business people grabbing dollar bills from the air
Photo: Getty Images; additional design by Archi Banal

OPINIONBusinessDecember 13, 2021

The richest saw their wealth soar during the pandemic. Was there a different path?

business people grabbing dollar bills from the air
Photo: Getty Images; additional design by Archi Banal

Ever since central banks saved the world from ruin in 2008, each economic challenge has been met with the same solution. It works – but also ensures the richest get even richer. 

As with most workplace interactions over the past few months, it happened on Slack. A colleague noted that “billionaire wealth increased 55% during the pandemic”, which prompted appropriate emoji reactions: one facepalm and two vomits. The stat concerns US billionaires, and came from a thinktank. It was somewhat cherry-picked, taking the bottom of the March 2020 market crash and the booming market rebound which sustained through April 2021 (and has continued since). Even so, it is fundamentally accurate: during the hardest year for the world in most people’s living memory, the wealth of the wealthiest surged.

This happened in the US, mostly under Trump. Surely here in Aotearoa, with our left-leaning government in charge, things were different? Well, no. Taken from the bottom of the March 2020 crash through to the January 2021 peak, the NZX50, which tracks our largest publicly-traded firms, rocketed up 47% – though it’s not extravagantly above its pre-pandemic peak, unlike the S&P500. Still, on a more granular level it appears to be true here too – Bernard Hickey analysed various publicly available data sources and came out with a 50% increase in wealth for the richest New Zealanders.

This happened all over the world, and was – with the benefit of hindsight – entirely inevitable. When the cataclysmic events of the early stages of the pandemic came upon us, governments around the world mostly did two things. First, they asked their citizens to stay indoors to slow or halt the spread of the virus. Second, to avoid the economic carnage that went along with mandating the closure of many businesses, they instituted an array of economic measures to try and keep jobs in place and the financial system intact while that happened.

Finance minister Grant Robertson with his 2020 budget, built around a ‘once in a generation’ $50bn Covid rescue fund. (Photo: Hagen Hopkins/Getty Images)

The money stuff came broadly under two umbrellas. One is known as fiscal policy, like our wage subsidy – government spending which goes directly to people or organisations. The other is monetary policy, wherein central banks reduced borrowing costs to almost nothing, allied with techniques like quantitative easing, which aim to increase the amount of money available to banks, and thus keep the economy from seizing up while on ice.

This was all done in the name of preventing a recession. And it makes sense – recessions are really bad! When they happen, thousands of people lose their jobs, businesses and sometimes whole industries can close down. Those rendered unemployed might spend months or years on benefits, which will impact their health, sense of self-worth and general ability to fully participate in life. For politicians, recessions are particularly freaky, because they’re strongly correlated with lost elections – so along with their constituents, they too often lose their jobs.

What happened with the rapidly-deployed economic response to Covid-19 and the lockdowns? Broadly, it worked. The whole world got through this existential challenge with much less economic pain than was anticipated. In fact, some seemingly unsolvable problems got better for the first time in decades. Poverty dropped by record margins in the US. Hybrid working caught on in a major way, reducing time in commutes and making work more accessible for some. Here in Aotearoa we have unemployment at 3.4%, matching a record low. Even after the epic Auckland lockdown which began in August of 2021, the life support system applied to business seems to have done its job, with relatively few major failures reported.

This means that while the health response to Covid-19 will be judged harshly in many countries, the economic response is largely seen as a very positive story, with no version of deep recession and slow, halting recovery which followed the GFC in 2008-2009. Which all sounds great – until you remember the billionaires.

The tool above shows median house prices for every suburb in New Zealand as at September 1, 2021, plus the year-on-year change.

Is the cure the disease?

What this boils down to, then, is a sense of dissatisfaction that when things go badly for all of us, the only way we fix things unavoidably makes the richest people richer still, outpacing the wealth increases of the middle class, let alone those in poverty. Was there a way of saving the economy that made Aotearoa’s less well-off wealthier instead? Could we have engineered the inverse of what we saw and have our billionaires stand still, while the bottom half rose?

Hickey addressed that in the Kākā this week, suggesting that had the government taken its recovery fund and distributed it directly to taxpayers, rather than filtering it through the wage subsidy to impacted employers and various other approaches, there would have been enough for a very significant sum: $10,000 per person.

This is not as far-fetched as it sounds: the concept is sometimes known as helicopter money, and versions of it were part of the post-pandemic response in the US and UK. The downside is that by not tying money to the maintenance of people’s jobs, you can get the kind of jaw dropping unemployment numbers seen in the US, where as many as six million filed for unemployment in a week. While many of those jobs have come back, it’s still some way off where it was pre-pandemic. It’s chilling to think of what has become of those people in a country with such a thin social safety net.

That said, giving $10,000 to everyone would be an unprecedented economic event. When plugged into the shipping and supply chain issues we’ve witnessed over the last couple of years, it’s easy to imagine the apocryphal empty supermarket shelves becoming a reality, and spread across many sectors of retail, leading to even more inflation than we are currently wrestling with. However, were it to be spread out over a longer timescale it might not have proven as problematic.

Researcher Max Rashbrooke is the author of Too Much Money, a new book subtitled “how wealth inequalities are unbalancing Aotearoa”. He believes that while the wage subsidy was effective at combating income inequality, other policies increased the kind of wealth inequality which saw billionaires particularly enjoy these past two years. He believes this could potentially have been clawed back with a one-time windfall tax – but says that any mention of tax has been rendered politically unsaleable in New Zealand, even for a Labour government.

If we had to do it over again

In some ways the economic response to the pandemic can be understood as what the New York Times recently called a memory of “the last war”. The period after the GFC in 2008-09 was characterised by “​​a series of chronic, interrelated problems: too little spending by consumers and businesses; too few jobs; and too-low inflation,” economics correspondent Neil Irwin wrote. “The result was an economy that functioned below its potential for years, with grave human costs.” We fought this very different catastrophe using much the same tools, and as a result saw some undesirable inequities.

That said, even in this wildly unequal outcome, there are signs of lessons being learned. The introduction of a form of unemployment insurance could blunt the impact of future economic downturns by preventing the temporary loss of a job from becoming a personal catastrophe – and potentially lessening the need for a wage subsidy. Housing consents are running at record levels, which brings with it the promise of a contraction to house prices and rents – something which, after years of prevarication, even the prime minister admitted was desirable just yesterday. The Reserve Bank is starting to stir too. In the face of runaway house prices and steeply rising inflation it has raised interest rates twice in recent months, and signalled it will continue to do so.

It all adds up to a sense that an end could be in sight for this long, strange period of shrugging acceptance that the only way we can protect low income people is with a tonic that makes asset prices – and in New Zealand, that really means house prices – escalate endlessly. And therefore increases our pre-existing inequalities.

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The promised land is, of course, getting the good times of business prosperity, low unemployment and higher wage growth, without the bad times of inflation, inaccessible house prices and rents that eat up every pay rise. But if there is a way to more effectively share the wealth while still protecting people from the horrors of recessions, then perhaps this K shaped recovery will have been worth it after all.

Follow When the Facts Change, Bernard Hickey’s essential weekly guide to the intersection of economics, politics and business on Apple Podcasts, Spotify or your favourite podcast provider.

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Off-Piste has created what it describes as New Zealand’s first plant-based ‘cut’ of red meat (Image: Archi Banal)
Off-Piste has created what it describes as New Zealand’s first plant-based ‘cut’ of red meat (Image: Archi Banal)

BusinessDecember 12, 2021

Is this the final final frontier of fake meat?

Contributing writer
Off-Piste has created what it describes as New Zealand’s first plant-based ‘cut’ of red meat (Image: Archi Banal)
Off-Piste has created what it describes as New Zealand’s first plant-based ‘cut’ of red meat (Image: Archi Banal)

Perfectly replicating the texture of red meat is the ultimate goal for the plant-based sector. With a bit of high-tech help from some clever scientists, this local company reckons its jerky is getting pretty close. 

Meat has played a starring role in the evolution of the human diet. While studies suggest that for around four-and-a-half million years, early hominids survived on a plant-based diet, 2.6 million years ago, our ancestors began hunting meat to add to their feeds. Fast-forward to 2021 and meat remains omnipresent in most of our diets – though not without controversy.

That controversy, focused on the impact meat consumption has on the environment and animal welfare, has seen the rise of a new generation of “fake meat” that harnesses modern technology to create increasingly accurate replicas of the real thing.

A local company, Off-Piste, has created what it describes as New Zealand’s first “cut” of red meat based on protein sourced from fava beans and peas – as opposed to the prevalent ground-up format of many plant-based meats. The jerky, which comes in three flavours, is uncanny in the way it approximates all the sensory attributes of the real thing. “We wanted to do a piece of meat you couldn’t really disguise, it had to be just a bit of meat,” says Jade Gray, the founder of Off-Piste. 

The venture exposes an interesting paradox. On one hand, it’s an explicit critique of animal farming – particularly its environmental impacts. On the other, those behind the brand aren’t attempting to alienate omnivores. In fact, they see them as their main customer base.

Originally from Twizel, Gray ran a cattle feedlot in China for 20 years. In 2010, while still in China, he co-founded a pizza restaurant brand called Gung Ho! Pizza. The chain became the first pizza brand in China to offer vegan cheese and vegan pepperoni. Its plant-based offerings were all made in-house across the brand’s 15 restaurants. 

Upon returning to Aotearoa a couple of years ago, Gray honed in on using what he’d learnt about plant-based foods to help address what he sees as the country’s biggest climate change challenge – greenhouse gas emissions from livestock.

Off-Piste founder Jade Gray, pictured with his daughter Raphy. (Image: supplied)

With New Zealand’s economic reliance on animal protein exports, Gray believes plant-based meats are a key part of shaking up New Zealand’s agriculture sector. Fortunately, he says, New Zealand has a very supportive food innovation environment. Off-Piste obtained a $200,000 grant from MPI to pre-seed the project and a $20,000 grant from the Foundation of Arable Research – a fund created by growers of crops.

The project began two years ago, but Off-Piste’s partnership with Massey University, the beginning of the food technology and science side of the project, kicked off in November last year. The science was headed by Allan Hardacre, senior researcher at Massey University’s Food and Advanced Technology Department in Auckland, “who is kind of like the godfather of plant-based meats in New Zealand”, says Gray. 

With patents still pending, the details of the alchemy behind the product – necessarily – remain somewhat elusive. But Gray draws parallels between his experience in pizza making where “you can take flour and water and yeast and before you know it you’ve got this incredible creation”. It’s a very similar process, he says.

To make the jerky, they take dry protein products and liquids, then apply mechanical pressure in a way that’s similar to kneading bread to stress the molecules, as well, of course, heat. Just like pizza dough, the result is stringy and tough, and their patented process produces robust fibre shreds that can be ripped apart.

High-profile alternative meat brands like Impossible and Beyond have attracted backlash amid criticisms their products are hyper processed, unhealthy and don’t address resource usage. Off-Piste was keen to counter this with its product. Their commitment to recreating the chewy mouthfeel of meat while also using nutritional ingredients you’d find on the shelves of a local health store didn’t come without challenges, however. As well as that, they’re aware of the risk of encouraging monocrops in our agriculture sector and are keen to avoid the next wave of palm oil, soy or maize. It meant relentless trial, error and problem-solving – particularly on the part of the scientists.

But when lockdown hit in August this year, Gray and his colleague Alex Radley were left to carry on the experiments without the help of the scientists at the FoodBowl facility in Māngere, which is operated by New Zealand Food Innovation. Going more than two months without haircuts meant they had the mad-scientist hair-dos to match. “We were just in there working with some pretty high-tech equipment, and really having to feel our way through it,” he says. 

It meant starting their days at 7.30am to test the experiments of the previous day that had been left to dry overnight. “After about 60 days of eating jerky for breakfast, you’re just looking at each other going, ‘really, is this what climate action looks like?’,” he says.

It’s paid off though, says Gray. “And now we’ve got a label we’re really proud of.” 

a replica of a hunk of red meat could be seen as one of the final frontiers for the plant-based sector. (Image: Charlotte Muru-Lanning)

The majority of plant-based meats you’ll find in the supermarket are in the form of mince, sausages or patties. In this way, a replica of a hunk of red meat could be seen as one of the final frontiers for the plant-based sector. Gray describes cuts of red meat like jerky as a step up on the red meat hierarchy – with fillet steak as the pinnacle, and a goal he’s keen to work towards.

There’s a growing interest in supporting plant-based products among both consumers and the agriculture sector, says Gray. “There’s a general acceptance that this is a really exciting sector that solves a lot of our challenges, whether it’s for waterways, greenhouse gas emissions, soil quality.”

This runs alongside a more general recognition that plant-based meats no longer need to be relegated to some kind of woo-woo fringe. 

In July, Gray spoke in front of 300 farmers at Lincoln University about his plant-based venture. While these interactions can often be both challenging and emotional, Gray says there seems to be a growing understanding that this is the direction the world is going. “We’ve got a long way to go in terms of the uptake of it,” he says. “That requires trust, it requires vision, it requires investment.”

Far from anti-farming, he views the possibilities of plant-based foods as providing a much-needed transition for the sector. Researchers have found that although meat consumption has on average increased globally, locally our consumption seems to be trending downward.

Reflecting on the rise of man-made fibres that decimated our local wool industry in the 1980s, Gray says, “the same could quite easily happen to meat and dairy if we don’t take note”. 

Plant-based meat that mimics meat in such an exact manner is a vital part of making plant-based alternatives viable, he says. Simply put, lots of us quite enjoy meat.

“I’m not hiding it,” he says. “We are trying to imitate every sensory experience of meat.”

The jerky is so similar that vegans are often put off. Because of this, Gray says, “it’s actually geared towards meat reducers and flexitarians”. 

When it comes to the market, it makes sense – there are a lot more flexitarians and reducitarians than there are vegans or vegetarians. “If we’re going to have an impact on greenhouse gas emissions, it needs to be in that demographic,” he says. 

Off-Piste’s three flavours of plant-based jerky (Image: supplied)

There’s a primal element to our enjoyment of meat, one that Gray believes we should embrace even as we shift away from the animal-based product. “To think that there’s not some deep-seated motivation to eat meat is, I think, ignoring evolution,” he says. 

Consider quintessential meals across various cuisines. For most New Zealanders, proteins – whether it be meat or seafood – make up core parts of dishes, especially when we’re celebrating. A meal that lacks it can feel less esteemed, less complete and less generous.

At the moment, the team behind Off-Piste has 10 products in the pipeline – each at various stages of development. For now, they’re focusing on the snack category with products like biltong and bier sticks, but they’ll be delving into new categories in the new year. The breakthroughs they’ve made in developing the mouth feel and aesthetic of plant-based meats might be a game-changer for the development of future high-end plant-based meat cuts such as steaks, ribs and cutlets.

Beyond potentially being more delicious, more sustainable and more affordable, Gray believes the project opens up possibilities to surpass the nutritional qualities of traditional meat too. Perhaps replacing those negative aspects of red meat like trans fat or cholesterol with ingredients that are good for us.

Rather than playing catch up with “real” meat, Gray is adamant that plant-based meats should and could surpass the desirability of animal meat. “Really there should become a point where our product is actually superior to meat,” he says. “I mean that quite sincerely.”

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