Ernst and Young Managing Partner Rob McLeod has published a good opinion piece in today's NZ Herald. We are sure that Rob won't mind if we quote extensively.
"simply giving money to individuals or countries, whether it be by individuals or governments, does not address the causes of poverty."
"governments cannot create wealth; they can only take it through taxation and redistribute it. There is ample evidence that redistribution can do harm as well as good, through creating welfarist attitudes and because it often breeds corruption."
"redistribution efforts pale into insignificance compared to the most powerful tool for lifting people out of poverty and misery: the market economy. Take Bill Gates, for example. What he has achieved as a software entrepreneur has done more to transform and enrich the lives of millions than his philanthropy."
"Consider the power of wealth creation compared to wealth redistribution in a New Zealand context - Treaty of Waitangi settlements. While important as a matter of justice, their economic significance has been exaggerated.
For example, there are about 633,000 Maori, and treaty settlements to date total around $743 million. This represents a one-off sum of almost $1200 per Maori which, at an after-tax rate of 4 per cent, represents an annual income of just $48 per recipient. The message is clear: governments, let alone treaty settlements, cannot be a source of material wealth for Maori."
"Maori have to generate wealth by participating in the market. A Maori school-leaver who starts work at 16 on $12 an hour, plateauing at just $20 per hour at age 25, would by 65 have earned a lump sum equivalent of $646,000. The equivalent tertiary qualified Maori starting at age 25 on an income of $42,000 that continued to increase each year at an average rate could expect to accumulate a lump sum of around $1.7 million by 65."
He concludes "So in thinking about our New Year's resolutions this year, for sure, let's all commit to giving generously to our chosen charities. But let's also remember the best thing we can do for New Zealand's less fortunate citizens: promote the changes needed to improve productivity and create the rising tide that lifts all boats."
Well said sir!
