The tyranny of New Zealand’s middle classes

I expect a lot of abuse for this, so don’t feel that you have to hold back.  Here is my Dom post article (that was supposed to be) from the prior weekend.  It kicks off as follows:

The statement that we are worse off than we were is false, and society’s willingness to believe it is a clear example of the unwarranted victim mentality taken on by the middle classes in New Zealand. In truth, the middle class is better off than it ever has been – due to a mix of economic growth, and by extracting resources from the rich and poor of New Zealand.

Personally, I 100% agree with myself – which doesn’t often happen.

In fact, take this song by Janis Jopin:

Replace lord with government, and you have the attitude of a surprising number of people in New Zealand at present ;)

Eric Crampton explained this phenomenon well in a couple of tweets:

First cut: narratives around deserving and undeserving poor resonate strongly with our moral intuitions.

Left has mushed those two groups together. WFF is classic transfer to “deserving”, hard-left says “unfair”.

Personally I find the distinction between deserving and undeserving poor to be both a poor black and white analogy, and a morally abhorrent way of viewing things.

How can anyone judge who is worthy of a better or worse living standard?  What sort of delusion do we live in if we think we can justify poverty for some, as we demand hand-outs for others who are significantly better off.  I find the entire viewpoint distasteful.

I would also note that this point of view doesn’t imply that I don’t believe there is a case for some redistribution to the middle classes – as I mention in the article.  Instead, I point out that we have had significant redistribution, the middle classes in NZ have done pretty damned well.  Increasing effective taxes on investment to redistribute to the middle classes at this point seems excessive in its costs – and in many cases (eg in terms of transportation and housing) this may merely be leading to higher prices instead of actually improving anyone’s living standards :(

Furthermore, the simultaneous demands for further income boosts to the middle classes and income cuts (and harsher criterion) on the poor is a massive step too far – we are going past describing anything that resembles fairness towards inappropriate punitive punishment of solo-mums and people suffering from addictions.

  • http://offsettingbehaviour.blogspot.com Eric Crampton

    There are nice incentive properties to the distinguishing, as recognized by MIll and by the older mutual aid societies. 

    • http://www.tvhe.co.nz Matt Nolan

      In terms of designing incentive mechanisms that has some merit – in terms of redistributional policy, our demand for “deserving” vs “undeserving” become something else entirely.

      If we were to think of it in terms of incentives, rather than redistribution, I don’t think we can make any more sense of the current form of middle class capture.

      • http://offsettingbehaviour.blogspot.com Eric Crampton

        Oh, not disagreeing at all about Director’s Law. 

        But I can understand, and have some sympathy, for the general view that where voters wish to extend insurance against bad outcome via a welfare system, it’s cheating for the recipient not to make an honest effort to seek employment or, if disability or other factors prevent it, at least to do what one can to pay back the community. 

  • dragonfly

    This is such a difficult issue. I think of Delcelia Witika sometimes – I know not many people will remember now who she was. Fortunately for her, she died, but had she not she would have grown into a person that everyone would have loved to hate. She would have been a single parent, possibly at a very young age, she would have been dependent on drugs and alcohol to quieten the awful demons in her head, and she would have been horribly abusive to her own children. Certainly she would have fallen into the category of the undeserving poor, according to most people. It’s easy to condemn and criticise and characterise others as undeserving when you have been through nothing much terrible yourself.

  • jh

    As a result, instead of talking about how difficult life is for a solo mother and what we can do to ensure that her children can grow up with dignity, politicians and the middle class spend countless hours talking about how welfare simply leads to women having kids as a career – and as a result, benefits should be strongly curtailed.
    ………….
    but hasn’t there been a big increase in numbers on the dpb? Doesn’t that suggest incentive?
     
    In the article I mentioned at the start, it was suggested that households were spending more and more on education, healthcare, and housing. This statement is true. Households are also getting much bigger, warmer, and flasher houses. They are getting vastly better healthcare. And they are receiving much higher levels of education. Consumers are choosing to spend a lot more on these things – when people’s income rises, they tend to spend it!
    ………..
     
    they may not experience spending on housing as wealth. I don’t. As land appreciates I (personally) feel diminished.
     
    I watched “The Big Idea” (TV7), which was “Increase The Population to 15million”. I looked at the proposer who was a tall, handsome well healed looking chap. My friend would say: “he’s higher up the food chain than you and I _”. It occurred to me that he would be one of those people that had the unobstructed view on Canon Hill, never noisy neighbors or concrete block wall 2meters from the lounge. Eric Crampton complains about not being able to live in an apartment by Brighton Beach. If you economists could only afford to live in Linwood or Riccarton to the south of Riccarton Road you might see things differently.

    • http://offsettingbehaviour.blogspot.com Eric Crampton

      @JH. I live in South Brighton. My back lot neighbour has a tenant living in their garage and has since we moved in. My neighbour to the North off and on has tenants in the shed. My neighbour to the South has her house for sale currently, but there is a secondary house on the back of her section that was built for her father, now deceased. I’m hardly writing from the poncy neighbourhoods.

      If we eased up on land use restrictions, more people could have affordable housing – even if population were to increase substantially.

  • jh

    “In New Zealand society, there are a lot of people struggling. Unemployment has been elevated for the last four years. Individuals who live a long way from work are facing very high fuel costs. In some regions, a shortage of property has made it expensive and difficult for the poor to move into appropriate lodgings.”
    ……
    So I’ll take back some of what I said (above). Which leaves me confused as to how big the middle class is given that the median wage is $40,000ish. 
    I’m working class and I divide people into those who have second properties and those who don’t. Those who don’t have any property I don’t like to think aboutl

    “We live in a world where economic growth and technological improvements are making our lives vastly better by the day. But these improvements don’t remove the fact that we have to accept trade-offs in our lives, as resources are ultimately scarce. Apart from providing for those that are genuinely struggling, it is not up to the government to increase our incomes and improve our lifestyles – it’s up to us. ”

    Nevertheless we rarely read this contradictory  observation by Rod Oram:

    Fast population growth over
    the past decade has strained infrastructure, boosted house prices and reduced the
    quality of life in the Auckland region.”  

    http://img.scoop.co.nz/media/pdfs/0705/RMA__Oram_Paper_May_2007.pdf

    • http://www.tvhe.co.nz jamesz

      I looked at the proposer who was a tall, handsome well healed looking chap. My friend would say: “he’s higher up the food chain than you and I”

      I’m working class and I divide people into those who have second properties and those who don’t. Those who don’t have any property I don’t like to think aboutl

      Matt is certainly a handsome chap, but none of the economists on this blog own any property! Maybe we’ve fallen through the cracks in your taxonomy ;)