My latest blog is an interview with my inspiring Uncle – Professor John Ryan – a man of social conscience, unwavering values and great heart. Here he talks about system change, inequality and a ferret called Sue.
Professor John on Inequality is the second in a blog series interviewing change makers with a dream of a more equitable world.
What was it like growing up in New Zealand in the 30’s and 40’s?
‘It was a very busy time with family. We always had stuff on – especially during the war. Life was tough then but it was much the same for everyone in New Zealand. When we got into the 50’s, I left school, went shearing, then into the railway and onto my career. There seemed to be more opportunities opening up. In the late 50’s I met Jan, we started our family and away we went. I loved teaching at the University in Auckland and then helping Wollongong get a University established.’
Tell me about going rabbiting with your dad in Pukeuri Junction?
‘In the wartime the rabbits could be sold for their skins. Up on the hills at the back of our place at Pukeuri we would go out with a ferret. We had a couple of ferrets and the best one was Sue. If there was a rabbit in the hole we would put Sue in, put a net over the hole and sit and wait. The first time we thought Sue wasn’t going to come out, so we took the nets off and then we heard this thumping. Then eight rabbits came out and we didn’t have any nets on to catch them! That was my first experience. A nice healthy rabbit, that’s fit, cooks up a bit like chicken. It helped with money through the war. We also did tying knots. We would get bales of binder twine delivered from the freezing works and cut them into lengths and tie the ends, so there was a loop of about eight inches. They were used to go through the shank of a lamb and hang it on the railing. Dad was pretty good at getting onto things to make extra money. We milked a couple of cows. We ran them on land rented alongside the railway.’
Who influenced you as a little fella?
‘Oh goodness, I would be trying to meet my dad’s expectations. They were very hard to meet. Mum was always there supporting, showing a lot of love. She didn’t put expectations out anything like Dad did. Dad was an incredible railway man who, particularly when I worked with him at Pukeuri, instilled important values like dedication, perseverance, and humour.’
What values were you surrounded with?
‘We were a committed Catholic family. Respect for the neighbours, respect for the community. That came through strongly. Our faith was valued highly. I remember before we had bikes, walking three miles up the road to church in a little place called Richmond.’
Since you were young, how has New Zealand changed?
‘New Zealand was much more egalitarian. It has now become more divided. Also, we left New Zealand (for Australia) in ‘73 and came back in ‘88 and noticed a tremendous change following the introduction of the Waitangi Tribunal. Noticeable changes were Maori pride in their heritage and also in how Pakeha saw Maori. The goodwill and sense of justice that the Waitangi Tribunal introduced was really positive for the whole community.’
Was New Zealand truly egalitarian?
‘I felt it was. Looking back on it now, the difference between what a top doctor got and what a labourer got wasn’t anything like it is today for the specialists. In the 1890’s Snedden introduced a lot of far-reaching policies and they helped set New Zealand up as a more egalitarian society.’
So you would have been a fan of Michael Joseph Savage?
‘In our household he was almost a saint.’
Why has inequality become such an issue here?
‘Since the GFC over 30% of the increase in incomes has gone to the top 0.1%. Those people at the top, the banks and the hedge funds, have enjoyed tremendous growth. And at the same time, unemployment has been hard to beat. Growth has been sluggish. There are several causes for this. One is globalisation. In the 50’s and 60’s an American auto worker could afford to buy the white ware and goods they were producing and send their kids to university. To do that today he would need an income of over $70 an hour. With globalisation those jobs have been outsourced to where they can be done more cheaply – such as China, Asia. Think of the call centres, clothing manufacturing – Most of the work is now done overseas. Of course it has had benefits in making goods cheaper. It’s also meant a lot of the jobs that were here before and paid reasonable wages are gone. There are many workers being paid $10 an hour with no health or medical insurance. That is not enough to live on.
Inequality has become so glaring. The ostentatious consumption of the very rich. If you are a poor person in Auckland and you drive over the Harbour Bridge, you’re confronted with all those yachts and properties. Since the GFC it has worsened.
Inequality – It’s not just in New Zealand, it is in Australia and America. There are the low wages and it is much more difficult to get a good job. Students are all ending up with big debts. If you come from a wealthy family that is not an issue at all. Sooner or later you can pay up front or you can pay off your debt through inheritance. Debt can hang around for a very long time. That is important because as long as students have to pay on credit for their education, it is going to end up affecting the educational opportunity of quite a few. For the States, many students have accumulated big debt and now are confronted with taking on a low paid part time job. Or taking on more debt to get a Masters. But with no guarantee of work at the end.
Low minimum wages and low unemployment benefits. When the unemployment benefits are below the poverty line, the person’s family and friends get called on to assist and gradually all of them fall into poverty. The savings of the family go.
Another reason for the inequality is that young people have virtually been shut out of the housing market. Because of the high cost of going in. Interest rates are low of course, but the capital required and the risk if you take on too much – especially if you don’t have a secure job. Perhaps half a generation have been shut out of the housing market. Housing prices tend to increase. So there is capital gain for those who own their own homes. That has been largely accruing to the current home owners, many of them are elderly. There is an intergenerational thing – student debt and young people not being able to get into the housing market. That generation is far worse off than their parents.
Governments are not building cheaper accommodation. Lots of buildings are going up, but very few smaller apartments available to rent long term that are reasonably priced. Out in the suburbs if a block becomes vacant, you have two big town houses built rather than four small units, as it’s not as profitable for the developers.
Why are you passionate about the gap between rich and poor?
‘Because I am worried about the opportunities for young people coming through and my grand children in particular. I am worried at the the lack of a good system that guarantees fair wages and encourages young people to achieve their potential. We want to encourage every person to achieve their potential. It’s a win for them (they are likely to be happier) and it’s a win for the community. They’ll be pushing up productivity and the community as a whole will be better off.’
What is the impact of accounting and business systems on society?
‘Accounting is like other things – It can be good and it can be bad. But accounting is an important part of capitalism. I support the capitalistic system but it needs regulation. Accounting should also be a means of regulating business. Accounting is really serving the moneyed interests, not the interests of the community, particularly in respect of stewardship reporting. Top lawyers and accountants are telling people how to avoid paying tax. I’ve got myself unpopular with professional bodies as I have said they are enabling tax avoidance and that is a basic cause of inequality. Kerry Packer in Australia had never paid more than $20,000 in tax.
Business systems in society can be good if they are enabling and increasing productivity. But when business is just open slather, the bigger companies can force out the smaller ones. In Australia we are looking to see if we need a Royal Commission into the banks and I think it is needed. But the government says, ‘No we don’t need one’.
The part of business I think is deplorable in the whole world, is providing and selling arms – especially to third world countries.
Another aspect of inequality is it goes through to health. Between 1990 and 2000 life expectancy for white women in the States improved by two years. But for poor women it was declining. For non-hispanic women without a college degree, their life expectancy between 1990 and 2000 fell back five years. That is incredible.
Also recently for white males without a college education in America aged between 40 and 60 – their life expectancy has fallen back significantly, largely through death from suicide and drugs. Out of work. Can’t see a future. Can’t provide for the family.’
What books do you recommend?
The Spirit Level by Richard Wilkinson and Kate Pickett. And then The Price of Inequality by Joseph Stiglitz. They are evidence based. What Wilkinson and Pickett disclose is quite startling. On any measure of human well-being you want to take (life expectancy, deaths from cancer, heart disease, whatever, it doesn’t matter), the more equal society did better. And it wasn’t just the rich, everyone did better. I found that surprising.
Joseph Stiglitz, a previous President of the World Bank, winner of the Nobel Prize in economics, adviser to President Clinton on economics, and then wrote his book on the evils of inequality. That book is also quite startling, full of statistics based on America. In a few years time we could be where they are. Which isn’t a place any economy would want to be.’
What’s the relationship between tax and poverty?
‘It’s not a direct relationship. Business gets in the middle there. If there was no tax avoidance, governments would be better equipped to ensure that basic benefits were adequate and that the minimum wage was paid. Obama, in the Federal Government in America, has increased the minimum wage for federal government employees.
Progressive income tax, can be the main means to redistribute wealth. We need a more progressive income tax so that those doing well are paying a fair rate of tax. For any earnings over $3 million or $4 million, I believe the top marginal income tax rate should be 75%. John Key in New Zealand took it down from 38% to 33%. So the rich get richer.
GST is what we call a regressive tax. It hits those at the bottom more. If you are poor you are spending all of your income. What the wealthy pay in GST is much less as a proportion of their income, than what the poor pay. Because the poor spend all their income on living. There used to be the idea that if you gave money to people making money, there would be a multiplier effect, the trickle down effect. But it doesn’t work. If you want to increase economic activity, increase all of the benefits by 50%. But people would say, ‘that’s just wasting money’, yet it would stimulate the economy and help to reduce inequality.
If you were Prime Minister of New Zealand, what would you change?
‘First, I would put a lot of money into early education. Evidence shows that if you get kids early, picked up even in pre-school when their learning and social skills are lacking, you can bring them up to speed so they enjoy learning, and life more fully. And education should be free up to and including the first degree and diploma.
The second change would be to ensure that taxes were properly assessed and collected and I would have a truly progressive tax system, based on ability to pay. The more you earn, the tax rate goes up more than proportionately. The government should then have more than enough to meet all the basic services, otherwise the tax rates need adjusting.
My third change would be to have a strong, independent, professional civil service advising government, one that was able to appropriately administer the regulations and controls that are needed.’
Do any countries have the tax system right?
The overall tax take of many Scandinavian countries is in the mid 40’s and they have stronger alignment with equality. For example, Luxembourg 43.6%, Norway and Germany 44.3%, and the Netherlands 46.8%. A highly progressive income tax is needed if you are going to bring about a redistribution of wealth and incomes, unless you have estate or gift duties, or progressive taxes on capital gains.
Anything else you’d like to say?
‘I haven’t mentioned two cancers on the political system. The first is donations. Governments become compromised through political donations. I would prohibit them. And if you did have to have them, put a cap on them of $500 or $1000 per individual, with none from companies or overseas individuals or unions. The other cancer on the political system is the lobbyists. In America for every elected person in Congress, there are several lobbyists. For every change that comes up there are two or three firms trying to affect the result and usually those with the biggest pockets win. They need to be regulated, and their activities disclosed. It all compromises the politial system. The troubles we are having now with Trump in the US and BREXIT in Britain show complete disenchantment of people with the political system.’
Your family describe you as being ‘into fairness and equality’, having an ‘active interest in politics’, being principled, very compassionate, committed to family, athletic, academic, generous, loving, competitive and a ‘friend and father and surfer’ (and of course an awesome Uncle). How would you describe yourself?
‘Oh goodness gracious me. I hope first and foremost I am a committed family person. But a man is not an island. We live in a community. One that cares for the community and wants to see everyone be given a chance. A community where all people are valued, their voices are heard, all people are respected.’
Tell me about your sports and boogie boarding at 83?
‘I still play table tennis. It would be very nice if I could boogie board in summer. That is one of the joys I have had. Boogie boarding alongside the grandkids, laughing our heads off, bumping feet and a quizzical look as if to say, ‘You old goat what are you doing!’.
New Zealand born and Australian based retired Professor John Ryan is the second eldest of 11 children, father of four and grandfather to his treasured grandchildren. He was raised in a staunchly Irish Catholic family with his early childhood years marked by the depression and the impact of World War Two on the home front, and his early working life alongside his father on the railways. John lives with his wife Jan in Wollongong, Australia near to where their four children have settled with their respective families. Now retired, John maintains a keen interest in public affairs and more than a passing interest in accounting and the impact of economic policy on our society. A tall, slim and kind man, likely to be found wearing his flat-cap and Doc Martens.
Special thanks to Veronica Culpan for writing the closing paragraph :0)