Category: Poverty

Some comments on Basic Income schemes; it’s not the answer to automation

A couple of days ago I spoke to Anas Hassan, a journalist for Common Weal, about Basic Income.  His article is on Common Space.  He recorded the conversation, and what’s presented, while it looks a bit like I’ve written a contribution, is actually a selection of the things I said over the phone.   Part of my comment, which is about the distributive problems of Basic Income, is stuff I’ve already covered in this blog, so I won’t repeat it now.  The other part is something I think I haven’t tackled elsewhere, which is about the idea that Basic Income can make up for the loss of jobs in an automated age.    What I told Anas, more or less, is this:

There are ways of absorbing the loss of jobs. As it happens, I think that there are lots of jobs that we ought to be providing and we ought to be doing. Many of those jobs are public in one sense or another – either they are paid for publicly or they are directly employed in the public sector.  Examples might be police, nurses, people involved in fire and rescue, gardeners. We need a massive number of carers both for older people and for younger people. We need more road menders [My correction: Anas has written ‘members’]. We need more people protecting the civic environment.  … We also have countries that simply employ more people doing things that are socially useful. My model for that would be some of the Nordic countries, but particularly Norway. And what we find is that the number of people who are involved in public service is directly associated and related to the amount of residual poverty that then remains in that economy, because what you are giving people is respected, worthwhile jobs. We could do that. Government has created many jobs. They are worthwhile jobs. They’re important jobs. And it could create an awful lot more if we had the will to do so.  That’s the answer to this question of what happens to people not having jobs.

Oxfam is critical of extreme inequality but it’s not clear about what the problems are.

Oxfam’s briefing paper on inequality, An economy for the 99%, has attracted some plaudits, but I was disappointed.  Its main theme is the startling disparity between the super-rich and the rest of the world.   While it’s well researched, it suffers from two key vices.  The first is that it doesn’t do enough to explain why this inequality is a bad thing.  The second that it gets distracted by other issues – climate change and violence against women.  That’s not to say that they’re not important, but so are lots of other things – war, corruption, sanitation, communications –  and they’re all irrelevant to this case, too.

What, then, is wrong with extreme inequality?  The problem with  inequality is not that very rich people don’t pay their taxes, though it would help if they did.  It’s that their wealth limits the rights and security of the poor, most obviously in access to land and resources.  At the same time,  that the maldistribution of resources going to lower paid workers holds back the world economy, ultimately costing everyone.  We need to be wary, too, of the assumption that the Rich are exclusively made up of people richer than us.  From the point of view of much of the world, those of us living comfortably in Europe are the Rich, and we’re just as much of a problem as Bill Gates and Warren Buffet.

Martin Ravallion on The Economics of Poverty

I’ve just finished working my way through Martin Ravallion’s magnum opus, The economics of poverty (Oxford University Press, 2016).  Ravallion was the leading economist in this field for the World Bank, and is now a Professor of Economics at Georgetown.  For Ravallion, there have been two ‘poverty enlightenments’: the early nineteenth century, when economists started to address the problems, and the 1960s and 70s, when poverty was ‘rediscovered’ and many contemporary techniques were devised or refined.   There has been a third wave since then, as people have come to understand the multidimensional and relational character of poverty, the political and legal dimensions of the concept and the importance of voice and empowerment; but Ravallion doesn’t have much time for all that.   Multidimensional indicators are ‘mashups’, poverty is at best ‘weakly relative’ with an absolute core and the experience of poverty is individual.

There’s lots to disagree with, then.  Most of the book is a review of economic techniques for the analysis of anti-poverty programmes; occasionally it’s heavy going.  Ravallion is at his best in the section on impact evaluation, even if I disagree with much about the basic approach.  Ravallion is a true believer in the value of multivariate analysis; missing values can be filled in by the computer (p 158), and the influences on poverty can be identified by letting variables “‘fight it out’ statistically to determine how much each variable matters” (p 249).

There are a couple of sideways mentions of my book, The idea of poverty, and the joy of blogging is that I can reply.  Ravallion is critical of the contention that structural adjustment made things worse for poor people. I’ve written more about structural adjustment, but in the book in question I had written only this brief comment:

In the 1980s, the International Monetary Fund and the World Bank promoted ‘structural adjustment’, a particular model of economic reform for developing countries – creating opportunities for international business, imposing strict financial discipline, increasing inequality and cutting the public sector.  Even when this worked, it generally increased the vulnerability of the poor.  When it did not, it could have very detrimental effects, because it weakened investment in human capital and cut away the main social protections that poorer people might have had.

Ravallion comments:

The critics of adjustment efforts argued that they were externally imposed and ill-conceived agendas for reform. In the 1980s it was often claimed that these programs increased poverty and inequality and one still hears such claims. [Note 174:   For example, Spicker (2007, 127) asserts that these programs generally increased inequality and poverty.]  The claims were rarely based on good evidence and, by and large, they did not stand up well to more careful empirical scrutiny.

Well, I did write that “Even when this worked, it generally increased the vulnerability of the poor.”  And another poverty expert wrote this:

This success against extreme poverty has come with continuing vulnerability to aggregate economic contraction, with one-in-six people in the developing world now living between $2 and $3 per day.

I wrote that the programmes increased inequality, and the same expert wrote, with a reservation I’d accept, that

Better (in the sense of “pro-market”) institutions … offer some hope for poor people, but it must be judged a rather limited hope based on experience.  The favored institutions tend in practice  to perform less well for poorer people. … [S]uppose that reforming developing countries fall into two categories: those for which pre-reform controls on the economy benefited the rich, keeping inequality artificially high (arguably the case in much of Latin America up to the 1980s), and those in which the controls had the opposite effect, keeping inequality low (as in Eastern Europe and Central Asia prior to the 1990s). Then economic policy reforms can entail sizable redistribution between the poor and the rich, but in opposite directions.

The expert in question is, of course, Martin Ravallion, on pages 448, 409-10 and 439 of this book.

Redesigning funeral benefits

I was at a conference today on funeral poverty, part of the Scottish Government’s agenda for #fairerscotland.   The current system of support is very limited, and horrendously complicated.  There are five elements in a claim: the circumstances and resources of a claimant, the circumstances and resources of the deceased, the arrangements made for a funeral, the relationship between the claimant and the deceased and the situation of other relatives who might potentially pay instead.  I argued that the system could be simplified most effectively if we treated the liabilities and any claim as a matter for the estate of the dead person.  That position didn’t attract much support at first, but as the discussion went on more people saw the point of it.  This is virtually the only circumstance in the UK system where we directly oblige family members other than spouses to take on the financial liabilities of their adult relatives.

It’s always a pleasure to learn from people who know much more than I do, and the representatives from the organisations for funeral directors were particularly impressive, not just for their detailed knowledge but also for their sensitivity and awareness of the issues. Unfortunately, the profession isn’t well regulated, and I was shocked to hear of bodies in England being kept in the freezer for months until fees could be met – in one case, for 25 years.  Some problems can’t be solved by the market.  There’s a strong argument for decommodification, and while there will always be some elements of the process that depend on personal choice, there’s also a case for reducing the role of payments and charges, for example by direct provision of burial lairs or cremation.

 

Poverty as a wicked problem

CROP, the Comparative Research Programme on Poverty, has just published a poverty brief I wrote for them, on Poverty as a wicked problem.   In the brief I argue for a pragmatic approach to poverty, rather than an analytical one.  Poverty is a wicked issue – complex, multidimensional, unclear and changeable. There is not one problem to be addressed. If we are not dealing with a set, specific problem, or even a defined process, there is little point in chasing after definitive, mechanistic answers.   There are some common misunderstandings about anti-poverty policy. The first is the belief that we can prevent poverty by identifying and dealing with its causes, or the ‘generative mechanisms’ that lead to people being poor; this has led to a long series of bad policies. The second misconception is to suppose that if we know what causes the problems, we will know how to stop them; the way into a problem is not usually the way out of it. Neither position is tenable, and too often they have led policy astray.

The problems are not going to sit there waiting for someone to solve them, so that they can be picked off one by one; new problems and issues are arising all the time. Poverty is dynamic – constantly shifting and changing, as an enormous range of processes coincide and collide. One of the central insights offered by the emphasis on poverty as a multidimensional issue has been to emphasise the importance of the perceptions, experience and voice of people who suffer it, as a way of clarifying issues and developing priorities.

Michael Higgins speaks about the treatment of citizens in poverty

This is from a speech given yesterday by Michael Higgins, the President of the Irish Republic.  The full text is here.

There can be no doubt that how a society treats its more vulnerable citizens, how it deals with helping people into work and protecting those unable to work, is a critical reflection of its moral core. A society that creates a culture of suspicion or hostility towards those living below the poverty line; or that patronises and infantilises them; or that fails to view its citizens living in poverty as individual people with individual problems, preferring to dismiss them as homogenous members of an inadequate underclass, cannot easily lay claim to being part of a functioning democracy.  …

There are challenges too to our administrative systems.  When people living in poverty are treated as numerical units or administrative cases; when they are forced to jump multiple and difficult hurdles in order to claim financial benefits to which they are entitled; too many occasions when they are required to navigate their way around overly complicated procedures and layers of red tape in order to avail of vital services, we insult and demean those amongst us who are guilty of nothing except living, day in day out, below the poverty line.

When a citizen experiencing poverty is not enabled to exercise their voice, or to claim their rights and entitlements, not empowered to enter into informed dialogue about decisions which affect their lives, rendered unable to defend themselves or to assert their opinion or to speak up and object when they feel their rights are being violated or ignored, or obstructed from access to an education that would open up windows of opportunity, they have been failed by a society that claims to operate on the principles of a democratic republic.

It is hard to imagine any senior politician or dignitary in the UK delivering a similar address, and that is to be regretted.

The Joseph Rowntree Foundation thinks it can solve poverty. It won’t do it this way.

The Joseph Rowntree Foundation has issued two reports under the headline, “We can solve poverty in the UK.”  They define poverty as being “to have resources that are well below minimum needs.”  Their objectives are to ensure that no-one should be destitute, that no-one should be poor for more than two years, and that there should be fewer than 10% of the population who have less than the standard at any time.  The first of the reports,  UK Poverty: causes, costs and solutions , has a lengthy account of research findings about people on low incomes.  The second report, We can solve poverty in the UK, is a manifesto with a long series of proposals.

The reports are lengthy; probably the best way to convey the focus of the approach is to reproduce the key measures they propose.  They write:

We could solve poverty by:
•  Supporting people to be good parents, helping parents share care and stay in work, minimising the adverse impacts of separation on children, and supporting children and parents’ mental health;
•  Giving access to high-quality, flexible and affordable childcare to parents on low incomes, allowing them to work and improving children’s pre-school development;
•  Ensuring all children from low-income backgrounds can succeed in school;
•  Ensuring all young people leave school with  the support, advice, skills and confidence  to move successfully into education, training  or the labour market and towards  independence; and
•  Raising and protecting family incomes so they an afford essentials, reduce stress and give children the opportunity to participate socially and educationally.

•  Supporting people to gain the skills and capabilities to find a job and progress once in work;
•  Creating more jobs offering at least a  Living Wage, with greater job security and opportunities for progression; and
•  A social security system that incentivises work and increasing hours, and supports people in and out of work to escape poverty.

•  Encouraging more older people to take up the financial support for which they  are eligible;
•  Ensuring more working-age people contribute to savings schemes and pension funds; and
•  Providing benefits for older disabled people that are tailored to meet additional costs of disability and care needs.

•  Ending the poverty premium through responsible business practices, better customer service, regulatory intervention and product innovation;
•  Enabling low-income and at-risk consumers  to get the best deals from providers;
•  Boosting the supply of genuinely affordable housing; and
•  Reducing energy demand through efficiency programmes.

•  Enabling young people leaving care to maximise their potential, with proper support around housing, employment and training;
•  Providing good quality holistic approaches to family support services, which address a  variety of issues, including material poverty and behaviour;
•  Providing homeless people with secure,  long-term homes; and
•  Significantly increasing access to and funding for mental health services.

•  Supporting communities to create and implement locally-led solutions and build pressure for bigger change;
•  National, regional and local leaders setting a clear vision and co-ordinating efforts across  sectors;
•  ‘Anchors’ – the big employers and in a place – using their purchasing power and networks to connect to land neighbourhoods; and big businesses and investors helping to rebalance the economy, driving growth up in ways that drive poverty down.

There are lots of measures here, some to agree with, some not, and a scattering (like leadership or responsible business practice) which seem frankly feeble.  What it isn’t doesn’t add up to is an anti-poverty strategy.  The  specific objectives which are identified are not linked to specific measures that could bring them about;  there is far too much emphasis on issues (such as parenting behaviour and work incentives) which have consistently failed to address the problems of poverty.

At root, the conceptualisation of poverty is weak.  Even if we accept the narrow focus on resources, the reports overemphasise pathological explanations for poverty – individual competence and family dysfunction – and say far too little about either the structure of the economy or social exclusion.  The resources that are identified are much too often concerned with cash and work, rather than assets and services.  There is very little consideration of entitlements and capabilities, basic security or empowerment.   The result is, I regret to say, a missed opportunity.

Why work is not the best way out of poverty

At the hustings, there seemed to be a general agreement between the politicians that work is the best route out of poverty.  It’s a common misconception, reinforced yesterday by a further claim that it’s all about education and opportunity.  These are common muddles, but worse, they have been diverting us from focusing on policies that have a much better record.

The place to start is with poverty.  Poverty is complex, multi-dimensional and many headed.  It’s a wicked problem, where apparent solutions that help in one way can add to the problems in others.  Single solutions don’t work.

Let’s focus, however, on low income.  Large numbers of people suffer low incomes for extended periods – previous research suggests that in Britain, well over half of us will have had at least a year on low income in a ten-year period.  The reasons for low income include unemployment, but they also include low pay, having young children, divorce, disability, becoming a student, suffering discrimination or falling ill.  Being in secure, well-paid work helps people to be less vulnerable, but it’s not a sovereign cure.  If we look at the evidence on the dynamics of poverty, education helps, and work helps, but so do staying healthy and marrying someone with a stable income.  But surely, it’s said, people in work are less likely to be poor.  True – but it doesn’t follow that entering work will have that effect on the next person into it, any more than encouraging people to focus on their marriage prospects would.   It all depends on the job, as marriage depends on who you marry.  The economy matters in general terms, because that shapes the range, pattern and numbers of jobs that are available; but work is no guarantee of invulnerability.

If we look at what pushing people into work has done, it hasn’t led to a reduction in poverty.   It has led to an increase in the proportion or people who are working on low incomes.  It’s also given us, as a by-product, a staggering increase in penalties for non-compliance with benefit rules, and some catastrophically low incomes as a result. ‘Employability’ providers have been diverted from what they do best, which is to help people in need of support; benefits have been undermined by rules which have little or nothing to do with people’s financial circumstances.  Putting together work preparation and benefits has been bad for both.

If work isn’t the way, what is?   We might get a clue by looking at pensions, where there have been positive improvements over several years.  That’s not because pensioners are entering the workplace; it’s because pensions have improved.   Benefits matter;  and, for dealing with poverty in a broader sense, the basic structure of services is critical.    If we’re serious about tackling poverty, we need a much broader based, structural response to the problems.

 

 

Child poverty measures saved! A note from Kitty Stewart

Dr Kitty Stewart prepared a joint letter about Child Poverty Statistics which was signed by 170 academics, and published in The Times.  The Times keeps the details behind a paywall, so with Kitty’s permission I am posting the letter and list of signatories here.

This is the text of the letter:

This week the House of Commons will decide whether to persist in abolishing the UK’s child poverty indicators, replacing them with ‘life chances’ measures of worklessness and educational attainment. We urge the government to listen to the Lords and retain the existing indicators, keeping income and material deprivation at the heart of child poverty measurement.

Research shows conclusively that income has a causal effect on child development: children in poor households do less well in part because of low family income. Worklessness is an inadequate proxy for children’s circumstances: two-thirds of UK children in poverty live with a working adult.

A recent government consultation showed overwhelming support for the current measures from academics, local authorities, frontline services and others. Just 1% of respondents supported removing income from poverty measurement.
Wider indicators of children’s well-being are welcome and important, but should not come at the expense of the existing poverty measures, which are vital to our ability to track the impact of economic and policy change.

Kitty has subsequently written:

The government has backed down on the abolition of the child poverty measures. The Bishop of Durham’s amendment was defeated in the Commons last week, but the government subsequently put a revised amendment to the Lords which does pretty much the same thing. There will be no requirement to report to parliament, but the law will continue to require annual publication of all four of the existing measures.

Maybe our joint letter, which was published in the Times on the morning of the Commons debate, added a little bit of extra pressure at a key moment, on top of the strength of the vote in the Lords and the concerted opposition from children’s charities and others. Whether it did or not, it seems that making a lot of noise can still make a difference, which is very cheering!

 

A Scotland without poverty

I’ve just shared a brief interview on Good Morning Scotland with Jim McCormick, of the Joseph Rowntree Foundation.  Jim has prepared a report called A Scotland without poverty (not to be confused with a Poverty Alliance report of the same name) proposing a ‘leadership strategy’ to develop effective anti-poverty policies.  The main proposals include an extension of free child care to 15 hours a week, getting more people into work and building career ladders,  more intensive employability support, improving housing conditions, extending financial inclusion, improving takeup and taxing Winter Fuel Payment.

This is much too limited.  The first problem is that it doesn’t address the principal conditions shaping the lives of people who are poor, which are not about work – they mostly affect people who are not part of the labour market, including long-term sickness, disability, childhood  and old age.  There are very limited responses to two of those , and even less about the first two.     The second problem is that for those who are engaged with the labour market, work is too insecure and unpredictable to build resources.   Work is not the answer.  Even to reduce poverty, we need to ensure access to the conditions of civilisation – the phrase is Tawney’s – with a secure foundation of health, education,  housing and public services.  Even within the limited framework of devolution, those are indeed issues that a Scottish Government could address.

The weakness of that comment is one it shares with the Rowntree report.  Jim refers to a  ‘leadership strategy’ – a strategy issued from on high – and I have just done the same thing.  Poverty is a difficult, complex, multifaceted set of issues.  In that situation, it’s not possible to insist on priorities in one field without sacrificing others – so how should those priorities be decided?  We need to look at what matters to the people who are experiencing poverty, and build from there.    ‘Leadership’ is not the way forward: try listening instead.