Plight of the have-nots is getting worse but our social safety net seems to rule out an uprising

Following our election American billionaire and prophet of doom Nick Hanauer could be on his way here, with a lot of his rich mates.

This country will be a bolt-hole for the super-rich, according to a lecture, The Pitchforks are coming for us Plutocrats, which Hanauer delivered to the influential TED Foundation earlier this year (the essay is available on

Now widely re-published on the web, this article predicts blood in the streets unless wealth gets shared more fairly.

Hanauer says the divide between the haves and have-nots is getting worse fast, and unless measures such as raising the minimum wage are introduced, the middle class could disappear.


"The more money workers make, the more opportunities people like me have," says the Seattle venture capitalist.

"A real economy is just like the game of Monopoly - when one person has all the money, the game is over."

His warning to the top 1 per cent, who now share about 20 per cent of America's wealth, is that they may not be able to spot the inevitable revolution coming.

"Revolutions, like bankruptcies, come gradually, then suddenly . . . And then there's no time for us to get on our Gulfstream Vs and fly to New Zealand."

It's unclear why Hanauer chose New Zealand as an example of a reliable safe haven for the super-rich to flee to, but in any case he seems to have been bang on.

The New Zealand poor, some of whom rioted in 1932 and 1984, show few signs of activism - violent or otherwise - with union membership in the doldrums and near collapse of the political left at the last election.

Labour pointed out 40 per cent of the New Zealand children growing up in poverty are in working households. They promised to raise the minimum wage from $14.25 to $16.25 an hour by next year. But it was to no avail.

Financial commentator Bernard Hickey says the estimated one million Kiwis who did not vote in the election were mainly the young and the poor.


"Since our system so heavily favours the old and the rich, sometimes I can't really understand why the young are not revolting," says Hickey.

"You must look back to the late 1800s or early 1900s to see the sort of inequality that we're seeing now in the western world today."

Though wages of the low paid have been stagnant for the last few years, the narrative employers have created is that they're providing you with a service by giving you a job, says CTU president Helen Kelly.

Kelly predicts poor financial outcomes for New Zealand as a consequence of failing to raise the minimum wage, and invest in training of low-paid workers, such as in the dairy industry.

"We hear 47 per cent of Kiwis did not get a wage increase last year and 50 per cent of Kiwis identify they struggle to pay bills - it's not just the marginalised poor (complaining) any more."

Kelly and Hickey are not predicting violent political upheaval caused by inequality any time soon and neither does a passionate advocate of raising the minimum wage, Hugh Fletcher. However, all three see negative consequences in crime, health and social cohesion.

Fletcher says there is no quick fix.

"We must integrate how the Government might use its extra tax take and re-organise effective marginal tax rates to ensure the improvement is broadly getting to where it is desired . . . raising the minimum wage, with a lower youth rate, unless they have children, is essential.

"The main argument advanced against it (though most academic econometric studies don't show consistent support for the argument advanced) is that it will reduce employment.

Much low-paid work is in the non-internationally tradeable service sector where it is relative costs, not absolute, that determine competitiveness. The costs of the coffee shop down the road will rise equally.

"Second, while it will encourage investment to replace labour at the margin, we should not be afraid of that. Too little investment per worker is generally acknowledged as a reason for our disappointing improvement in per capita incomes.

"Thirdly, if labour is displaced by investment the nation's potential output grows and the Reserve Bank can be more accommodative in its monetary policy."

Hickey says violent political activism may have been restrained by the fact that New Zealand's income inequality has not worsened as much as in some other countries over the last five to 10 years.

"It obviously worsened dramatically in the late 1980s and early 1990s. In fact, it was the worst in the OECD over that time. However, in New Zealand we have working for families, interest free student loans, universal superannuation, publicly funded healthcare and education systems - a pretty strong social safety net which has restrained (the extent of) this shift in income and wealth to the top, which we've seen in the United States, Europe and east Asia."

Hickey says with the political left in retreat "and unions looking dead or dying", there's nothing obvious which will restore the balance of most of the wealth concentrating in the hands of a very few at the top.

The massive disruption with first and second World Wars forced governments to intervene in capitalism, he says.

"World War II in particular helped to launch a prosperous American middle class, as the soldiers who fought were offered free tertiary education, which effectively lifted the skills levels of an entire generation."

As a consequence an economic system was created which was about driving incomes to the masses and driving up skill levels to the masses.

"Now governments are controlled by people convinced that the best models is open markets, free trade and to generally exercise less intervention in markets. There's also a drive from some who seem to be more politically influential, to reduce size of government and taxes.

"As things stand I'm not necessarily confident a political movement to try to shift the dial towards less inequality - to restrain the natural inclination of capitalism to concentrate wealth in the hands of a few - can happen again."