Tuesday, 22 May 2007

For ye have the poor always with you

Geoffrey Payne and Agent Mancuso began a debate yesterday on whether the Liberal Democrats should make the reduction of inequality (referred to by some as the issue of “relative poverty”) a matter of party policy.

Coincidentally, I have been reading some old party papers today, and have come across clear statements of support for the concept of “relative poverty” and the idea that government should counter it.

“A fair Britain is one… [that] redistributes wealth from the richest to the poorest.
“Inequalities in wealth… are widening… We are determined to reverse this trend and to remove the inequalities created by the structures of society. We are determined to create a fairer Britain.” (Trust in People: make Britain free, fair and green, Lib Dem policy paper 76)
Yet as Mancuso notes, “even the poorest people in Britain are considerably better off than the poorest were a generation ago, and they in turn were better off than the generation previous. Compared to the millions who live in genuine poverty around the world, all but the very poorest in Britain live in luxury.” The sentiments are echoed in the article by Arnold Kling to which I referred a couple of weeks ago.

The Government defines income poverty as having an income below 60 per cent of the national median income; severe poverty is below 40 per cent. Yet in a dynamic, prosperous society, vast differences in wealth are inevitable (and perhaps even functional).

It is almost as though, at the very moment that we are about to rid our country of poverty forever, we have discovered a way of ensuring that the poor will always be with us. Hmm…

Last year I read an interesting account of how the relative definition of poverty came to be adopted in the UK. It starts with the Labour Party conference in 1959. Labour were in the doldrums: they had lost three general elections in a row, and Barbara Castle lamented “the poverty and unemployment which we came into existence to fight have been largely conquered.” But three years later at the annual conference of the British Sociological Association it was proposed that the “Poverty Line” be considered to be the equivalent to the amount that the government paid in ‘Supplementary Benefit’. Harriet Wilson, an academic who was there, described the tension that resulted from this redefinition of poverty as “a mood of conspiratorial excitement.” One historian, examining this change, has referred to it as “explicitly political”.

If there is truth in this suggestion, it is indeed disturbing, for it suggests that senior Labour figures deliberately adopted and promoted a relative definition of poverty, not because it better summed up the suffering of the economically less well off, but because it gave them an inexhaustible raison d'ĂȘtre, a justification for a Trotskyite permanent revolution, an excuse for an eternal battle against the wealthy and successful whom socialists so fail to understand and appreciate.

Irrespective of whether the conspiracy theory is true, however, relative poverty should not be our concern. Our focus should be on ensuring that nobody suffers from absolute poverty: that no matter how dire the circumstances, everyone may be assured of food, water, clothing, shelter and warmth. To those five essentials I might add the opportunity to lift themselves back out of their desperate state, but this is best achieved through a rapidly growing economy and loose labour laws, resulting in the rapid creation of new and better job opportunities.

By comparison, the levelling sentiments (which, is might be noted, bear little resemblance to the beliefs of the original Levellers) of those who would seek to take from the rich to give to the poor (what economists would call penalising success and rewarding failure) should have no place in our party’s policies.

Particularly, we must absolutely shun the populist attraction of a “policy of extra income tax for the very rich to secure more funding for public services [which] was a net vote winner at the last general election, by a substantial margin.” As liberals we should no more discriminate against people because of their wealth or their income than we should because of their gender or race. It is easy to find unpopular minorities against which some punitive legislation can be enacted, to the delight of an unsympathetic majority – and no minority garners less sympathy than the rich. But that is not what liberalism is about. Rather, it is an affront to the rule of law.

A fair Britain does not mean that everybody has the same or a broadly similar amount of wealth. It means that everybody, no matter their wealth, is treated equally by the state.

As Oliver Wendell Holmes, Jr., once said, “I have no respect for the passion for equality, which seems to me merely idealising envy.”

4 comments:

Patrick Wallace said...

>>A fair Britain does not mean that everybody has the same or a broadly similar amount of wealth. It means that everybody, no matter their wealth, is treated equally by the state.<<<

On one definition, perhaps. But

"...we seek to balance the fundamental values of liberty, equality and community, and in which no-one shall be enslaved by poverty, ignorance or conformity. We champion the freedom, dignity and well-being of individuals, we acknowledge and respect their right to freedom of conscience and their right to develop their talents to the full. We aim to disperse power, to foster diversity and to nurture creativity. We believe that the role of the state is to enable all citizens to attain these ideals, to contribute fully to their communities and to take part in the decisions which affect their lives" also commits the party to active government intervention to optimise life chances, which is great deal more than

>>a rapidly growing economy and loose labour laws, resulting in the rapid creation of new and better job opportunities<<

For one thing, there is always the "I'm All Right Jack" tendency of those who have to make damn sure those who haven't are as far as possible excluded from the better opportunities and what are perceived to be the good things of life, the "positional" and "aspirational" goods rather than absolute wealth.

Inequalities of income and wealth tend to become self-reinforcing, just as totally unregulated markets tend to descend into cartels. Those who benefit hang on to their benefits, those who don't feel frustrated and excluded - as often they actually are.

Tom Papworth said...

Actually, Patrick, most of your quote from the constitution is entirely in line with what I said.

As long as government meddling does not undermine social mobility (as has happened with, for example, the state run education system) then people are free to lift themselves out of "poverty, ignorance or conformity", as used to be the case before the first great wave of Labour interventionism. If one is free to improve one's own life, one is not enslaved.

Similarly, "freedom, dignity and well-being" are best achieved by treating people equally before the law and freeing them to make the choices that best improve their lives.

It is, as the preamble so eloquently states, "the role of the state... to enable ... citizens to attain these ideals", not to hand it to some on a plate by confiscating the property of others. That is not liberty, it is tyranny.

The preamble does not "commit the party to active government intervention to optimise life chances". It commits the party to help people optimise their own life chances.

The "I'm all right jack" tendency (actually first coined about the Unions’ use of labour laws to benefit their members at the expense of non-unionised workers) is of course unpleasant, but it far preferable to the use of the state to feed our envy.

In fact, only a fool would want to exclude others from making the best of their lives. One persons’ success has a knock-on effect that benefits society. We are all richer when one of us does better; that is the Invisible Hand at work.

But if you believe that the reason why some fare better than others is because the privileged are grinding down the deprived, then the best way to ensure that nobody can exclude others from bettering themselves is to free people to maximise "life, liberty and the pursuit of happiness" through their own means.

That is the role of the state.

agentmancuso said...

Tom,

a more thorough version than mine, and with added pictures.

Much of my limited thinking on this topic came originally from a reading of this title.

Edis said...

Interesting and important debate. Another dimension we need to consider is the question of our measures of inequality. Calssically, do we measure income of individuals or of households? Should incomes be adjusted in poverty statistics to take account of household needs?

If we are to have a serious debate I think we also need to make sure everyone understands the concept of a Lorenz Curve and why this is central to current debates on welfare policy effectiveness.

For my part I note that the Model of perfect Competition so many Market Advocates rely on does not support innovation and enterpreneurship, (a point strongy made by von Hayek incidentially) so changing enterpreneurial economies will not be Pareto Efficient. They will have market failures and externalities which can lead to disporortionate negate effects on those with the least resources at their command.

It is the job of public authorities - governments or reasonable substitutes - to 'balance the values of liberty, equality and community' and make sure that there are countervailing influences to imperfect markets.