RDN on poverty & inequality at Greenbelt

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/