Dialogue: Increasingly difficult for people to move out of lower-income ranks

The points made by Reuben Chapple in a Dialogue page article on household income data and the incidence of poverty were not new. A black American academic, Thomas Sowell, made the same points when the Business Roundtable sponsored his appearance in this country a few years ago.

Essentially, Mr Chapple argued that the household income data were but snapshots in time and thus did not convey people's movement out of the lower-income bands as they established careers, earned more and built up assets.

He referred to studies which recorded that "only 3 per cent of all households will remain permanently in the bottom 20 per cent."

So much for benefit dependency. Not, then, the problem that Mr Chapple and his ilk have in the past cracked it up to be? We shall see.

Sometimes, of course, people succeed in moving along Mr Chapple's conveyor belt to abundance - the "accumulated assets in the form of bank accounts, share investments, pension funds and equity in their homes" to which he referred.

But generally, people's progress is not as inexorable as he would have us believe - or as considerable. Home ownership is in decline, for instance.

And there is now a considerable amount of "churning," in which people move in quite short bursts in and out of varying levels of reliance on the benefit, struggling to secure a foothold through insecure and often multiple low-paid jobs.

Their problems were compounded in the 1990s by the Employment Contracts Act, which celebrated all of this.

In this churning, people will zig-zag up and down the ranks of the bottom, say, 40 per cent and give periodic and somewhat limited credence to what Mr Chapple had to say about movements out of the very lowest bands.

But it is simply not a foundation on which people can build healthy and satisfying lives for themselves or their children.

So the movement of people out of the lowest income bands is often temporary, and Government policies and broad economic developments at the end of the last century made their progress harder to secure against swings in fortune as well.

Government policy of the 1990s, for instance, probably failed to maintain the value of the social wage, that range of good-quality, accessible services in health, education and housing not measured in household income data and which Mr Chapple neglected entirely.

He also disputed the incidence of poverty, defining it as a "lack of food, shelter and clothing." It is at this point that his article became slightly unhinged.

It was hard to miss how he fumed and was incredulous over the fact that middle-class consumer items such as video-recorders can be found in the homes of the modern-day poor.

But here Mr Chapple forgot his very argument that people would periodically lift themselves out of the very lowest income range and be able to splash out now and again (even if going through subsequent phases when they would not be able to make the purchase).

So why is he disturbed by the sight of video-recorders in the homes of the poor?

The problem Mr Chapple has is that for the specific purpose of convincing us that we have no problem with poverty, he needed to cast practically everybody as hard-working, socially and economically mobile achievers unstoppably on the way up.

But for his broader purpose of denigrating the left, his reflexes took him towards the contradictory argument that there is a large, immobile and undeserving group of poor people (undeserving of video-recorders, anyway, and the proper subject of sneers for having a video-recorder), courted by left-wing leaders who want to win votes and "feel superior."

Of course, neither of Mr Chapple's purposes is served by an acknowledgment of the messy reality of large numbers of New Zealanders who work hard and suffer fluctuating fortunes, with probably no material abundance ever in sight.

These are the people who can benefit most from sympathetic and intelligent Government action. They are also the people Mr Chapple and his party - Act - cannot look in the eye.

* Patrick Hine, the Labour Party candidate for Pakuranga at the last election, has tutored in political studies at Auckland University.