Max Rashbrooke’s latest book examines the way inequality is flourishing in Aotearoa – and how we might pull it up by the roots.
Class is a problem again. Way back in the mid 19th century Marx and Engels declared that the history of the world was the history of class struggles, and for a long time the left – in all its liberal, revolutionary and social democratic guises – was primarily concerned with economic class and economic inequality. Then the 1960s saw the rise of the New Left, which pointed out that the traditional left’s victories in the class struggle were mostly benefiting white men. What about women? Disability rights? The environment? The threat of nuclear war? Gay rights? What about racism? Did unions and left-wing parties really represent “the working class” if most low-income workers were non-white and were systematically excluded from those movements?
The advocates for economic and class egalitarianism never went away, they were just drowned out for a while. But they’ve grown louder again in recent years. There was the global financial crisis; Thomas Piketty’s argument that increasing inequality is built into the structure of capitalism; the blatant unfairness of the impact of the Covid pandemic. The stimulus measures by central banks around the world that inflated property and share prices, and have led to dramatic increases in the cost of living. Added to which, traditional working class electorates around the world are starting to abandon left-wing parties, switching their support to conservative or anti-immigrant politicians. So left-wing strategists and intellectuals are paying more attention to class.
Max Rashbrooke is a New Zealand-based researcher focusing on economic inequality, and his new book Too Much Money argues that we need to refocus on the new/old subjects of wealth, class and wellbeing. His book is filled with graphs and tables and they’re the easiest way to communicate what Rashbrooke is saying, and also to agree and/or disagree with his conclusions. Let’s start with this one, which breaks New Zealand’s wealth distribution down into five main groups.
At first this looks really bad. Grounds for a revolution, even. The middle-class wealth share is roughly proportionate to its size: 40% of the population, 39% of the wealth. The poorest 50% have only 2%! The greedy 10% are stealing almost all of their money! And, Rashbrooke explains, the actual distribution of wealth is probably worse than this. The very rich are “shy”, in the sense that they conceal their wealth so they can’t be taxed on it. If you factor that in, he writes:
On this estimate, some 38,000 individuals own a startling one dollar in every four of this country’s wealth – a quarter share of the entire stock of property, household effects, cash and financial investments.
That’s a dollar in every four of the country’s private wealth, btw, excluding the assets owned by the state, which are vast. The other caveat – and Rashbrooke does point this out and gives us another chart – is that a lot of our wealth inequality is predicated on age:
Which changes the picture a bit. Instead of a greedy super-rich elite robbing the poor, we seem to see most people entering the job market carrying debt from study, getting a mortgage, slowly paying it off and saving for retirement. Which is less of a grounds for a revolution and more like a functional economic system. But, Rashbrooke counter argues, there’s also wealth inequality within those age groups. Look at this, which shows wealth inequality by age groups.
For older New Zealanders wealth distribution is actually pretty egalitarian; younger New Zealanders less so. Why is that youngest age group so unequal? Because age is not the defining driver of inequality. That would be ethnicity.
This helps explain the increases in inequality as you move down the age cohorts: Pākehā are the oldest ethnicity group, partly because of lower birth rates; partly because Māori and Pasifika die earlier than white people. And it’s a powerful reminder that talking about class is not a pivot to avoiding race: they’re two perspectives on the same bleak subject.
The second chapter of Too Much Money gives a brief history of inequality in New Zealand. It describes an early 19th century system in which Māori were successful participants of an emerging capitalist economy, but Pākehā society – especially in the South Island, was extremely inegalitarian. It was dominated by the “Great Sheep Lords”, a landed gentry who built large estates and kept the price of labour low by ensuring the price of land was high, so that “lower-class” settlers would have to work for a long time before accumulating enough wealth to acquire property. Then there’s a depression in the 1880s and a liberal government gets voted in. It compulsorily acquires the great estates and breaks them up, selling off smaller parcels of land. But it also acquires millions of acres of Māori land, reselling it to Pākehā.
This is a trend that continues with the first Labour government in the 1930s, and the establishment of the famous “cradle to grave” welfare system, which the sociologist Francis Castles called a “wage earner’s welfare state”. The government built state houses and loaned mortgages at low interest, but excluded Māori from receiving the loans until the 1950s. There’s often a tradeoff in our history, Rashbrooke indicates, of Pākehā building a more egalitarian society for themselves but doing so by disenfranchising Māori.
We can see the consequences in that last table. And Rashbrooke doesn’t make this point, but I think you can see it in the more recent data he presents: after the neoliberal reforms of the ’80s and ’90s, and the partial dismantlement of the systems that delivered egalitarianish outcomes to wage earners, we see a switch to residential property ownership as the primary means of wealth creation. And this leads to a fairly egalitarian outcome for people who own or can buy residential property, who are mostly Pākehā.
What Rashbrooke is worried about is the breakdown of even the tepid egalitarianism of the recent past. Instead of breaching those existing wealth divides we’re moving in the wrong direction. The gap is widening. He even quotes Hugh Fletcher, scion of one of New Zealand’s wealthiest families and former CE of Fletcher Challenge, who warns:
My generation [the baby boomers] and maybe the next one or two has basically stolen the financial wealth of the younger generations. It’s impossible for a young person to buy a house without support from their parents … Which means it’s only certain families who have access to housing. The ability to own homes has now become completely unequal.
Rashbrooke is concerned about the emergence of an upper-middle class elite, who he describes as “opportunity hoarders”. They dominate both the public and private sectors. Their children are given extraordinary advantages to excel in the education system, then enjoy access to well-paid, secure work, while almost everyone born into less fortunate circumstances is held back by a complex tangle of obstacles; poorer health, fewer choices, less social and cultural capital. He draws on Thomas Piketty’s recent findings describing political cleavages in western democracies, which argues that their politics are dominated by technocratic elite divided into two factions: “the brahmin left” and “the merchant right”. Rashbrooke sketches out their New Zealand forms as:
A “Kelburn left” and a “Remuera right”. The former would be a traditional, discreet upper-middle class, located in hilltop suburbs such as Kelburn, Khandallah and Karori. Its members would be largely professionals: senior public servants, academics, high-ranking doctors and lawyers, high-paid consultants and heads of government departments, public agencies and regulatory bodies. Speculatively, we could say that the resources they mobilise include human capital (high levels of education) and social capital (public-sector and professional networks). They might also manifest cultural capital through attendance at “legitimate” artistic events (such as New Zealand Symphony Orchestra concerts), furnishings like Persian rugs and old wooden tables and chairs, and an easy familiarity with (pre-coronavirus) foreign holidays.
The Remuera right, by contrast, would draw from the world of commerce: entrepreneurs, property developers, senior executives, corporate consultants and a whole suite of other businesspeople, from modestly wealthy sole traders through to Rich Listers. Their main form of capital would probably be financial. This would include ownership of housing in the zones that enable access to prestigious state schools, although they might also send their children to private establishments like King’s. They would manifest their own forms of cultural capital, especially through their houses, which might feature swimming pools, multi-car garages, steel-and-chrome furniture and expensive contemporary New Zealand art.
These groups now live highly segregated lives, Rashbrooke warns. They’re mostly white, and primarily an urban elite – Auckland and Wellington contain 76% of the nation’s most affluent areas despite representing only 40% of the population. In a functioning democracy citizens “share a common life”, but our wealthy are increasingly disassociated from the less fortunate, which makes it hard to appreciate the challenges they face:
Physically separated, people of different status slowly lose their understanding of how the other half lives. Their sense of those other people being “like” them, their feeling of having something in common with them, and consequently their empathy for and trust in them, all dwindle. In Auckland, for instance, people have become less likely to volunteer in other communities, to share their skills across social and economic boundaries, as those communities have become more segregated.
And they dominate our politics. Rashbrooke cites research comparing the makeup of the 1972 and 2017 New Zealand parliaments. Our politicians in 2017 are far more diverse in terms of gender and ethnicity; but far richer than the rest of us, and:
In 1972, one MP in five had done blue-collar work – in clerical, service-sector or labouring jobs – immediately before entering Parliament. That was still unrepresentative of the population at large (of whom 71% did such work), but ensured a modicum of socio-economic diversity. By 2017, there were literally no MPs of whom that was true (although some, like Labour’s Willie Jackson, had held blue-collar jobs earlier in their working lives).
Unbelievably he fails to mention Jacinda Ardern’s famous stint at the Morrinsville Fish and Chip shop.
Every social sciences book faces the notorious “last chapter problem”, in which the author offers up suggestions of how to solve the many intractable problems they’ve raised. Rashbrooke offers up not a graph, but a picture:
We need to become a less individualistic nation, he argues, and transition to a more egalitarian, less competitive people. More like Denmark, or Amyarta Sen’s “capability society”, in which people are not just theoretically free to live the lives they want, but actually capable of doing so. And I think Rashbrooke is genuinely optimistic that this might happen. But I’ve been writing about New Zealand politics for about the same length of time as he has, and I’ve never seen much evidence that any of this could come true. Or, that even if we tried to move in that direction, that it’d be anything more than a redirection of money and power from the Remuera Right to the Kelburn Left. But I agree that there’s value in the conversation. Who knows, maybe if enough people promote these arguments we’ll hit an inflection point in which real change becomes possible. The pleasure of pessimism is that if you’re proved wrong it’s because something good happens.
I published my own take on class in New Zealand last year, also drawing on the Piketty model. Rashbrooke’s book is more measured and deeper, more data-driven; it looks back over our history to make sense of where we are. And it reveals the falsity of that Old Left/New Left debate, that there’s a conflict between talking about wealth inequality or racial justice. In New Zealand, at least, it makes very little sense to talk about one struggle without the other.