Dinner with a Socialist

Not long ago, I ate dinner with a mate named Kevin. He’s the host at my AirBnB. Nice guy.

We were making light conversation and I asked him where he’d choose to live if he could live anywhere in the world.

His answer might shock you…but first, a little bit about Kevin’s background.

He’s 26. Resides in the CBD in Auckland. He lives in his own apartment with his girlfriend.

He’s a programmer, but he’s currently not working a 9–5 job. His girlfriend is a student at the University of Auckland.

Neither are big fans of capitalism.

They live modestly. Eat in most nights. Don’t smoke or drink. Walk everywhere they go.

Your average young couple in Auckland.

When I asked him where he’d live, he told me New Zealand. He would never want to live anywhere else.

Makes sense. It’s a wonderful country. But normally, people fantasise about living somewhere where the grass is a bit greener.

Fiji. Australia. France. Switzerland.

But for Kevin, nothing tops good old Aotearoa.

It surprised me, so I asked him why.

Because here, anyone can get a job and that job will be enough to live comfortably. No need to work two or three jobs like I hear a lot of Americans do.

I was sceptical, so I investigated…

In the United States, the labour force is approximately 161 million strong. According to the Department of Labor, there are 7.4 million workers that have more than one job. That’s 4.6% of the workforce.

In New Zealand, the labour force is 2.5 million, of which 154,000 reported working multiple jobs. That’s 6.1%.

4.6% in the US versus 6.1% in New Zealand.

So, Kevin was off-base there. What else fuelled his decision to choose New Zealand?

Here in New Zealand, we have the “living wage” and it’s catching on. More and more people are getting behind the movement.

According to Living Wage Aotearoa, the current ‘living wage’ in New Zealand is $20.55 per hour. The ‘living wage’ is a trendy phrase. It describes the least income needed to buy only the necessities such as food, transportation, housing, and childcare.

That’s $4.05 beyond minimum wage — the lowest wage that employers must pay.

But it doesn’t matter, because a ‘living wage’ is a joke.

The concept is noble — quantify a basic standard of living by income — but the calculations behind the number are meaningless.

First of all, it generalises all populations across the country. It’s the same for a family of six in Auckland as it is for a single person living out in a tin-pot town like Ngatea.

Only an egg would think that their costs are the same.

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Secondly, adjustments are based on national wage trends, rather than the cost of goods (CPI).

So if wages go up, the ‘living wage’ goes up too, even if the ‘necessities’ still cost the same.

Completely backwards.

It’s a fad. It sounds good to those earning below the ‘living wage’. And a nice buzz word for election season. But it’s not useful for creating policy.

That doesn’t stop Wellington mayor, Justin Lester, from cheering it on. (If his name sounds familiar, it’s because he’s the guy who wanted to buy everyone a house.)

When he announced the new 2018 ‘living wage’, he proclaimed that the new rate was ‘really good’, and that the small rise showed the ‘integrity’ of the process.

Nice one, Justin.

Back to our conversation with Kevin…he continued:

In New Zealand, we don’t have the ultra-wealthy running our country. You Americans need more people like Bernie Sanders.

I agree that the ultra-wealthy have no business running countries. But it surprised me to hear that Bernie Sanders was his example of an average earner.

Do you think Sanders is rich?’ I asked.

Of course not. That was his whole thing, right? Taking from the rich and giving the poor. A modern Robin Hood.

Yikes! How wrong he was there.

Bernie Sanders, like nearly all well-known American politicians, is obscenely wealthy. A millionaire. The man owns several vacation houses.

Yes, he’s part of the 1%.

But I held my tongue with Kevin.

You see, I don’t know everything about how money works. I assume that others know more than I do.

So, when smart folks like Kevin open up, I listen.

All part of connecting the dots…the goal here at Money Morning New Zealand.

We take in as much as we can, then we check the facts. If it adds up, then we’re all a little closer to understanding.

If it doesn’t, then we move on.

We suspect that Kevin and many others tend to take the mainstream stance at face value.

But the truth is that the mainstream can be as biased and baseless as anything else.

To you, dear reader, we hope that you challenge what you hear. Whether it’s on TV, from your neighbour, or even from us. Question everything.

Eventually, we’ll all get a little closer to the truth.

Best,
Taylor Kee
Editor, Money Morning New Zealand

PS: If you’re like Kevin, and think the 1% are to blame, I’d recommend that you check out the Global Rich List. You might be surprised at your position in the ranks. Check it out here.


Taylor Kee is the lead Editor at Money Morning NZ. With a background in the financial publishing industry, Taylor knows how simple, yet difficult investing can be. He has worked with a range of assets classes, and with some of the world’s most thought-provoking financial writers, including Bill Bonner, Dan Denning, Doug Casey, and more. But he’s found his niche in macroeconomics and the excitement of technology investments. And Taylor is looking forward to the opportunity to share his thoughts on where New Zealand’s economy is going next and the opportunities it presents. Taylor shares these ideas with Money Morning NZ readers each day.


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