The Dim-Post

July 29, 2011

Riddle me this

Filed under: economics — danylmc @ 8:49 pm

So the richest people in the country increased their wealth by 20% over the past year, to $45.2 billion, an amazing 35% of New Zealand’s yearly GDP owned by 150 people. But we didn’t have 20% economic growth in 2010. We didn’t even have 2% growth. So where did all their extra wealth come from? ‘Prudent overseas investments?’

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47 Comments »

  1. Communist!!

    Comment by Pascal's bookie — July 29, 2011 @ 8:51 pm

  2. From the journalists arse. These rich list type articles are a load of tosh, all they succeed in doing is to reinforce the nations fascination/hatred of any and all who have done well.

    Comment by Barnsley Bill — July 29, 2011 @ 9:12 pm

  3. I think you will find that the “Rich List” is a journalist’s perception. I personally know a multi-millionaire who, when phoned by an NBR journalist, insisted his name be permanently removed. I know another, also on the list, who was actually broke.
    So this is an ‘envy list’, very loosely based on facts.

    If you, Dannyl, had a swagful in the bank, would you really want to tell the world how big your swag was?

    Comment by Crusader Col — July 29, 2011 @ 9:23 pm

  4. Hmmn. Nominal GDP is $189 billion. But that is money spent/earned, not asset value. A typical return on asset value might be 8%, or $3.6 billion in income from those $45.2 billion in assets. So the likely income of this group is actually just 3.6 / 189 or 2% of nominal GDP. Not 35%.

    Besides which, many assets are held offshore, and swings in interest rates, currency, and capital yields will likely have much more effect than changes to revenue (GDP). And it’s basically a Scientific Wild Ass Guess by a newspaper about the private affairs of people who are expert at keeping their affairs private.

    So it’s low interest rates and newspaper gossip. That’s all. Nothing to see here. Move along now. Vote National.

    Comment by vibenna — July 29, 2011 @ 9:23 pm

  5. From a notional increase in asset prices. We don’t add increases in asset values to GDP.

    Comment by davidp — July 29, 2011 @ 9:23 pm

  6. Remember Mr Hubbard, richest man in the south, now worth fuck all of anything
    Not the first to fall off the rich list and not the last because it based on guesses or chancy valuations certainly not hard cash in the bank

    Comment by Raymond A Francis — July 29, 2011 @ 9:27 pm

  7. Grow the pie and everyone gets more pie!

    The rising tide will cause everyone’s boats to rise!

    Comment by Philoff — July 29, 2011 @ 9:27 pm

  8. ‘Prudent overseas investments?’

    Little Red Hen?

    JC

    Comment by JC — July 29, 2011 @ 9:41 pm

  9. the strengthening New Zealand dollar making overseas assets more valuable in $NZ terms?

    Comment by Kahikatea — July 29, 2011 @ 9:44 pm

  10. the strengthening New Zealand dollar making overseas assets more less valuable in $NZ terms

    Comment by abel the amish — July 29, 2011 @ 9:52 pm

  11. My net wealth is over half a million NZD.

    My debt is my business.Put me on your list please…..

    Comment by andy (the other one) — July 29, 2011 @ 10:00 pm

  12. you’re right Abel, but it sounded good when I thought of it

    Comment by Kahikatea — July 29, 2011 @ 10:09 pm

  13. They’d probably written down the value of assets the previous year and then made some back assuming the NBR list is accurate …

    Comment by abel the amish — July 29, 2011 @ 10:17 pm

  14. Stick to washing test tubes.

    Comment by Adolf Fiinkensein — July 29, 2011 @ 10:42 pm

  15. 20% doesn’t seem that much really – most of these guys own hugely profitable businesses.

    Comment by gazzaj — July 29, 2011 @ 10:44 pm

  16. Wealth transferred from ordinary kiwis.

    Comment by Anthony — July 29, 2011 @ 10:46 pm

  17. And something else to ruminate while admiring massive wealth gains these people accrue – half of them aren’t even paying the top rate of income tax.

    http://tvnz.co.nz/business-news/only-half-100-richest-people-paying-top-tax-3336599

    Comment by taranaki — July 29, 2011 @ 10:54 pm

  18. This is satire, right? If not, I nominate this as the first truly awful Dimpost post

    Comment by gazzaj — July 29, 2011 @ 11:26 pm

  19. “20% doesn’t seem that much really”

    Eh? It’s massive, if it’s real. But it’s probably spurious bollocks. A newspaper’s estimate of these individuals’ wealth is pretty dodgy at the best of times. Consistency in that estimate from year to year is far too much to ask. This certainly isn’t a truly awful Dimpost, but perhaps a slightly gullible reaction to silly media stuff. Where is the wisely sceptical Danyl we know and love?

    Comment by Dr Foster — July 29, 2011 @ 11:35 pm

  20. Eh? It’s massive, if it’s real.

    Not at all. If I’ve got $100m, and borrow another $400m, and make 10% profit over interest, I’ve made $50m and increased my net worth by 50%. It’s not surprising that the richest people (who have consistently created profitable businesses) should be able to keep making 20%+ each year… and the rest of the economy has nothing to do with it.

    Comment by gazzaj — July 30, 2011 @ 12:04 am

  21. As far as the media are concerned it is a celeb thing. Yawn.

    Comment by peterlepaysan — July 30, 2011 @ 12:18 am

  22. Jesus. Is the whole world on drugs. I know i’m getting on a bit and not really worthy of attention, but I have to say, you despicable tory pull-throughs trying to minimise this sickening reality, you really, really, make me want to vomit. The sight of you jocularly defending and trying to deflect from this level of obscene accumulation while 40,000 or so perfectly-formed children die every day for want of pennies, makes me physically sick. Not to mention what’s happening on your own doorstep. You sicken me, you filthy, selfish scum. Well done, Danyl. Keep reminding us of the grotesque reality that these pathetic gormless pawns peddle and try to excuse. Put you addresses up Barnacle Bill, abel, vibenna, you cowardly fascist hatemongers – if you’re genuine you’ll be happy for my foodbank and DWI clients to come and visit and let you explain it to them. You won’t. Not in a million years. Because you’re chickenshit victim-bashing propagandists not worth a tin of shit. Do us all a favour: rot alone in the hell you’ve created for yourselves and let humanity get on with it.

    Comment by ak — July 30, 2011 @ 12:56 am

  23. ak – why not move to North Korea? Or Cuba? Or the Soviet Union (sorry, gone bust). Or East Germany (sorry, merged into the nice capitalist west). Nice intentions are all very well, but the world is full of evidence of what kind of society, and what kind of economy leads to greater welfare for everyone. Peddle your hate and envy if you wish, but don’t dignify it with claims to ‘reality.’ The answer to some people doing poorly is not to pull everybody else down. Or you could try Pol Pot. Or Maoism. Or … need I go on?

    Comment by vibenna — July 30, 2011 @ 1:03 am

  24. So no address vibenna. Just call ak a hating envious commo from behind a wall and scuttle back off home. Coward. It’ll catch up with you girl, can’t day I care.

    Comment by ak — July 30, 2011 @ 1:43 am

  25. “Not at all. If I’ve got $100m, and borrow another $400m, and make 10% profit over interest, I’ve made $50m and increased my net worth by 50%”

    But 10% real profit is a hell of a lot for a mature business. You make it sound easy, but an expansion of 400% in one year is more growth than most businesses can realistically sustain except in the very early phases of growth from a low base, when they are in a risky stage. The capital might be available, but under your scenario the business has to be able to grow its market by several hundred percent in a single year. This is not a common scenario for a mature business. It certainly doesn’t explain richlist increase in wealth at a level of 20% per annum..

    Comment by Dr Foster — July 30, 2011 @ 2:25 am

  26. The stock market has gone up 12% over the last year, and that’s not including dividends. Capital generally increases faster than wages. If only there was a political party proposing these capital gains be subject to some kind of tax: they could make a lot of hay out of this.

    Comment by bradluen — July 30, 2011 @ 7:40 am

  27. AK, put your details up first comrade. Don’t worry, we are all to busy eating roast swan and pitchforking peasants to come round in our bentleys and harangue you at home.
    Dork.

    Comment by Barnsley Bill — July 30, 2011 @ 9:19 am

  28. You may be eating roast swan Bill, I prefer a native Turducken of Kakapo stuffed with Kereru stuffed with Blue Duck hand turned by peasants over a fire of Kauri coals.

    Comment by will — July 30, 2011 @ 9:29 am

  29. Because you’re chickenshit victim-bashing propagandists not worth a tin of shit. Do us all a favour: rot alone in the hell you’ve created for yourselves and let humanity get on with it.

    I personally found this whole comment rather bracing. Huzzah.

    Comment by Russell Brown — July 30, 2011 @ 9:48 am

  30. @vibenna – There hundreds of thousands of New Zealanders nowadays who have access to better nutrition and health care if Fidel Castro was in charge rather than your mate “Goofy” Key. Cause for thought, don’t you think?

    Comment by Sanctuary — July 30, 2011 @ 9:48 am

  31. Care for a slice of native Turducken Sancy?

    Comment by will — July 30, 2011 @ 10:02 am

  32. “There hundreds of thousands of New Zealanders nowadays who have access to better nutrition and health care if Fidel Castro was in charge rather than your mate “Goofy” Key.”

    And we could afford those Cuban Doctors too.. they work for $30 per month.. although Key could do a deal with Fidel and likely get them cheaper.

    JC

    Comment by JC — July 30, 2011 @ 10:10 am

  33. I would have thought that arriving at a point where hundeds of thousands of your fellow citizens would be better off in many material ways living in a communist country should set off a few alarm bells. After all, if that system is better for them than the current one, what is stopping people eventually realising this?

    Comment by Sanctuary — July 30, 2011 @ 10:14 am

  34. We could theme the Turducken Cuba stylz by serving with black beans and rice.

    Comment by will — July 30, 2011 @ 10:15 am

  35. will, the sort of pointless, passive-aggressive, whining mockery that you regularly adopt as your default fall back position is very typical of the right in general. You know that what you really want to say would be unacceptable; so you retreat to sniping your “witticisms” from the darkened side alleys of the debate.

    That is fine – but here is a hint: There is a reason almost every comedian isn’t right wing.

    Comment by Sanctuary — July 30, 2011 @ 10:31 am

  36. This thread is great, and I didn’t have to insult anyone to get it going.

    Comment by Dizzy — July 30, 2011 @ 11:09 am

  37. @ Dizzy, do you think a native Turducken should be layered with streaky bacon or thinly sliced rump of peasant to best retain the birds flavour and moisture during long slow roasting? Will it work served with black beans and rice?

    Comment by will — July 30, 2011 @ 11:25 am

  38. I wouldn’t use peasant. The meat is tough and stringy because of the diet of cold gruel and all that backbreaking work in the master’s fields.

    Comment by Dizzy — July 30, 2011 @ 11:29 am

  39. Streaky bacon this year then. In anticipation of next years native bird feast I will buy a small peasant chiild and cage feed them grain to produce a fine fat layered rump of peasant. Are there rearing standards one must adhere to?

    Comment by will — July 30, 2011 @ 11:38 am

  40. Um.. if they broke no laws, where’s the problem?

    Or do we hate them purely for being skilled at making money? Don’t misunderstand me, I haven’t yet met a really wealthy person I could stand, but that’s no reason in itself to assume they’re some sort of evil.

    Comment by annie — July 30, 2011 @ 11:55 am

  41. But 10% real profit is a hell of a lot for a mature business.

    Sure, for your average mature business, but that’s not the point. These guys didn’t get to be the richest by earning average returns – they’re the richest because they can consistently make 20%, 50%, 100% returns on their investments. Graeme Hart has gone from nothing to $8.8bn. If you’re investing your own money in other people’s businesses, then 10% real returns are the best you can hope for – but if you’re investing other people’s money in your own business – and you’re good at it – there’s no limit in % terms to what you can make.

    Comment by gazzaj — July 30, 2011 @ 12:15 pm

  42. A modest proposal indeed.

    Comment by DeepRed — July 30, 2011 @ 12:21 pm

  43. You have found it! At last! The beginning of the True Path, the way to the Light of Marxism-Leninism, a road paved with liberal (dis)illusion, fraught with the peril of reactionary backsliding, but at least and at last you have found it!

    Comment by pulling your Lenin — July 31, 2011 @ 1:31 pm

  44. in all seriousness, though, other studies (can’t be arsed finding them, sorry) have shown that the wealth of the world’s ‘ultra-high net worth individuals’ (yes, this is seriously what the super-rich are called these days) has grown significantly, even through the economic crisis of the last few years. Just be careful to remember that this is totally a coincidence and ‘ultra-high net worth individuals’ do not constitute a class or part of a class nor do they have any common interests whatsoever and no influence or control over politics, the economy or how wealth is distributed at all

    Comment by pulling your Lenin — July 31, 2011 @ 1:40 pm

  45. “I would have thought that arriving at a point where hundeds of thousands of your fellow citizens would be better off in many material ways living in a communist country should set off a few alarm bells. After all, if that system is better for them than the current one, what is stopping people eventually realising this?” Comment by Sanctuary @ 34

    Serious? Have you not seen the docos or read the story’s describing what the Cuban healthcare system is REALLY like? Propaganda win for the Cubans, it seems.
    Now, our own socialist healthcare system is much, much better. Why? Because we have the economy to almost pay for it, thanks to the majority of industry in NZ being freemarket and tax-paying (water, healthcare, mass transit being among the few execptions).

    Comment by Clunking Fist — July 31, 2011 @ 5:24 pm

  46. 46.“I would have thought that arriving at a point where hundeds of thousands of your fellow citizens would be better off in many material ways living in a communist country should set off a few alarm bells. After all, if that system is better for them than the current one, what is stopping people eventually realising this?” Comment by Sanctuary @ 34

    Serious? Have you not seen the docos or read the story’s describing what the Cuban healthcare system is REALLY like? Propaganda win for the Cubans, it seems.
    Now, our own socialist healthcare system is much, much better. Why? Because we have the economy to almost pay for it, thanks to the majority of industry in NZ being freemarket and tax-paying (water, healthcare, mass transit being among the few execptions).

    Comment by Clunking Fist — July 31, 2011 @ 5:49 pm


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