Letter to Sir Paul Callaghan
Posted: March 30th, 2011 | Author: Jackson James Wood | Filed under: Jackson James Wood | Tags: Baby Boomers, Christchurch, Heke, Sir Paul Callaghan, tax | 2 Comments »This letter was written in response to this letter urging overseas holders of student loans to pay back more in the wake of the Christchurch earthquake.
Dear Professor Sir Paul Callaghan,
I know nothing about you, other than the fact that you hail from a generation (or two) before mine. You are the product of a New Zealand that truly cared about cradle to cradle care. No doubt you received a free tertiary education and had no concern for the crippling burden of debt that many of my generation must shoulder. Higher tax rates ensured that regardless of whether you lived in a state home or the home of a statesman, there was a ladder available for you to climb and build your fortune. If you fell off that ladder, the state was there to look after you.
But during the ’80s and ’90s that ladder was brutally swept away from many people. And how those people fell. Still they are falling and still the ladders are being viciously pulled out from underneath us.
I’m not saying you, Sir Paul, are responsible; I am saying that your generation is responsible. So, it really galls me when someone from the generation that consumed all the wealth their parents created, consumed all the wealth they could create and are now consuming all the wealth that their grandchildren could ever hope to make, ask our generation to give that little bit more.
While I accept your argument that an overseas cash injection is something that could help to rebuild Christchurch — and address other issues — I think asking the people who can literally do the least about the problem is somewhat foolish; most expatriates with student loans aren’t exactly living ‘la vida loca’. The majority of the 35,000 — that number alone is an indictment of how costly it has become to live in New Zealand and repay a student loan — are probably not earning much more than they would earn in New Zealand.
The people who you should be asking to help are the Baby Boomers. They control the most wealth in New Zealand, own the most investment properties, possess the most capital and, most importantly, they control the New Zealand legislature. They are the people who invested in Fletcher Challenge within minutes of hearing of the second massive earthquake in Christchurch. They are the people with the cash money and ability to offer significant aid.
Over the past decade, the Boomers equity in the housing market rose from $200 billion to over $400 billion. All the boomer generation would have to do is liquidate a mere half of a percent of their housing assets to match the $2 billion owed by overseas holders of student loans. This does not even take into account the disproportionate degree to which the Boomer generation control non housing assets! Calling on recent graduates to pay back their loans before they have had the chance to build themselves a life yet is to ignore the vastest pool of wealth available to us.
So I put it to you, Sir Paul and to all the Baby Boomers, that this is an obligation that you should shoulder. By carrying out that obligation, those among you who fight for generations X, Y and Z will be heroes. The Boomers who actually make that sacrifice will be the true legends. Years from now, history will look back on the final wave of Boomers who, just as they started hitting the retirement age of 65, realised that they had to stop being greedy and bludging off the grandkids.
Simple steps such as an earthquake levy, a capital gains tax, pollution tax, and many other progressive taxes could give us the capital we need to not only rebuild Christchurch, but to build a better New Zealand.
Yours sincerely,
Jackson James Wood
(Some guy with a BA and a student loan living in New Zealand)
—-
I see that IrishBill over at The Standard has also written on the topic and some ex-pats have also taken umbrage at Sir Paul’s comments.
Hi Jackson,
Thanks for the chance to reply. Could I suggest that the key to my message is to be found in my video appeal on the homepage of http://www.heke.ac.nz (it may move later to the “Spread the word” page). Yes, I am a baby boomer, and in my appeal I front up to the fact that I didn’t have a loan. I will say more on that later. I think first though, your point is that the burden shouldn’t fall on ex-students alone. Here I couldn’t agree more.
Yesterday, I opened the Salvation Army’s Red Shield Appeal in Auckland. I made a challenge there to those with discretionary income, and to the Corporate sector, to dig deep to support the voluntary social service sector. We simply have to go on supporting Women’s refuge and Plunket. But the rebuild of Christchurch, once the Insurance Companies and EQC have made their contribution, will fall on all of us, all New Zealand taxpayers and indeed all our citizens. Because we are all then poorer now, and there must be equity in this matter.
So why the student loan issue. Firstly, because it is a potential tragedy for New Zealand if we use our offshore talented young forever because their loans blow out under compounding interest, preventing them every coming home and facing the consequences.
You might say that the scheme is unfair and the burden is too great. But let’s get some proportion here. The median loan for the offshore kiwis is about $18,000. Mortgages is 20 to 30 times that. So these loans aren’t huge, but the numbers of people not repaying is huge at 35,000.
So here’s the point. What I am trying to do is create a “win-win-win”. A win for the individual who starts paying off a loan obligation and gets called a hero or heroine for doing so, becoming part of a group of young we shall talk about with respect for generations to come. Second a win for that individual who then at least has the option of a return to New Zealand in the future. And finally, of course, a win for their families at home.
Now I appreciate that this type of optimistic logic doesn’t work for all. I also acknowledge in my appeal that some may not be able to afford to pay. This is directed at those who can, and our feedback already tells us there are many in that category.
So finally to the issue of me, the baby boomer. I came form a home where neither of my parents had secondary eduction. They never gave me a cent towards university study, since they didn’t really comprehend its value. Every summer, for 5 years, I worked from 5 am to 8 pm in the Imlay Freezing works, including Christmas Day and other holidays. I never had a holiday ever during those summers. I paid my fees (equivalent to about $2000 per annum in today’s terms) and met most of my living expenses, though admit, I had won a national scholarship which helped support me.
During this time people in New Zealand were paying marginal tax rates of 66%. I paid a marginal tax rate of 66% for twenty years, until the 1990′s period to which you refer, when lower income taxes was traded off against more user pays.
I am not a rich man in dollar terms, though I am rich in the love of friends and family and I have been extraordinarily honoured by the country I love. I have tried to turn my science to the benefit of New Zealand by starting a company, with colleagues, a company which exports scientific instruments, earns millions for its shareholders (I’m a minor one) and which employs talented kiwis. My country has given me so much, including a marvellous health system which has sustained me through two major surgeries and three courses of chemotherapy.
Your generation has the change to make history. My recommendation is to seize it.
[...] please check out Egonomist regular guest Jackson James Wood’s brilliant piece on absolutegeni.us in response to the HEKE [...]