“No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.” ~ Adam Smith
While some level of inequality is unavoidable in a society, there is a point where it becomes toxic, leaching into the lives of individuals, families, communities and society in wide-ranging and damaging ways.
Societies with high levels of inequality suffer from:
- increased crime
- lower educational attainment
- worse physical health outcomes
- worse mental health outcomes
- lower productivity as potential goes unrealised
- increased stress on institutions
- decreased social cohesion
- decreased general wellbeing
While the burden falls on the most vulnerable – in this country: women, Maori, Pacific Peoples, people with disabilities, people on lower incomes or unemployed – inequality affects an entire society.
While income and wealth inequality tend to track together, they are not the same thing. Income inequality relates to disparities of what people earn (the flow) such as salaries, wages and benefits. Wealth inequality relates to disparities in what assets people hold, such as houses and shares. Of course, wealth can, and does, earn income.
How do we measure inequality?
The Gini Coefficient measures income distribution across a population. It is expressed as a number between 0 and 100 where:
0 = total equality - everyone has the same income
100 = total inequality - one person has all the income
A higher Gini index indicates greater inequality, where the top percentile high-income individuals receive a much larger percentage of the populations total income than the bottom percentile.
If you look closely you can see Aotearoa New Zealand snuggled in between Greece and Portugal, with a Gini of .320. Australia has a lower Gini of .318 but lets not dwell on that - we believe that with the right set of policies and with a population willing to pay their fair share, we can move that dial downwards.
Global inequality, as measured by the Gini index, has been steadily increasing over the decades, spiking during the Covid-19 pandemic. According to the World Economic forum, during the past decade the richest 1% of people captured about half of all new global wealth. But, they say, "Even that pales against what is happening now. Since 2020 and over these pandemic years, the top 1% have managed to seize nearly two-thirds of the $42 trillion in newly-created wealth. This is nearly twice as much money as gained over the same period by the remaining 99% of humanity."
Inequality is an issue globally and here at home in Aotearoa New Zealand. Closing the Gap is dedicated to working towards policy and social change that will shift the dial downwards, allowing all New Zealanders to thrive and to reach their full potential. Keep checking back here, as we grow our website, for updates and new resources and - Join the Conversation!