The more things change...November 15, 2014

Another example of the more things change, the more they stay the same. Not sure if this is a new feature of Papers Past or I simply hadn't noticed it previously, but 'computer generated' text provides a pastable version of an item. Here's one I enjoyed from the Evening Post 80 years ago today:

WORK.AND IDLENESS
SCIENCE MAKES BOTH
IS STILL KEY TO PROGRESS
Three thousand million pounds was added to the world's wealth by the inventions of Thomas A. Edison. That estimate was used by Sir James Jeans, in his presidential address to 3000 members of the British Association, states the London "Daily Express." He gave an impassioned denial to the charge that science does more harm than good. Although some new inventions had thrown people out of work, he said, scientific discoveries had provided work for millions
"There are many who attribute most of our present national woes—including unemployment in industry and the danger of war—to the recent rapid advance in scientific knowledge," Sir James went on.
"It is obvious that the country which called a halt to scientific progress would soon fall behind in every other respect as well.
"Those who sigh for an Arcadia in which all the machinery would be swapped and all invention proclaimed a crime, as it was in Erewhon, forget that the Erewhonians had neither to compete with highly organised scientific competitors for the trade of the world, nor to protect themselves against possible bomb-dropping, blockade, or invasion. Scientific research has two products of industrial importance—the laboursaving inventions which displace labour and the more fundamental discoveries which may ultimately lead to new trades, and new popular demands providing employment for vast armies of labour.

"Our great need at the moment is tor industry-making discoveries. The investigator in pure science does not know whether his researches will result in a mere labour-saving device or a new industry. He only knows that if  all science were throttled down neither would result.The community would become crystallised in its present state, with nothing to do but watch its population increase, and shiver as it waited for the famine, pestilence, or war, which must inevitably come, to restore the balance between food and mouths, land and population.'' 

And the same anti-science sentiment survives. Here's an example from 1997:

 NEW TECHNOLOGY AND THE END OF JOBS
Jeremy Rifkin
A technology revolution is fast replacing human beings with machines in virtually every sector and industry in the global economy. Already, millions of workers have been permanently eliminated from the economic process, and whole work categories and job assignments have shrunk, been restructured, or disappeared. Global unemployment has now reached its highest level since the great depression of the 1930s. More than 800 million human beings are now unemployed or underemployed in the world. That figure is likely to rise sharply between now and the turn of the century as millions of new entrants into the workforce find themselves without jobs.

More

MSD recommends higher benefits to Minister

I've been monitoring the MSD site for the Briefing to the Incoming Minister for Social Development. It's still not there but the NZ Herald has it.

Simon Collins summarises what he thinks the stand out points are. A reference to benefit levels - especially the one that relates particularly to child poverty - appears.

A graph in the briefing paper shows that the income of a sole-parent beneficiary with one child has dropped by almost 20 per cent in real terms since 1983, while the net average ordinary-time wage has risen in real terms over the same period by more than 30 per cent.
"In light of the short and long-term costs of child poverty to individuals and communities and relatively flat trend lines in levels of child poverty and hardship, it is important to continue to make progress in this area," it says.
"Alleviating hardship for children in the 'here-and-now' is an investment to improve life chances and child wellbeing in other domains, and reduces the potential harm and costs (including economic costs) to society.
"Within this multi-pronged approach, options could be explored to review the adequacy of the existing transfer payments, notably in the case of families with children."

The 'here and now' phrase worries me. That is exactly what increases future risk.

In short MSD are recommending to the Minister that sole parent benefit levels should rise despite the proven risks that this will result in more single parents and more unemployed households.

By the way, the graph is lifted from the Household Incomes Report (C.8) which states,

"None of the scenario lines include the Accommodation Supplement or the subsidy received by those on income-related rents vis-à-vis market rents."

The same applies to C.7 which fills out the picture. When a typical South Auckland accommodation supplement is added the SPS (ex DPB) with two children rises to $642 weekly:

 

Update: Received a link in a subscription e-mail posted at 5.00am this morning. Simon Collins sure reads and writes fast.

'Long term' unemployed numbers falling

I do wonder why MSD publishes a "snapshot" of Jobseeker data in November which is only current to June. But here is their latest installment showing progress towards BPS target depicting people continuously receiving Jobseeker Support for 12 or more months:

 


With the unemployment rate dropping you would expect the trend to continue.

As noted in the Result Action Plan for Reducing Long-term Welfare Dependence, a breakdown of client groups most at risk of staying on a benefit for longer periods is provided below. As at the end of June 2014, these client groups consisted of:

• 21,995 Māori (a 1.6 per cent decrease from the March 2014 quarter)
• 4,550 Pasifika (a 3.6 per cent decrease from the March 2014 quarter)
• 6,850 Youth (a 2.1 per cent decrease from the March 2014 quarter).

This is also in line with the HLFS employment data which shows the Maori unemployment rate is not falling as fast as Pasifika.

Numbers on the Supported Living Payment (generally ex Invalid Benefit) are static:

 

 Numbers on Sole Parent Support are declining slightly:

Incredible cost escalation or incredibly bad reporting?

I listened to TV3 News coverage of the Glenn Inquiry report wondering why the media never questions the info they are fed in press releases (see previous post).

But it gets worse than just repeating spoon fed lines.

The reporter worriedly asserted:

The Glenn Inquiry warns if child abuse and domestic violence aren't curbed in 10 years' time, it will cost New Zealand $80 billion a year. 

That would be around 44% of the country's GDP!!  Didn't anyone writing or reading this news item say, hang on a minute, that can't be right.

The original Glenn Inquiry media statement said:

At this rate, the accumulated costs over the next 10 years could approach $80 billion.

In part I blame the authors of the original statement for using tricky means to blow up costs. But for TV3 to misread and report the statistics so poorly is pathetic.

Glenn Report says family violence costs are soaring

From Scoop:

Study Exposes Soaring Cost of Abuse

Monday, 10 November 2014, 9:41 am
Press Release: Glenn Inquiry 10 November 2014
Study Exposes Soaring Cost of Abuse
Child abuse and violence between partners are estimated to be costing New Zealand up to $7 billion a year and rising, an economic impact study conducted for the Glenn Inquiry has concluded.
This is seven times more than what it was costing 20 years ago, and equates to 60 percent of New Zealand’s total dairy export earnings in 2013. The abuse and violence is nearly twice as costly per head of population here as it is in Australia.
At this rate, the accumulated costs over the next 10 years could approach $80 billion.

Estimations of these kinds always make me suspicious and cynical.

So the cost was $1 billion in 1994 and is 7 times that today.

Where did the original figure come from?

It seems Suzanne Snively and Coopers and Lybrand did a report for MSD which was published in the Social Policy Journal in 1995. Women's Refuge refer to it,

" In 1996, economist Suzanne Snively estimated the cost of domestic violence in New Zealand to be between $1.2 and $5.8 billion per annum."

So up to $5.8 billion in 1995 and up to $7 billion in 2014.

Adjusting for inflation would push the 1995 figure above $7 billion.

On what basis can these costs be described as "soaring?"

Two contrasting letters

Two contrasting letters in the DomPost this morning responding to an editorial about child poverty:

NZ Herald sends wrong message

The NZ Herald has a headline  

More childless couples in NZ

The photo accompanying it is of a young couple drinking champagne and laughing, implying more young couples are choosing to be child-free.

The photo should have been something like this:

The reason there are proportionately more couples without dependent children is the ageing population.

The clue is here:

 Marlborough was the only region where over half (53.2 per cent) of the families were couples without children, which reflected the older age structure of people in these families in this region, Mr Meech said.

Fertility rates are slightly lower than in 2006 but the total fertility rate is still 2 births per woman. High by developed world standards.

"Reduce poverty with capitalism" - true story

From the NCPA today:

Countries Boost Incomes, Reduce Poverty with Capitalism

November 4, 2014
From 1990 to 2011, the percent of the world's population living in extreme poverty fell from 36 percent down to 15 percent. Why? Douglas Irwin, economics professor at Dartmouth College, says the answer is simple: capitalism.
The drop in poverty over the last quarter-century is the greatest drop in poverty in world history, writes Irwin, and it is due to the fact that developing countries implemented business-friendly economic policies. He offers a few examples:

• China took major steps in 1978 when it allowed private businesses and private agricultural plots while putting an end to the state's monopoly over foreign trade. Today, Chinese workers have much higher wages, and fewer of them are living in poverty.
• India began doing away with its government licensing system in 1991. The country had required state approval not only for people to start new businesses but to expand existing ones and purchase foreign goods and parts. Like China, the state has seen a resulting drop in poverty and a boost in wages.
• Tanzania has seen major growth after it did away with price controls and other socialist policies in the 1980s.

Capitalism, says Irwin, was given a bad reputation by Marxists who equated capitalism with the exploitation of workers. But Irwin says Adam Smith had the better description of capitalism -- a "commercial society" in which all men could participate in markets. The growth of that commercial society has brought great improvements across the globe -- while 811 million workers earned less than $1.25 per day in 1991, that number had dropped to 375 million in 2013.
Source: Douglas A. Irwin, "The Ultimate Global Antipoverty Program," Wall Street Journal, November 3, 2014.

We went up to China earlier this year and saw the truth of this for ourselves.

Those who persist with Marxism do poor people no favours.

Unintelligent DomPost editorial

Today's DomPost editorial is typical of their unintelligent position on child poverty. The editorial is italicised with my points interspersed:

The government must act on poverty

Unicef's latest report on child poverty in rich countries in the years after 2007 includes a special criticism of New Zealand.
"Australia's increase in spending on families had a more positive impact than the ambitious tax cuts implemented in New Zealand, where poverty and inequality stagnated."
The last part, at least, is blunt but fair - whichever way you dice it, poverty levels in New Zealand are flat.
Perhaps, one might argue, that is still an achievement after years of recession. The National Government has not cut such social spending as the Working for Families tax credits, a help to many low-income families during the past 10 years. But Australia's success begs the question: why are we not doing more? Prime Minister John Key says it's all about the economy - Australia famously bucked the global slump after 2007.
"A strong economy is the No 1 way to lift youngsters out of poverty," he says.
This is at least an incomplete view. It must be relevant that the Australian government launched what one group of academics calls a "massive policy response" to the financial crisis, putting "billions of dollars into the pockets of low and middle income families".

Other sources conflict with this. According to the OECD's Society at a Glance 2014:

Relative poverty in Australia (14.4% of the population) is higher than the OECD average (11.3%). Even if they still are high, poverty rates for youth and particularly those over the age of 65 declined, while child poverty increased...

The strong increase in real public social spending between 2007/08 and 2012 is mainly explained by pensions, leaving many families with children behind.

 


Some will argue that New Zealand cannot afford such spending. 

According to the above graph, NZ almost did.

They will also say that policies to seriously dent child poverty rates are not worth it because they end up discouraging parents from finding work. 

An evidence-based argument. But not only is work discouraged by higher benefits,  the rate of single parenthood is encouraged.
 

Yet those arguments get something truly wrong. What New Zealand cannot afford is to keep leaving so many of its youngest people flailing.
The statistics are complex, but it is fair to say about one in five Kiwi kids is growing up in a house with resources so meagre that they are held back from meaningful participation in society. 

No it isn't fair to say "one in five" when the claim is based solely on relative poverty numbers. Many children in low income families are not experiencing hardship.

Why not use real data?

Describing hardship for children

Material hardship means going without goods, services, and experiences that people can reasonably be expected to have. Statistics New Zealand, with the advice of the Ministry of Social Development, has provided an analysis of what this means using the New Zealand General Social Survey data. They identified eleven key indicators of vulnerability such as:

•

having a smoker or a victim of crime living in the house (both about 20%)

•

living in a high deprivation area (22%)

•

living in an overcrowded house (13%)

•

having a low socioeconomic rating on the ELSI scale

•

having more than one housing problem like damp, cost, cold, or inadequate

heating (10%)

•

having limited access to facilities like shops, schools, libraries and medical

facilities (9%).

They assessed the six percent of children with five or more of these indicators as being at high risk of being in deprivation.

 
Is it any wonder that we keep seeing such figures across all the social indicators? There is a "long tail" of underachievement in our schools. A quarter of people face housing costs so high they are in financial stress. A quarter does not turn out to vote.
Does anyone doubt some connection here? These problems suggest a group cut adrift from the rest of the country. 

And voter turn out in Australia (despite compulsory registration) is falling too. As defined by the percentage of the voting age population that actually voted it has been falling steadily to reach 79.67% in 2013. So much for that theory.


It is not enough to insist that only a stronger economy can solve these problems. New Zealand's economy today is stronger than it was in the 1980s - the median household income has grown by half. 

Not according to the Household Incomes Report:

More like a quarter. Much of the increased median is due to households increasingly featuring more than one earner.


Yet the number of children in poverty has roughly doubled in that time.

Only when after-housing-cost household incomes are used.

 If their parents are earning, their real pay increases have been all but eroded by spiking housing costs.

And the government is addressing the housing affordability problem on a number of fronts not least of which is trying to reduce costly local government bureaucracy and land supply issues.



If they are not, their benefits have been cut. 

I recently calculated a benefit 'package' for a sole parent and two children comparing pre-cuts 1989 with today ( in $2014). They are not terribly dissimilar. Yes, the basic rate is considerably lower, but the add-ons are higher. It isn't that benefit cuts have eroded income support payments so much as the rising median household income means more beneficiaries and their children fall below the 60 percent threshold. That's why the poverty rate for beneficiary children is so much higher than for working families.




Meanwhile, what it means to participate in New Zealand has changed - now it's an internet connection as well as bread on the table and a pair of shoes.

This is about priorities. To hold off spending more on children because it discourages work, or might slow growth, is to have them backwards. 

To not prioritise encouraging work is economic insanity.  NZ research has proved that poor children in working homes do better than poor children in benefit-dependent homes.


Everyone agrees it is unacceptable for New Zealand kids to grow up in deprivation. That must be the starting point here - it cannot be qualified away.
If the Government won't transfer more money to those in poverty, it needs to explain how else it will answer this profound problem.
- The Dominion Post

If the writer had his or her eyes open it would be clear what the government has been doing to address the problem. Welfare reform.


Plus many other practical developments over the past few years. Insulation of over 200,000 homes; increased access to GPs; an intensive campaign to reduce rheumatic fever; boosted budgeting advisory services; low cost procurement of household essentials like washing machines; low interest loans to combat loan sharks; partnering with charities providing food and clothing to poor children; home visitation programmes like Early Start; extended income-related rents to non-government social housing; and Whanau Ora, to mention some.