Huge efforts needed to address wealth divide

Only a generation ago, the average Kiwi could expect to own a home, have a job, enjoy reasonable access to healthcare and educational opportunities and live in a supportive social environment.

That average Kiwi today is richer, on average, but no longer guaranteed of the other opportunities. Poorly planned public policies, including large net labour migration of recent years and inadequate investment in physical and social infrastructures, have contributed to the highly unequal income and wealth distribution. Correcting them would require policy intervention on many fronts, not least in taxation and public spending.

Taxing assets and higher incomes don’t have to be a ‘downward adjustment’, as Eric Crampton postulates (‘‘The rich own more than you think’’, News, November 21). By improving the shares of some, redistribution would achieve an upward adjustment too. Intergenerational transfers of assets, particularly residential properties, will make the already high inequalities even worse. Taxing assets alone will probably not remove them, but it can help reduce them.

Srikanta Chatterjee, Emeritus Professor, School of Economics & Finance, Massey University