Brown's poverty fiddle

paul freeman

I'm surprised. Surely such creative statisticians as New Labour could have eradicated poverty completely, by redefining the poor as anyone not entitled to tax credits. Very sloppy!!

Tom

It's a hugely important point and one the conservatives should seize upon.

Nick Kaplan

The biggest problem with the government statistics is that they are so arbitrary, there is no good reason to define poverty at 60% or even 40% of the median income because poverty is absolute not relative! This is closet socialism at its worst, the only way you can end poverty if poverty is seen in relative terms, is to end inequality. If you lift some people above the current 60% level then all you do is change/ increase the median so a new group of people who were previously had enough wealth not to be counted as poor are now considered to be on the poverty-line, even if they have in real terms got wealthier over that period. Poverty instead should be seen in absolute and objective terms. There should be a basic bundle of goods say clothes, food and shelter and all those on a household income which is too low to provide these things should be considered poor. If poverty is seen in these objective terms the government cannot then just adjust statistics until they get the results they want. How you address poverty is a completely different matter, but what is important to notice about an absolute measure of poverty is that hitting the rich with high taxes on its own would no longer be enough to reduce ‘poverty’. If one uses a relative measure one can tax the rich hugely bringing down the median disposable income and so even if the poor are not made better off they can rise over the arbitrary 60% because that 60% will be 60% of a lower number. On an absolute measure the poor actually need to be made better off in real terms before the government can state they are no longer poor and the way to do this is to pursue long term economic growth, not short term tax hikes.

Travis Bickle

Ah I can see the next relaunch coming up (next Friday probably).

"I've led people out of poverty before, and I will do it again"

(the bit about leading them back in between will, of course, be airbrushed from history )

BC

These comments are cobblers. Nick K gets it half right but draws totally the wrong conclusion. Anyone with half a grasp of mathematics can see that by having the poverty target as a percentage of median (relative poverty) is a moving target and therefore much harder for the government to achieve. hardly a case of the Govt moving the target to suit themselves. If the government has chosen to use the easier to achieve absolute poverty target then you lot would probably be moaning that the target didn't mean a lot in the real world of rising prosperity.

Austin

Nick Kaplan is spot on. The day when politicians started saying "poverty" when they were referring to income inequality was a bad day for the English language, and a bad day for economic policymaking. I suggest that all right-thinking people correct their interlocutors whenever they use "poverty" in this way.

Note that on an island where half the population are US dollar billionaires and the other half are millionaires, the millionaires live in "poverty".

Bocephus

If we are living in a country in which the best part of 5 million people are happy to live off some sort of out of work benefit while at the same time foregoing the opportunity to take one of the millions of jobs Gordon keeps telling us he's (HE?) created maybe he has "lifted a million of people out of poverty."

The hard working majority are paying for it but hey, anything for a quiet life, so long as the mayhem doesn't spill over onto the middle class streets.

Ted Tedford

BC: I think the deduction from Nick Kaplan's post is that, with a relative definition of poverty, you always have a certain number of people 'in poverty'. That means the self-assumed task of eradicating poverty can never be achieved, which means The State is able to secure itself a (very profitable) role in pursuing this chimera in perpetuity.

If the government defined poverty on acceptable absolute terms (like the consensus on the 'shopping basket'), and the government managed to 'eliminate' that poverty, then I think you'd find most Coffee Housers were cockahoop, as long as it was accompanied by a similar reduction in State power and scope, and in the tax burden!

Nick Kaplan

BC, if the target was an absolute measure (which it should be) I certainly would not complain it was too easy to achieve in a world of rising prosperity. Instead I would make the obvious point that encouraging a world of rising prosperity is the only way to end long-term poverty. The government should help people help themselves, by trying to ensure benign economic conditions in which wealth creation can occur, it should not arbitrarily redistribute small levels of wealth to achieve pointless and arbitrary targets. It is not that a relative measure is harder to achieve, the point is a relative measure is totally meaningless and gets the government to concentrate on completely the wrong thing i.e. wealth redistribution instead of wealth creation.

John Page

Hence, I suppose, the saying that the poor are always with us. Nick is right. The definition of poverty was New Lab spin. They wanted considerable redistribution - and who would be prepared to oppose it by arguing in favour of 'child poverty'? The lazy media adopt the definition of 'poverty', just as until very recently they accepted the CPI as 'inflation'. When you run the numbers on 'eliminating child "poverty"', the implications are huge.

Hysteria

I think we have basically agreed Nick K's first post -

But the key for me is whether DC and the boys can agree and articulate this new definition?

I can hear the squeals of outrage from Polly Toynbee and her fellow travellers already - but I think a "correct" definition is consistent with traditional Conservative principles.

Mike Tranter

What is the median income in £? Who are those who live in "poverty". I do not deny low incomes and hard lives, but realism is essential. How many in poverty are employed by the government? (Health Care Assistants and so on in the NHS) Why not have flat taxation and take the low paid out of taxation completely, or is the Brown/Darling approach of means testing paramount?

Alf Tupper

Bocephus.

Too right mate.

As well as peaceful streets though, the middle class are really quite keen to keep those marvellous Romanian plasterers who totally hacked, boarded and skimmed the cottage for just six quid an hour, I mean, where can you find a British worker to match that? Hmm?

Adam Smith

Nick Kaplan needs to read my book the Wealth of Nations, in which I explained and justified the concept of relative poverty -- even though that's not what I called it at the time.

Max Kaye

Adam Smith: P.J. O'Rourke's version ('On The Weath of Nations') is pithier.

Tiberius

If Brown had concentrated on poverty of the mind, rather than a supposed lack of disposable drinking tokens, for low income earners, he could have done a great deal to improve their prospects of social mobility. But, of course, his single-minded obsession with spoiling quality of life for the middle classes would then have been compromised.

David the Economist

Without disagreeing with the sentiment of some of the comments, people need to get the math right to avoid looking silly!

The MEDIAN salary is the salary earned by the person who has as many people earning more than them as less than them. It is the salary of the middle person.

With a skewed distribution of salary the median is below the MEAN salary - which is the sum of all salaries divided by the number of salaries.

Bill Gates (assuming he has a high salary as well as vast wealth) increases the mean but barely changes the median. Which is why that has been used as the benchmark.

x% of median income is not a bad way of expressing "below most peoples standards" though labeling it poverty and smuggling in the ethical implications without debate is crass leftism of course.

Implementing absolute poverty scores gets into equally fatuous lists of "must haves" that are contentious and ride rough-shod over individual choices. And are subject to wish-inflation.

No easy answer really.