RDN on poverty & inequality at Greenbelt

Posted by RDN under Economic affairs / Mind & body / Politics & campaigns / RDN's media outings on 26 August 2011

I’ve been invited to the Greenbelt religious festival (27/08/11) to debate ” The Poor are Poor because the Rich are Rich?” It is arranged round a Methodist document, Of Equal Value: Poverty and Inequality in the United Kingdom.

Here’s my brief to myself.

I think the document Of Equal Value: Poverty and Inequality in the United Kingdom makes some important mistakes, and in particular it makes the mistakes common to the leftish poverty campaigning of the socialists and the churches.

Here’s a core statement from it:
“It is entirely uncontroversial that being at the bottom end of a highly unequal society is much worse than being at the bottom end of a more equal society, ie that equality is better for the poor.”

This is claptrap. It rehashes The Spirit Level argument which is wrong in several ways. (And which I reviewed at the Social Affairs Unit site.)

Try this test: Pakistan and Australia are about as unequal as each other. Bangladesh is a little less unequal than the UK. China is a little less unequal than the US. So we are supposed to be indifferent whether we are poor Pakistan or Australia and positively to prefer to be poor in Bangladesh or China than in the UK or the US. Right. Tell that to the poor people who long to emigrate to the unequal Anglosphere West. (See below for a link to the CIA Factbook evidence.)

I agree that most very unequal societies are horrible: many are in Africa. I agree that some equal societies are very nice: but some of them are in Scandinavia. I wouldn’t want to live in either class of society.

Do not be blinded by the happiness of the egalitarian Nordics and Scandinavians. They are fairly cheerful because they are rich, not because they are equal. They do pride themselves on their equality, but they are losing some of it and anyway take far more tranquilisers than the apparently uncheerful Brits. (See below RDN mini-essays which over some of this.)

The document assumes that poverty is bad and that inequality must be bad because it increases poverty. I think there is the additional thought that inequality is bad because it is a sign of the indifference of the rich toward the poor.

Actually, in Western societies poverty is not necessarily all that awful since it is defined (as the document notes) as having less than 60 percent of the median wage. When the median wage rises, lots more poor people may be created, but these “new poor” are no worse off materially than they ever were.

The document makes what is surely the mistake of linking poverty and inequality without spelling out the terms of the link. There is certainly a correlation between inequality and poverty in some Western countries. But that there is a causal link is way less sure and certainly not proved. I mean: the link is not remotely proved. We have no evidence whatever that increasing inequality increases poverty in any real way. Indeed, the poor generally benefit from economic growth, and if inequality is a stimulus to growth, then the poor may well benefit from it.

It is generally assumed by the left (and the document) that a very unequal society ought to be balanced up so the rich get less rich and the poor get more, generally in a straight swap. But it is already the case that the rich pay a hugely disproportionate of the nation’s tax and it is not clear how wise it would be to tax them more, even from the point of view of the poor.

It’s worth noting that in the UK the top 10 per cent earn 15 times as much as the bottom 10 per cent. But after tax and benefits are taken into account, that shrinks to about a five times difference.

It is sometimes argued that there is less social mobility in unequal societies, almost by definition. This seems absurd. The US was once the capital both of inequality and social mobility. This was always much more true of England than the left likes to admit. Nowadays, the US and the UK are famous for becoming less socially mobile.

This may be the case, in the sense that we may have lost the key to educating and motivating the working class and especially the underclass to success. This may have many causes: liberal education has made schools pretty hopeless as launching pads; the cream has already floated out of the lower classes; modern job demands are far greater than they were; benefit dependency has lead to what amounts to a moral erosion; deteriorating parental skills and standards have become endemics; and so on. (There’s a very good account of  these processes – more PC than mine – in the New Statesman, under the title “It’s not all bad news on social mobility.”)

It is important to stress that the modern world has made social mobility demanding: not policy; not the malevolence of the rich and their class interests. Anybody, from anywhere, can acquire the skills and get the luck the modern world needs. Indeed, people from good and bad backgrounds probably share about the same amount, but not type, of advantages.

I am struck by the poverty of policy recommendations made in the document. It’s more about soup kitchens than about motivating the poor to rise above their circumstances. I think this flows from an attitude which is more old-left than spiritual, or religious. It risks casting the poor as victims; as not spiritually the equal of the better-off.

I should perhaps add that the right is not necessarily indifferent to human suffering, but it is committed to the view that the state is not likely to do much good when it tries to do good. So there are tense and interesting issues for the right in all this.

Useful resources:
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2172rank.html
http://www.ifs.org.uk/comms/comm118.pdf
http://www.ifs.org.uk/projects/347
which leads us to:
http://www.ifs.org.uk/budgets/gb2011/11chap12.pdf
http://richarddnorth.com/2010/03/rdn-on-affluence-and-envy-on-bbc-news-channel/

 

2 comments

  • Written by Paul Morrison on 19/09/11 at 3:20 pm:

    Dear Richard,
    Thank you for the debate which I greatly enjoyed, and although the audience was always going to be biased against you – you continued to put your points in your characteristically forceful style.

    I have mulled on your comments both here and at debate and it will come as no suprise I have not yet been converted to your right wing point of view. I have a number of points which might be illuminating

    – In the Methodist report and the Spirit Level the hypothesis, supported by a great deal of evidence, is that once the poorest in a society no longer starve or become destitute the nature of poverty in that society changes. Inequality becomes the major factor in the society’s wellbeing and not the total wealth within that society.

    Without doing international comparisons it is clear that inequality harms social mobility, harms relationships between groups in society, and data from the UK only show that rising inequality leads to rising differentials in health and well being measures (eg life expectancy for poorest decile Glasgow males has stayed static since 1992, whereas their richer neighbours gained 38 months of life expectancy. The increases in income follow the same pattern)
    Your references to Bangaldesh are therefore irrelevant to the ideas of the Spirt Level or the ideas put forward in the Methodist Poverty and Inequality Paper. I am puzzled if you just did not get the key point of the Spirit Level or you refer to Bangaledesh knowing it is irrelevant but to have dramatic effect.

    Another point you made in the debate is that if poverty is measured relatively it is mathmatically impossible to be irradicated. That is true if Poverty is defined by a PROPORTION of the population (clearly foolish) – but not true if Poverty is measured using the internatioally accepted RELATIVE method. This is a common mistake but an extraordinarily important one. Relative poverty can be irradicated, and relative child poverty has been irradicated in some nordic countries.

    You state as a matter of fact that social mobility can be achieved by anyone who works hard, has a bit of talent and possibly a bit of luck. This assertion flies in the face of all evidence. Social immobility and inequality in the UK are closely correlated very closely (as they are in post 1980’s USA). It is easy to see how the cause and effect work – some start in a competative economy with a massive head start and others well behind the starting line. Just as importantly some get a second chance either through contacts (Andy Couson for instance) or straight forward affluence.
    Even more strangely you state that rich and poor have equal but different problems – the only way to square that with evidence is to assume the children of teh wealthy are innately luckier, harder working and/or talented. The eugenic line this leads us down is clearly not what any of us could believe.
    While we can all give examples of people who buck the trend it is clear social mobility in the UK has ground to a halt and this is occuring when the inequality is at 1920’s levels ( when social mobility also was dead).

    The last point about our recomendations being about soup kitchens is also puzzling.
    – We recommend that the poor are not talked about as benefit cheats or scroungers as the Chancelor did when he lied about the level of Benefit fraud, but are treated both personally and in the public discourse as equals.
    – We asked that Methodists looked at their tax affairs so we can in good concience call for others to pay their fair share.
    – And possibly the most importatant point came from the Glasgow Poverty Truth Commission – “Nothing For Us Without Us”. Poor communities should no longer have solutions put upon them; be they the right wing “welfare dependancy” solutions; or the left wing “educate and improve” solutions. Instead the communities should be given the resourses to solve their own problems. If that is a soup kitchen so be it – but our experience is that the solutions are much more effective and imaginative.

    Hope this adds to the debate
    Paul

  • Written by RDN on 19/09/11 at 6:17 pm:

    Thanks for that, Paul.

    You’re right, it was a cheap shot for me to say that lots of poor countries are more equal than the Anglosphere, and still I wouldn’t like to be in the former. But I remain robust in my view that absolute poverty is horrible; relative poverty may or not be (mostly depending on how near to absolute it is). I stick to my view that when there is rising general affluence, it may often be the case that relative povery also increases, but so what? Rising inequality – and, I suspect, rising average affluence – will by defintion create more relative poverty if the position of the “poor” remains static or improves less quickly than that of the better-off. But the poor may be no poorer than they were before: the inequality may not be arising because of a deterioration in their absolute position.

    I do agree with you that the exercise of social mobility may be tougher than it once was: but I think I talked quite well about some of the problems involved there, and I don’t think any of them have much to do with inequality.

    But I remain most adamant about the following statement of yours:

    ….. it is clear that inequality harms social mobility, harms relationships between groups in society, and data from the UK only show that rising inequality leads to rising differentials in health and well being measures (eg life expectancy for poorest decile Glasgow males has stayed static since 1992, whereas their richer neighbours gained 38 months of life expectancy.

    I do see that the affluent in our society are living for longer. They determine to live healthily and can afford good care when things go against them. But it is not inequality which means the poor are less healthy. It is poverty of one kind and another.

    More generally: I am always happy to defend the principle of inequality, and especially to differentiate between inequality and poverty. But I would like a society in which there was less relative poverty and lots of upward mobility. I do also think that society is a complex organic whole from top to bottom.

    My difficulty is that I doubt heavily progressively taxation will do the trick. And I stick to the view that your document does not tell me that the Methodists have very much to say about how to crack this difficult nut. Perhaps I should concede that I am less clear about what to suggest than I would like to be.

    I hope that helps.

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