems? According to recent social commentators it lies in making sure we all have roughly the same amount of stuff. Tapu Misa, writing in 7 September's New Zealand Herald, joined the likes of John Minto in suggesting that reducing income inequality is the way to solve New Zealand's endemic social ills. Minto is perhaps in another league to Misa, in advocating for government to even out income imbalances with a 100 percent income tax on earnings above $250,000. With 24 percent of our highly skilled workforce already ditching the country, surely we don't want to give them another reason to leave.

Misa and Minto are getting excited by these familiar ideas because of a new book written by two British health researchers, Richard Wilkinson and Kate Pickett, called The Spirit Level. Using data for 23 wealthy countries, including New Zealand, they have investigated the statistical relationship between income inequality and a range of social outcomes, like health, educational achievement and mental health. Contrary to what we might expect, they find that it isn't necessarily the wealthiest countries that are the happiest or healthiest. In fact, some of the wealthiest countries have the highest levels of social problems, and--as the commentators emphasise--the highest levels of inequality. The authors of The Spirit Level claim this as evidence that higher economic growth has done all that it can for boosting living standards; once countries reach a certain level of prosperity, increasing economic growth does not seem to make their societies healthier or happier. They recommend politicians should instead reduce the 'scale of the material differences between people' to improve everyone's quality of life.

Wilkinson and Pickett's study is thorough and original. But despite the commentators' excitement about the apparent relationship between inequality and worsening social outcomes, this correlation is still just a correlation. In other words, seeing a relationship between two things doesn't prove that one causes the other. We cannot be certain it is inequality that is causing a problem and not the other way around.

We should also be careful about concluding from such evidence that there is a single, neatly packaged solution to social problems. In this case, the research has declared inequality to be a problem, so commentators have decided that all we have to do is fix inequality and the world will be better. Sound familiar? From Communism to New Zealand's 'Think Big,' grand schemes have been tried in the past and they have been found wanting. Minto is misguided to suggest that we can cure social problems through tax-payer financed redistribution. Quite apart from the economic consequences, Wilkinson and Pickett themselves do not see a bigger hand for government as the only solution. They say 'the argument for greater equality is not necessarily the same as the argument for big government.'

Like Misa and Minto, we all care about having a fairer society. But by claiming that reducing material inequality is the solution to our problems, Misa and Minto have ironically made the very mistake that Wilkinson and Pickett wrote The Spirit Level to condemn—reducing everything to economics. Just as economic growth won't guarantee health and happiness, it is fair to say that making everyone's material wealth roughly the same provides no guarantees. What we truly need is a society where we take responsibility for one another. In the past, New Zealand had a range of thriving friendly societies that dispensed welfare and education to the community. Now the government does it--often badly. If society lacks care and compassion, all the redistribution in the world won't help.

We need a society that actually encourages people to thrive. That celebrates with the entrepreneur when they bank their first profit and encourages businesses as they create more jobs. We need the kind of society where a young person, unemployed for the third generation in their family, is not condemned to endless queuing for the dole. But this requires ordinary people doing the harder work of sticking with one another; providing people who have been given a rough deal a chance to turn things around, by driving them to work, helping them learn their trade and cheering for them as they stay in a job. Redistribution sounds easy—it lets us transfer money and feel like a good Samaritan--but in reality, a better commitment is needed.

There is no single solution for creating a fairer society. But there are about 4 million individual solutions if all of us decide to do what we can in our communities. You and I are the closest thing there is to a silver bullet.

Read 'It's just not fair—why equality matters' by Tapu Misa

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10595635

Read 'Put a cap on eye-popping incomes' by John Minto

http://www.stuff.co.nz/business/blogs/frontline/2821218/Put-a-cap-on-eye-popping-incomes

RECESSION AND RELATIONSHIPS The financial consequences of the recession are reported daily. Less widely considered are the social consequences of recession. As budgets tighten and debt levels grow, there are significant consequences for the well-being of society, and particularly—as Dr Samantha Callan has argued—for the family life of a nation.

According to Callan, an academic from the UK, there is growing concern in Britain about the impact the recession is having on family relationships. Newspapers are reporting that demand for relationship counselling has increased dramatically in Britain and 'internet 'dating agencies' geared towards infidelity report a recent sharp upturn in business.' Using the 'Family Stress Model' Callan argues that stress impacts on people's mood and behaviour, which in turn can exacerbate and reinforce the stress. With job security threatened, house prices dropping and the pressure of debt burgeoning for many, this pattern is currently playing out for many families.

Callan argues that the relationships most likely to hold up under this stress are those marked by dedication and commitment, which tends to be strongest in marriage relationships. This is partly because of the external forces that go towards keeping a marriage together and partly because marriage relationships result from a clear decision to treat life as a joint project, rather than being something people 'fall into.' With a growth in informal family structures over the past decades, Callan suggests it is likely that the stress induced by recession will lead to higher rates of family breakdown.

How should governments respond to this situation? Callan argues that they need to 'develop and deploy the sandbags of family strengthening policy, to shore up the beautiful thing that is the family life of a nation.' She suggests that some of the best ways to do this would be firstly to encourage flexible working arrangements which would allow families to negotiate work in a way that is suitable for their family life; and secondly, to begin talking more about the social benefits of marriage instead of treating all couple relationships as equivalent. She also says that services which 'help people build resilient and well-functioning families' are important. Read 'Sandbagging the Family' by Samantha Callan

http://www.maxim.org.nz/index.cfm/policy___research/article?id=1941

IN THE NEWS

PUBLIC LECTURE EVENT – STEPPING IN AND STEPPING UP Too many New Zealand children are mired in dysfunction. Abuse and poor parenting mark their early lives, setting them on a grim trajectory of anti-social behaviour leading to negative outcomes like substance abuse, poor health and crime. But though the problems are bleak, we needn't throw in the towel. Effective family intervention programmes hold out real hope of change, of reversing the slide into dysfunction. The best hope is found in funding programmes that really work, and getting in early. Professor David Fergusson will speak about the portfolio of interventions that is available to New Zealand and need for careful and thorough implementation and evaluation of these interventions. We will also introduce Maxim Institute's recent research in this area.

Date: Thursday 15 October 2009 Time: 6:00 pm — 7:30 pm Venue: The Parenting Place 300 Great South Road Greenlane, Auckland Drinks and canapés will be served

RSVP: Please email rsvp@maxim.org.nz or phone Summer Haycock on (09) 627 3261 by Friday 9 October 2009.

Please note RSVP is essential.

View an invitation to Stepping In and Stepping Up

http://www.maxim.org.nz/files/pdf/Fergusson%20Invite%20Web.pdf

THE COSTS OF RAIL The ownership of KiwiRail is a hot political issue, with the 2008 government buy-back of KiwiRail proving contentious before last year's election. Then Prime Minster, Helen Clark rationalised the buy-back as a way 'for rail to play its full part in building a more sustainable New Zealand.' The idea was that strengthening the railway would give New Zealand a more environmentally friendly form of transport.

A new paper titled 'KiwiRail: Doomed to Fail?' by Luke Malpass of the Centre for Independent Studies, argues differently. Malpass contends that KiwiRail was purchased for ideological reasons and that 'KiwiRail in its current form will never be more than a loss-making asset and is an open-ended fiscal risk.' He says that KiwiRail was purchased against the direct advice of Treasury and it will not achieve the environmental goals promised. Malpass advocates for KiwiRail to be sold back into private hands. Read 'KiwiRail: Doomed to Fail?'

http://www.cis.org.au/issue_analysis/IA115/IA115.pdf

TALKING POINT

'The essence of our effort to see that every child has a chance must be to assure each an equal opportunity, not to become equal, but to become different—to realise whatever unique potential ... he or she possesses.'

John Martin Fischer

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Maxim Institute's regular email publication, Real Issues, provides thought-provoking analysis of developments in policy and culture in New Zealand and around the world.

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