Ep. 66 : The Wealth Chasm - Economist Dr Ganesh Rajaram Ahirao cover art

Ep. 66 : The Wealth Chasm - Economist Dr Ganesh Rajaram Ahirao

Ep. 66 : The Wealth Chasm - Economist Dr Ganesh Rajaram Ahirao

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 I recently caught up with Dr Ganesh Rajaram Ahirao who was formerly the Research Director at BERL and Chair of the now disestablished Productivity Commission ,who has been analyzing data from Stats NZ on wealth distribution in our country - and what he has uncovered is truly alarming.You can find his research on his Substack here:However I have copied his research post below in case you can’t access it and you want to read his disturbing analysis as he talks to me about what it means._______________________________________________________________In 2024 Aotearoa wealth ranged between* an average net debt of $298,000 for each of 19,9401 households* an average net wealth of $9.2 million for each of another 19,940 households.Alternatively,* 19,940 households shared total net debt of $5.9 billion* another 19,940 households shared total net wealth of $183.8 billion.The picture below illustrates the net wealth per household - across the total spectrum of the wealth distribution - with each vertical bar representing 19,940 households.2The right-hand end of the spectrum illustrates that, while relatively small in number, the net wealth of the uber-wealthy was visibly well above those only a few bars towards their left. For example, the 19,940 households in the 95th percentile (the 6th bar from the right) each with $4.1 million of net wealth is less than half that of the $9.2 million for each of those households in the 100th percentile.Adding up the ten bars at the right-hand end of this spectrum, (together representing 199,400 households), results in a combined $1,006.9 billion in net wealth. Each household in this group possesses net wealth of at least $2.5 million, with many having visibly more.However, wealth at the left-hand end of this spectrum is close to invisible. The widespread prevalence of household’s either in net debt, or possessing relatively negligible levels of net wealth, is saddeningly stark.The left-hand 50 vertical bars in the picture - together representing the net wealth of 997,000 households (that is, half of all households) - barely register any visible wealth.The following picture magnifies the previous chart, allowing the left-hand 50 vertical bars to become visible. Note, critically, that the vertical axis depicts a considerably smaller range of wealth (in $thousands and not $millions) than in the previous chart. However, each vertical bar still represents 19,940 households - with the 50 bars together totalling half of all households in Aotearoa in 2024.The numbers are sobering, if bland* the half of all households illustrated here together recorded net wealth totalling $138.2 billion* that means half of all households in Aotearoa possessed 6.7% of the total net wealth of all households* consequently, the other half of households in Aotearoa possessed 93.3% of the total net wealth of all households.I urge you to see past the blandness of the numbers and remind yourself that behind each of the 19,940 households represented by each of those vertical bars lie individuals, families, whānau, hapū, and community hopes and aspirations.The numbers in the latter chart include many people and communities still awaiting - in vain - for the hope and opportunities to be accrued from the much-promised trickle down.The chasm opensThose unfortunate to be amongst those households towards the left-hand end of this spectrum have seen their wealth struggle to register any significant improvements over the 9 years to 2024. Worse, many have seen their debts noticeably increase.What was a divide, has become a chasm.The combined total debt of the least-wealthy 10% of all households (that is, 199,400 households, being the ten bars at the left-hand end of the spectrum in the pictures above) last year totalled $8.0 billion. In 2015, that debt totalled $1.7 billion.In contrast, the combined wealth of the most-wealthy 10% (the ten bars at the right-hand end of the first picture) rose from $551.5 billion in 2015 to the aforementioned $1,006.9 billion.Yes, the nine years to 2024 saw the least-wealthy households in Aotearoa subjected to an ever worsening debt picture - with their total debt rising by $6.3 billion.That is, an average $31,640 worsening for each household.Over the same period, the most-wealthy households in Aotearoa enjoyed an increase in their total wealth of $455.3 billion.That is, an average $2.3 million improvement for each household.I know it is a cliche to talk about the rich getting richer, while the poor get poorer. But, what I do not know is when (or how) we - as a nation - have seemingly become so immune to this utter failure of our economy and the consequent dereliction of our duty to our people and communities.Many prognoses, advice, and policies centre on education as the key out of poverty. I share such a view. And, yes, I wholeheartedly encourage further education and training as this data (discussed below) provides evidence of a better wealth outcome for those with further ...
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