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April 15, 2021

Why we should all care about rising inequality (but especially if you’re wealthy)

This topic has been heavy on my heart for a while – actually, many things to do with inequality weigh heavily. Some care about rising inequality naturally – we have a higher level of empathy and tend to feel more keenly for those who are suffering. But there are those who don't find it so easy to empathise and this is my message for them.

We ALL need to care about rising inequality, especially if you are wealthy. For someone who thinks ‘I've got what I need why do I need to care about anyone else'… they don't understand how capitalism works.

So many times I've wanted to share my thoughts on wealth inequality. Oh and privilege denial. And the housing crisis here in Aotearoa New Zealand… racism… unconscious bias – ALL THE THINGS.

But it's not easy to write about. So I drew it – and then found that I did have a few things to say!

TL;DR – check out the cartoon slideshow below – or read on!

Rising inequality created by soaring house prices

Watching what is happening here in New Zealand with housing prices soaring – sure, some people are getting really wealthy… But the impact this has on society is heartbreaking and long-reaching. Because the more unreachable housing becomes for families in New Zealand, the further those at the bottom are pushed down. The bigger the divide between those who have and those who do not, grows.

But so many people don't make the connection. The link between a housing crisis and the misery that it creates at the bottom. And how this misery will eventually affect us ALL – not just those squashed in a heap down there.

I'm not even talking about rising crime, although this will happen as a result of this economic shift.

Flippantly flipping

In a relatively healthy discussion about flipping homes, a property investor commented to me a few weeks back:

“Investors who flip run down properties create awesome options for first home buyers. Isn't this what first home buyers want – more supply?”.

This particular investor is aiming to own 25 homes. She wants to do this so that she can build the capital over time to become a property developer. To be honest, she'd make a great landlady! She gets that families deserve healthy homes, and she wants to provide that to them.

I guess, for this reason, she couldn't see the connection. She doesn't believe that she's contributing to rising inequality – the growing chasm between the haves and the have nots.

She couldn't see the impact that massive property investor activity was having on the market. (In January 2021 investors ‘snapped up 30 per cent of all properties sold, their highest percentage share on record‘.

This in turn keeps pushing prices further and further out of reach of families who just want their own home. Like me, just one home please.

Because, even if a property investor buys an ‘old dunger' to do up, it continues to add heat to the market. No matter where it is located and in what state it is in. That's one more home that is taken out of current circulation, and one more family who has to wait.

Families who don't own homes are worse off. Not just in net worth, but health and happiness too.

Renters don't live as long. Let that sink in.

Bringing it all back to hard work

Some of these property investors might write me off as not understanding the work they need to do.

I get it – it does take time and it does take sacrifice. There's no denying that they have worked hard, and have made decisions and sacrifices that have gotten them where they are. Being a landlady is not a walk in the park, it's a job. I'm not here to dismiss that.

But they've also had luck.

Luck that usually comes in the form of privilege.

Sure it's hard work. But I can tell you straight up that I am working hard too. But I don't have what you have.

During lockdown I saw our essential workers – our lowest paid workers – being sent out every day to work, with the fear of getting sick, or dying. They worked hard while those of us privileged enough to be able to do our work from the safety* of our homes, sent messages of support.

Those even more privileged were able to make a dash to their holiday home before alert levels changed (at time terrifying the small towns they descended upon).

*Some of those less privileged did not live in safe homes, but could not leave them. You can make a difference to those people by gifting a safe night below or follow this link: Safe Night.

Can we have a conversation about that privilege?

It's hard to watch the effects that this housing crisis and rising inequality is having, and will continue to have on our society. On our kids. On their futures.

I just want us to take a moment to remember, that privilege helps some of us rise to the top. Lack of it or less of it keeps some of us on the bottom – regardless of work ethic.

Those first home buyers? They're actually privileged enough to be in a position of being somewhat near to buying a home.

When they can't buy that home, they continue to rent. So those who can afford less, get less.

Some families are downsizing. Some mums (like me) are hustling to grow businesses with multiple income streams. We're trying to get smart about our financial self-care. All a privilege, to me.

What about the poor folk at the ‘bottom'?

What happens to these people who get pushed out the bottom? The ones who may never have a hope of saving enough for a deposit on even a ‘dunger'?

4,000 kids in New Zealand are living in hotel accommodation. The waitlist for public housing is at an all time high. Māori and Pacific peoples make up a majority of these ‘statistics'. And what of those people with mental health and mental and physical disabilities?

Maybe some of these less privileged folks don't dare dream of home ownership.

But they would still like a healthy, warm, safe home for themselves and their families.

The sad fact is, that the further down they are pushed, because of rising inequality, the worse the housing stock gets. Cold, damp, mouldy homes at the best. Homeless and destitute and the worst.

This is why we all need to help those less privileged than ourselves

If you're interested in learning more about this sketchy capitalism cycle we are in, Bernard Hickey's podcast episode from The Spinoff's “When the facts change” Global capitalism’s ‘doom loop' and how to stop i‪t‬ or if you want to go super deep, you can read Ray Dalio's The Changing World Order. For a lighter explainer on the economic cycles that have played out (and are playing out) over history, watch Ray Dalio's illustrated video – How the Economic Machine Works (a brilliantly simple and enjoyable explainer for the non-economist).

And on a lighter note, I really need to ask Nick to update the numbers on this post done in 2018: Is a house a good investment? That'll be a scream.

Ok so how can we help?

Here's the thing – YOU are probably already helping, so this subject is moot. I want to give you an explanation to put in your back pocket so that you can use it the next time you hear objections.

👂 When you come across completely tone deaf people that won't admit that privilege plays a part in the levels of success you reach – not just hard work

👂When you hear comments that Māori, Pacific peoples or any other BIPOC (black, indigienous and people of colour) are lazy, or otherwise categorised as not working hard enough. 

🙏🏼 When you just want to take a moment for yourself to feel gratitude for everything you have today – acknowledging all the small and large privileges that helped you create it.

Etc.

As always, love to know your thoughts!

If you want to talk about this sort of stuff in a safe, non-judgy environment you can always find me, and other like minded mums in the Facebook group: Creating Healthy Wealth in Motherhood.

Wanna start something constructive in the form of a leveraged income stream? Download the free guide to find out a bit more about how leveraged income can be great for motherhood.

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