Wednesday, October 15, 2008

The Theory of Relativity

When I found out that the topic for Blog Action Day this year was Poverty, I simply could not get out of my mind the debate between relative and absolute poverty.

In politics there are two types of poverty; absolute poverty, the kind preferred by the right, and relative poverty, the kind feted by the left. Absolute poverty is poverty as most people understand the word; starvation, lack of housing and other basic amenities. Basically being classically poor, similar to the characters in the novels Dickens writes. Relative poverty is based on having household earnings of 60% of the median. In Britain, thanks to socialism and the welfare state, absolute poverty of the kind seen in Charles Dickens novels generally does not exist anymore. Leftists now concentrate on alleviating relative poverty by good old fashioned mechanisms like taxing the rich to give to the poor. In other words, wealth redistribution.

The right-wing have a lot of problems with this. Firstly, taxing the rich (productive) to give to the poor (lazy) means there is no incentive to work. They point to all those single mothers who live in council houses provided by the state producing babies the rest of them support while a wailout of bankers (that is the official collective term) create wealth in the city funding it (until that is they get greedy for short term game and the state has to bail them out before western civilisation collapses). Secondly, they object to the term poverty. The poor are not starving like the good old days of unregulated Victorian capitalism, they own many mobile phones and wear designer clothes. They are actually rich thanks to western capitalism. The fact that a the child of working class parents has a 1 in 10 chance of getting to University compared to the 8 out of 10 children born to middle-class parents getting to University passes them by. Thirdly, the definition of relative poverty means that if a lot of rich people come to the country, the number of people suffering relative poverty can go up. I have always had a slight problem with this, because I was under the impression that rich people leave this country to live as tax exiles elsewhere, and that the majority of immigrants coming here could not speak English and leeched of the state. If this is true, immigration would reduce relative poverty, not make it worse.

I have mellowed a bit over the years and am not as left-wing as I was in a previous incarnation. I understand the ideas of modern right-wing politics, the theory of incentives and how a well meaning government can actually make things worse. For example, there is an interesting theory that Gordon Brown's disastrous abolition of the 10p tax rate was actually a measure designed to target child poverty. After all, if you raise taxes for the poor, and give money back to those with families, those with children will end up relatively better off than those without. Maybe relative poverty is not such a good definition after all.

It used to infuriate me when the right belittled the idea of relative poverty. After all, most of them had never experienced it. It got me thinking: what is the key problem behind poverty in this country. I decided the problem was the lack of social mobility. It is more true today than any time in post-war Britain that a child will end up in a similar position in society to that of their parents. That is real poverty. The poverty of aspirations amongst the relatively poor.

Of course, we should be glad that we do not suffer the old-fashioned type of poverty much anymore in the West, and that many people in the world famously live on less than one dollar a day (cost of living differences aside). I am proud to live in a city which pioneered the Drop the Debt campaign 10 years ago when the G8 summit came to town.

I hope one day I will see a world with no absolute poverty, and a Birmingham with none, relatively speaking.

1 comment:

JPH said...

There was an article in the FT today about rising inequality in incomes in the UK. However, the article said the measure had increased due to the larger gap between super-rich and middle classes, not due to a change between middle and working class. I found it very odd that the "standard" measure would put any weight at all on inequality at the top of the scale. To be frank, who gives a toss? I can't believe there is anybody losing sleep over that particular brand of social injustice.