In the latest episode of 2 Cents 2 Much, Janaye Henry spoke with economist Shamubeel Eaqub to find out more about the cost of living crisis. This is an edited excerpt of their conversation.
Janaye Henry: What is the cost of living crisis?
Shamubeel Eaqub: The cost of living has gone up much more than the wages have gone up. So people are finding it harder – you know, they’re paying more for food, more for fuel, more for rent, more for their mortgages. And there’s just not much left at the end of the week.
Do you actually think it’s a crisis?
It is a crisis. New Zealanders are telling us they’re feeling the most pessimistic that they’ve felt since the last big recession. People are finding their finances are not doing so well and they don’t think it’s going to get better soon. So it is really hard when your money doesn’t go far enough, when you’re stressed about looking after your family and providing that security that you want.
So, yes, there is a cost of living crisis and it’s very recent for most New Zealanders in the last couple of years. But of course for poor people, it’s been going on for some time.
People think that work equals money and people think that money equals merit. Neither of those things are true. Poor people are sometimes the hardest workers, but they just aren’t rewarded for the work that they do. The Covid period was quite extraordinary, where we realised who the people are who are the true backbone of the country. But they’re still the ones who are getting paid minimum wages, and they’re still the ones that have some of the worst working conditions.
So it’s been a very strange couple of years where I think we’ve understood where the real work is, where the essential workers are, and yet we’re happy to keep exploiting them.
Do you think our current economy is set up to trap people in poverty?
Yes. Poverty is a trap and we don’t have enough ladders for people to climb out. So if it was a game of snakes and ladders, I’d say all the snakes are at the bottom and all the leaders are at the top. So you’re much more likely to fall out into poverty than climb out of poverty. And that’s really frustrating because we know from evidence that when you’re living in poverty, you’re so busy and so stressed dealing with poverty that you don’t have time to, you know, do education or have time out for looking after yourself or your career or whatever.
It’s very uncomfortable for people to hear that somehow you are motivated to keep somebody poor. But the thing is, we kind of are, right? We kind of like the cheaper coffee. We like to bitch and moan a bit when coffee prices go up. But what’s the other side? What’s the other side of paying more?
You go and support people that you want to support. You go and buy things from businesses that you trust. But those are very individual responses. Really it’s the system change stuff that we’ve got to work on. We should not have work that makes people live in poverty. How can it be that we have jobs that do not give people dignity? What is the purpose of the economy if not to give people dignity and comfort?
It sounds like you place a lot of responsibility on the government to help us out of the situation.
The reality is that when it comes to the collective, that is the role of the government and that is the role of the public institutions. That’s why we have them. We vote these people into power and we ask them to create these institutions like the Reserve Bank, because we want them to make decisions on behalf of New Zealand. And they should do a good job.
Is there a political party that has policies you align with the most as an economist?
No. It’s not possible, in a way. Because they get into power and they do the same thing as the last lot. So when they’re on the stump asking for your vote during general elections, they’ll promise you anything.
But then what happens is most of what the government does doesn’t change a lot. And partly that’s a good thing. We don’t want wholesale changes to everything because we want some stability and predictability of, you know, the rules and regulations for our country. But at the same time, sometimes we kind of just want some change.
Look, if you sum it all up, if you just take everybody together, things are looking good. But then we have this incredible underbelly of poverty and unfairness that’s become really steeped in our society that I don’t think is OK. And for a country that is so small, we’re only 5 million people.
We know who those poor people are. We know the people who need help. And we can do it if we want to, because we actually are quite rich as a nation. The reason why we have poverty, the reason why we have the kind of inequality that we have, is by choice. We choose not to look after these people. We choose not to take action. And that, to me, is very concerning because that’s what leads to that, you know, that kind of fraying of the social fabric, that anger that seeps out.
And I feel like that’s something that shouldn’t happen in our country and we can absolutely solve it. But we’re choosing not to because there’s so little leadership and there’s so little empathy and love in the way that we do politics and public policy.
OK, I do feel some anger.
I do too. I think we should be angry. Because it’s completely preventable.
I’ve never heard that before. That poverty is preventable. People talk about it like it’s inevitable.
It’s not. It’s entirely a choice thing. In a country like New Zealand, we choose to have the level of poverty that we have. And I feel very frustrated by it because we know that if we had been more generous with them, if we gave them more support from most people, they would be able to climb out.
But we keep them in this level of poverty that is so consuming and so difficult, and then we dehumanise them and then blame them for being poor. It just makes no sense.
Why has it only now been declared a cost of living crisis when we have had that underbelly for so long?
So there’s a difference between poverty and the increase in the cost of living, which also affects middle classes. So for poor people, life has been very expensive for a very long time.
It has become unbearably expensive over the course of the last couple of years. But the reason why it’s in the headlines is even people who were previously comfortable and are feeling that cost of living increases. And that’s why it’s in the headlines because the middle classes have way more representation in our headlines and media and common narrative than poor people do.
I thought the cost of living crisis would help people develop more empathy to people who are experiencing and have experienced poverty for a long time. But I don’t think I’m seeing that.
Look, I think when you experience that cost of living crisis, as we are at the moment, there is also a tendency to look at yourself first. My weekly shop isn’t going as far, I can’t afford to buy this thing or that thing. So there is also this element of “what can I do to look after my family first?”
That’s very much an instinctive response. Empathy requires you to think about what somebody else is feeling with a lot less than you. And that’s a very uncomfortable thought for most people to possess. And people don’t want to think about being poor. People don’t want to think about those uncomfortable things. And so, yes, we should be more empathetic, but we are not.
And I wish we were, because I think we would be a better society if we were. But it also comes with some really big duties. If you’re empathetic, if you’re truly empathetic, you would want to pay more taxes. You’d want to have less handouts from the government, from yourself, for yourself. Now, when push comes to shove, do you really, really want to vote for that?
The reality is that most people don’t think that way. Most people, when push comes to shove, will vote for their own comforts, not for the comfort of others.
Watch a new episode of 2 Cents 2 Much on The Spinoff next Tuesday. Made with support from NZ On Air.