A toast to the Queen: inequality rules

Yesterday was the official birthday of the most unequal person in our realm, the Queen. Inequality reigns, you might say.

Inequality also rules. The Queen is above politics. Inequality is embedded in politics. It will be a dividing line in next year’s election.

The cabinet is clear about its dominant objective: more and faster GDP growth. To that end, for example, it is radically reshaping the Resource Management Act and trampling over local councils, especially council staffs whom one senior minister calls “zealots” who stifle enterprise.

One dimension to ministers’ GDP-above-all motivation is economic: the more GDP there is — products and services — the better-off everyone will be because they will have more things and stuff and nearly everyone likes more things and stuff. The other dimension is political: if middling voters get more things and stuff they will back National in the 2014 election.

But therein lurks a paradox. In theory, if there is more GDP, as a byproduct some seeps down to the least well off. But making GDP go faster depends on greater inequality.

Take the government’s wage policy. The current Employment Contracts Amendment Bill makes it harder for workers to group together to bargain on wages and that comes after several bills on the same track, most spectacularly at the bidding of a United States film giant. National’s Auckland regional conference last month voted to permit employers to replace workers they have locked out.

Why do this? Because lower real wages make New Zealand businesses more competitive on a wage-cost basis, especially compared with Australian businesses which face tougher wage laws.

The corollary: people, especially those Paula Bennett has prodded off a benefit, should be grateful for a job and not whinge about not having enough to live on.

There is a problem with this: if too many people don’t have enough to live on — that is, go without some necessities, as last year’s research tells us considerable numbers do — that undermines social cohesion.

Inequality doesn’t unite. It divides. A fragmented society functions less well than a cohesive one.

And if too many people feel the GDP-above-all formula leaves them out, there is a risk that GDP will grow more slowly, not more quickly.

The liberal-left — which encompasses most of the Labour party and the Greens — claims that risk is not only real but being realised. Labour points back to the success of social security from the late 1930s in restoring unity and dignity after the Depression’s “sugarbag years”. It claims a causal link between that and the prosperity of the 1950s and 1960s. At the company level the Warehouse’s adoption of a “living wage” for some employees makes a parallel point: staff will be more loyal and productive and profits will rise.

Labour argues that ensuring children have the necessities of life is more likely to turn them eventually into job-holding and tax-paying adults and so build a stronger economy.

It also argues an intrinsic moral case: that no child deserves a bad start in life. Labour’s press releases complaining at Bennett’s policies — actually, to a large extent, Bill English’s — read like moral strictures. That is not likely to win middling voters in large numbers. The English-Bennett line of making certain limited investments in parents and young adults to avoid actuarially-calculated cumulative costs later is more practical and so more likely to appeal to middling voters who suspect many poor households swing the lead.

Labour does run an investment line but is wary of tying it to actuarial numbers as English and Bennett do and characterises the English-Bennett line as punishment, not investment.

A Labour-Green government would seek to recapitulate, revive and restore the 1930s-70s social security ethos and aim for the 1972 aspiration that all can be fully part of society.

Leave aside how achievable that is in a world in which both the nature and geographical location of work has been radically changing. There is a deeper political issue.

The social security state and its successor, the welfare state, bedded in not because the liberal-left initially triumphed. It endured because National adopted it in the late 1940s.

National’s reason was not kindness. It was a liberal-conservative belief in the intrinsic value of a cohesive society to all its members. Exclusion of some from the community undermines social order and social order is precious to most conservatives. (Libertarians such as ACT and some National ministers are a different breed.)

Some days John Key and at times some other ministers exhibit that instinct, which some call a “communitarian” conservatism, traceable back to Edmund Burke.

So later this decade will that instinct prevail in National if a future different government tries to restore a secure, because less unequal, society?

If it does, the Queen, that pinnacle of inequality, would likely approve. Why? It would bring peace to the realm.