Rising inequality holds back economic growth — according to a recent report by the Organization for Economic Co-operation and Development (OECD).

The organization, which is primarily composed of high-income countries, analyzed economic growth from 1990 to 2010 and found that almost all 21 examined countries missed out on economic growth due to rising inequalities.

“When income inequality rises, economic growth falls,” the authors of the report concluded.

They explained their findings by pointing out that wealth gaps hold back the skills development of children — particularly those with parents who have a poorer education background. In other words: A lack of access to high-quality and long-term education among poorer citizens in many OECD countries hurts the economy.

New Zealand’s economy could have grown by 44 percent between 1990 and 2010, but the country did only achieve 28 percent growth due to inequality. Hence, it lost 15.5 percentage points — more than any other country. This is particularly surprising, given that New Zealand was once considered a paradise of equality, as Max Rashbrooke, the author of a book called Inequality: A New Zealand Crisis, pointed out in the Guardian newspaper.

“New Zealand halved its top tax rate, cut benefits by up to a quarter of their value, and dramatically reduced the bargaining power – and therefore the share of national income – of ordinary workers. Thousands of people lost their jobs as manufacturing work went overseas, and there was no significant response with increased trade training or skills programs, a policy failure that is ongoing,” Rashbrooke writes in the op-ed. He also blames New Zealand for a lack of affordable homes which led to higher rents and unpaid mortgages.

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OECD Secretary-General Angel Gurría stated “this compelling evidence proves that addressing high and growing inequality is critical to promote strong and sustained growth and needs to be at the centre of the policy debate. Countries that promote equal opportunity for all from an early age are those that will grow and prosper.”

John Key and the National Party consider themselves the best political party in New Zealand at handling the growth of the economy, and go as far as stating their economic programme is taking us in the right direction. Unfortunately for them, the recent OECD report indicates that policies are favoured towards the wealthy. National’s tax cuts for the rich can be used as an example, having had a direct negative effect on the growth of the economy due to the resulting inequality.

Clinical psychologist and television personality Nigel Latta last year addressed inequality in New Zealand with his documentary ‘The New Haves and Have Nots’ which gives a chilling insight into why the divide between the rich and poor is growing faster here than in any other OECD country except one. Nigel explains the negative flow on effects from inequality including poverty, crime, the impact on future generations, as well as discusses the latest Quality of Life Survey which states the number of people who do not have enough money to meet their everyday needs has almost doubled to one in five people (20%).

Last year New Zealand voted for more of the same, which translates to more inequality and policies favouring the elite at the cost of the nation. The right-wing media machine worked overtime leading up to the last election to deceive the country into believing a right-wing government coupled with trickle-down economics would benefit everyone. With heads buried deep in the sand, New Zealand voters have themselves to thank for a government that has done its part changing our country from a once fair and equal land into a tax haven for the wealthy to thrive in.

In order to implement change, New Zealand can’t expect a blind nation acting solely on self-interest to achieve it. Those who want change need to speak up and act on the behalf of all those who have been left behind by past and present government policies which only favour the wealthy. 

About The Author

Wake Up NZ is a team of dedicated truth-seekers from all over New Zealand. We are committed to disseminating information that the mainstream media fails to bring to you.

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2 Responses

  1. John

    Talking of a country of former equality and well-being, I was talking to a friend of mine recently older chap a builder use to work for the ministry of works back in the day. He was telling me of a time where such a ministry existed to give young people in NZ a job in a trade such as himself as a builder or a plumber road worker etc and he told me of the power board that took young people in to be linesmen so and so forth or you could work in a factory join the armed forces or be a farmer as such. He told me how in such a scheme training was provided and so was a job. So I told him how now I have to take out a student loan to try and do a pre-trade course to become an electrician look for an apprenticeship how now we import tradesmen to fill the void sold a shitload of NZ assets to Australia and that ministry doesn’t exist anymore and was never replaced with such a likewise scheme. Peter Dunn said recently “One of the greatest challenges we face is youth un-employment”. Well at least the armed forces are around right? I served in the Army and know it takes a mind set to be a Solider. Why is it we are so un willing to educate the youth of NZ?


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