Monday, November 27, 2006

Modern Myths: No.1: Poverty

I want to use my blog this week to get a few things straight about a few things, because reality seems to be completely divorced from some popular concepts at the moment. All the concepts involved are suspiciously being pushed very hard in the media and are currently the subject of vast public spending and policy and legislation changes. My next few blog posts will address these myths individually, because there's too much to cram into one post. I will deal with them in order of priority, with the issues being pushed the hardest and financed the most, first.

Myth 1: Relative poverty is a social problem which desperately needs addressing, because it is at the root of all public disorder issues and failures in the education system.

Truth: Relative poverty only means you have less than some other people. It does not mean that you don't have enough of everything you really need, which is the definition of real, material poverty. Material poverty has all but disappeared in this country due to our state welfare system. Where people are unable to afford to eat or pay their bills, this is usually due to financial mismanagement, not lack of income.

To quote Charles Dickens: "Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." This quotation was widely repeated throughout my childhood by my chartered accountant stepfather, who in the course of his work had seen a lot of misery. It annoyed me then but has stayed with me resolutely ever since.

Relative poverty is only a problem for the family involved if they succumb to the marketing campaigns and peer pressure to constantly acquire the latest thing, when they don't actually need the thing. This is a choice everyone is free to make.

Furthermore, a family living in relative poverty who is satisfied with their lot has many advantages over their more affluent counterparts. Being happier with less, there is more spare time freed from working to devote to family, house, garden and children. Having just enough money, as opposed to too much, is a far less stressful way of living. I know this because I've lived through both situations. Surplus cash is just as much a cause of worry as lack of cash, but this is something most people won't believe unless they've actually experienced both.

For individuals and families, poverty is a state of mind which is easily cured.

The acceptance or choice made by swathes of the population to live in relative poverty is, however, a huge problem for those people who devote their lives to the goal of keeping our country's economy artificially inflating. There is no such thing as a stagnant financial situation: the economy is either shrinking or growing. When people stop increasing their spending rate, the economy starts shrinking and we are classed as being in a depression. I would argue that a healthy, naturally run economy has natural ups and downs (booms and busts) like everything else in life, but governments stake their success on avoiding slumps, for which they are invariably held responsible.

I see that David Cameron has jumped on the 'relative poverty' bandwagon now, saying: "In the past we used to think of poverty in absolute terms - meaning straightforward material deprivation. That's not enough. We need to think of poverty in relative terms - the fact that some people lack those things which others in society take for granted. So I want this message to go out loud and clear - the Conservative Party recognises, will measure and will act on relative poverty," because of course the issue goes way beyond party politics and Mr Cameron is setting up his stall for his time in office which will, I'm sure, be little different from Tony Blair's in terms of policy and legislative program.

The think tanks are working hard to 'prove' the relative poverty argument. The Joseph Rowntree Foundation, whose research papers are widely used and quoted by Tony Blair has worked on very little else in the past few years. JRF's page on poverty forms a main part of their website hub. If you read it you will notice that the term 'relative' has strangely disappeared, although relative poverty is undoubtedly the subject of the page, not absolute material poverty. I expect this to be an increasing trend in the near future.

Being seen to be trying to solve the (invented) 'problem' of relative poverty has many benefits for government and big money/power people, including:

1. Giving them an excuse to introduce a raft of surveillance and social control laws and measures, such as:
- Imposing full-time childcare on children from as early as two years old
- The targetting of poorer families for compulsory intervention programmes
- 'Contracts' between citizen and state (drawn up by states not citizens, naturally.)

2. Enabling them to keep the economy artificially growing, by:
- Increasing productivity, whether people really need more things or not.
- Increasing employment, whether people really want or need to go out to work full-time.
- Increasing spending, both public and private.

3. Using people living in relative poverty as public whipping boys for issues like rising crime, failures in the education system and major public health problems.

4. Drawing attention to the so-called 'poverty' issue makes government look...


As opposed to looking like the greedy
$$ warmongers $$ they really are.


Blogger Tim said...

It seems to me fairly obvious that you shouldn't define your own poverty by someone else's wealth, or vice versa.

Compared to Madonna I am very poor, compared to most of the population of the world I am very rich.

However, I do think there is a real problem ( I linked to this from another post of yours) Top fifth 4 times better off than bottom fifth.

Amongst other things, the concentration of wealth in the hands of a tiny section of the population needs to be addressed - the reality at the moment is that those who are moderately wealthy are the ones who get stung by tax of all kinds while the wealthy can afford to exploit all sorts of exemptions to protect their income and to pass on their wealth to their children, thus perpetuating inequality.

Also, I do think we need to take a decision that if we need someone to do something, like care work, or caring for children or elderly parents or whatever, then we also need to pay them properly for doing it. The salaries earnt by some of the least useful people, like lawyers, are obscene and need to be reined in.

1:32 pm, November 27, 2006  
Blogger Gill said...

I agree with you Tim, the people in the middle of the wealth range are actually the most disadvantaged and the top fifth has far too much money.

Maybe the frenzied anti-'poverty' drive has an added purpose in distracting our attention from this too. It does seem to seek to promote an us-v-them mentality between those who have a bit spare and those who have nothing spare.

5:39 pm, November 27, 2006  
Blogger Tim said...

I think the people who are probably the most shafted are those who are struggling along in the second quintile.

These are probably people who are not on benefits, but have little more income than if they were.

However, going to work costs money, you have to pay for travel, clothing, maybe food too, so I suspect they can easily end up slaving away at thoroughly horrid jobs, being treated like doodoo by all and sundry and effectively paying for the privilege.

As far as the bottom quintile is concerned, to a degree we are talking about people who are reliant on what are effectively subs from the people in q2,3,4 and 5 so:

1) I think it is very important that, as a society, we ensure that everyone is warm, fed and able to live decently.

2) they are not entitled to expect the rest of us to keep them in beer and fags too.

6:58 pm, November 27, 2006  
Blogger Gill said...

Agreed. Though my experience of state benefits is that they're not enough to fund beer and fags, so I think the amount is probably set right.

Better not to have one group of people working long hours in horrible jobs and another group doing nothing though IMO. The part time option is surely preferable, and I kind of like the WTC system (if it worked properly) for going some way towards allowing for that option.

7:52 pm, November 27, 2006  
Blogger Allie said...

I think that managing on very little money can be much more complicated than you make out.

How about unexpected expenses that are far out of your budget? Like a sudden family crisis that involves travel. Or an ill child in hospital that means you can't plan all your spending as easily as you might if life just trundled along. Life throws people shitty surprises and my (limited)experience of life on benefits is that there is no scope for dealing with those things. That's how people living in poverty end up getting loans that they have no hope of paying off. I got a bit of junk mail from the Provident today that had typical APR of 177%!

If people don't have anyone in their life who has a bit of money to help them out in crisis situations then they get trapped.

Also, people get dependent on drugs of various kinds, people also get depressed and ill. When those things happen then can spell financial and personal ruin for anyone. When they happen to people living in poverty there is usually next to no useful help available that they can afford.

I think you're right that the goverment has a vested interest in making people feel that they should be aspiring to material wealth. But, on the other hand, I think that people struggle really hard to get by in this country and way too many people suffer needless pain and stress because they could do with a few more quid coming in.

11:35 pm, November 27, 2006  
Blogger Tim said...

Allie, that is fair comment.

The way the system is set up means that someone who becomes unemployed can (probably) meet their day to day expenses, and get by, but there is no flexibility, if the fridge breaks, there won't be the money to replace it and that is quite tough.

You mention debt. I do think that we have a misguided enthusiasm for debt and for most people who have been working and become reliant on benefit this is going to be an issue - it is one thing to service credit card debts from a salary, another to fund it from benefits which are barely sufficient anyway.

I would stress that I am not saying that we should be mean in benefit provision, but that we should be balanced and measured. I think there are, unfortunately, always going to be just enough people successfully milking the system to keep the media supplied with their round of dole scrounger living in mansion stories and that certainly doesn't help.

One big problems is that the system seems to be set up to prevent people from helping themselves. Any attempt to earn a few pennies extra can quickly mean your benefits are cut or lost.

When I had to change career ten years ago, I would have struggled much more had it not been for an excellent DSS manager who explained to me how I could, legally, be unemployed, self-employed and employed all at the same time as claiming income support. There is no way that I would ever have worked out how to juggle all that for myself. His advice meant that within a very few months I just stopped bothering to sign on (I still have a couple of giros made out for 10p lying around) and very shortly after that was able to earn good money using the new skills I had acquired.

8:19 am, November 28, 2006  
Blogger Gill said...

That's true Allie - benefits don't usually allow for savings. If one of my children became desperately ill elsewhere in the country, for example, our food budget would shrink to bread & jam/ beans on toast rations for a week or two so that I could fund the train travel to get to them. But it would be worth it and we would stay solvent, just.

There are social funding loans for emergencies, aren't there? Very low rates of interest, if any at all. We considered taking one out when we needed a fridge, but then decided to do without the fridge instead, until someone gave us one. Perhaps these should be publicised more than they are. Also repayments come out of essntial benefits payments, albeit in small amounts, but they would still be felt.

Debt and drugs (and drink - the 3 ds!) are the huge problems I agree. Lives do spiral out of control on these and that's horrible, but I'm not sure how being in employment makes it easier - I suspect it just delays the point where catastrophe hits.

Far better, IMO, to look at the root causes of debt/drug/drink problems and see if there are ways of preventing them, by allowing for strong families perhaps. More space for people? The work being done on social bonds (towards weakening them) and social bridges (towards strengthening them) is extremely worrying in this respect, because it encourages people to become more reliant on professional strangers than known and trusted relatives, friends and neighbours for their support network.

Tim, you can't do that self-employed thing any more! Well, you can, but it's far more complicated now. Basically the DWP holds your business bank account and pays you benefit which has to come from the account ASAP. You have a certain time within which you have to turn a profit and you HAVE to attend courses, regardless of your previous experience. *rolls eyes*

9:06 am, November 28, 2006  
Blogger Tim said...

I have often thought that they WANT people to stay on benefits, they make it so hard to get off them.

Removing the chance to do self emplyed work is another example.

Don't know whether this has changed too, but it used to be that you could do a course, but you had to be "available" for work. Any course which would give you a qualification/skill of any real value was a) not capable of being funded b) very expensive and c) meant you went over the hours limit so were no longer eligible for benefits.

Like I say, I think it would be wrong if benefits were generous, because that would be unfair to the people out of whose pockets they are paid (NB it isn't the Government's money, Government has no money of its own, just what it takes from taxpayers). On the other hand, it is of no advantage to taxpayers if people at the lower end of the income scale are trapped, depressed, oppressed and alienated. That costs a lot financially but socially far more than we can afford.

10:25 am, November 28, 2006  
Anonymous Lucy B said...

Very interesting post, thanks Gill, and tapping into a lot of the things I am struggling with lately ... inspired me to start a journal to try and sort out what my thoughts are about stuff! Missed you yesterday - hope you had a good meeting. :-)

11:27 am, November 28, 2006  
Blogger Gill said...

I think they have done things to make it appear that they're trying to get people off benefits Tim - whether thats the same thing as them wanting ppl to get off them is another matter!

If you were to ask them they would say they've tried to make it easier, not harder, for people to go into self-employment when in actual fact they've just got more standardised and control-freakish about it.

Interesting point about courses - I'm not too sure which they will and won't fund, but I think they're going more towards loans and away from grants and benefits for students, which is of course very offputting for any prospective students.

I agree benefits should not be generous and they aren't.

"On the other hand, it is of no advantage to taxpayers if people at the lower end of the income scale are trapped, depressed, oppressed and alienated."

Indeed, but since when did governments do things in the interests of taxpayers? LOL To appease taxpayers when needs be, maybe, but they actually act more in the interests of big money people IMO. And it's in *their* interests to have the poor and the slightly less poor busily at one another's throats and conveniently forgetting about the very rich, who, as you say, seem to get away with a lot and pay comparatively little.

Hi Lucy, we missed you too! Hope you're all well :-) Glad you liked the post :-)

12:26 pm, November 28, 2006  
Blogger Tim said...

New Labour is very big on appearance and illusion.

On the courses, when I was in the position of wanting/needing to be able to do one, I was outside the age range they were prepared to help, there was a big thing about yoof unemployment and if you were over 24 you were pretty much stuffed. They were spending all the money on "initiatives" but not supplying people with the help and support they wanted, needed and were asking for. Just as I was moving on they started New Deal 1 (same as Old Deal, but brighter colours).

There is indeed an old saying that there has never been a tax system arranged to the benefit of the taxpayer.

There is one other thing which just crossed my mind. A long time ago, we used to have a grant system for students. Again it didn't make students rich but it did mean that if they were careful they could get through a degree and finish with their bank account in the black.

Now we have a loan system.

We want to encourage people to reduce personal borrowing.

The Government has a special web site dedicated to encouraging young people to get hugely in debt before they ever see a pay cheque.

How does that work then?

Why doesn't Webcameron say he will revert to the pre-Thatcher system? It'd get my vote.

12:52 pm, November 28, 2006  
Blogger Gill said...

I'm kind of in two minds about the students loans system.

On the one hand it's a really bad idea to have people starting their working life in debt, and as you say this will encourage the kind of ethos which sees debt as being a normal thing. This is obviously bad news for the individuals concerned.

But on the other hand I don't like the idea of education all being geared up specifically towards employment and all being money-orientated.

Surely at one time people were proud to be apprentice-trained craftsmen, for example, whereas now it's more the done thing to attend a prescribed degree course in an -ology.

Surely our universities should be funded and financed in such a way, however and by whoever, so that they facilitate learning for learning's sake and not just some 'playing at training' way of keeping the yoof off the streets?

2:32 pm, November 28, 2006  
Blogger Tim said...

At some point there was this study done which said that 50% of all jobs would, in future, require degree level skills.

All the university dons rubbed their hands with glee at this and so did all the lecturers in tech colleges who saw straight away that this was their big chance to step up to the pay scales of their university colleagues.

But, big but. A degree level qualificiation does not necessarily mean a degree. It could mean, training to be a chartered account, a surveyor, a omputer programmer, or an engineer, for which you don't need a university at all. Or, for that matter, as you rightly say, a master craftsmen, trained in the traditional fashion as a toolmaker, cabinet maker or mason could scarcely be said to not have skills of at least that level.

But we wouldn't want our children going off and doing anything which involved getting their hands dirty, much better that they get pointless degrees and equally pointless jobs which don't involve them actually making something useful.

I think I agree with what I think you said, we should keep universities for learning, for research make them places where you go to expand your mind, to drink beer, not to make it. And we can then have technical colleges where people go to learn to do stuff. :)

2:57 pm, November 28, 2006  
Blogger Gill said...

That sounds like a much better idea :-)

We seem to have lost our way when we started putting professionals with degrees on a pedestal, then deciding we all wanted to be 'equal', therefore we should all have degrees.

But I have more respect for a good cabinetmaker, for e.g., than I do for a lawyer.

Globalisation and knowledge-based economies seem to be to blame. We're importing everything we possibly can that's tangible, including skills, and leaving our own people with very little left to do.

Maybe we're all destined to sit around thinking here in the UK. Or blogging!

3:45 pm, November 28, 2006  
Blogger Tim said...

...or driving round in white vans made in Japan or Germany, burning petrol produced from Saudi Arabia, delivering goods made in China.

"Yeah look at them yo-yos
Thats the way you do it,
You play your guitar on the MTV
That ain't 'a workin',
Thats the way you do it..."

5:17 pm, November 28, 2006  
Blogger Gill said...

*That*'s why I love Dire Straits! The true gurus ;-)

6:10 pm, November 28, 2006  
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