Poverty; what causes it?

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Poverty is not to be recommended- I have seen it; I have had some personal experience of it. It strips you of your becoming. It is like a leach sucking the life from everything you hoped for. There is nothing noble about poverty, nothing sexy. Even those who rightly pride themselves on rising from humble beginnings have only the benefit of hindsight.

Poverty however is best understood as the direct consequence of the wealth of others. I know, it sounds all too simplistic; too much like the impractical economies proposed by Marx, or by Jesus even. But think about it; poverty is caused above all by this one thing; inequality.

Not that we talk about this much any more. The Government is currently engaged in a redefinition of child poverty in the UK (previously defined as growing up in households with less than 60% of median income) towards something defined instead by an understanding of the so-called root causes of poverty, including family breakdown, debt and addiction. This seems to make sense at first, until you look at the evidence.

The government is influenced mostly by the work of the right wing think tank set up by Ian Duncan Smith called the Centre for Social Justice, who paint a picture of UK poverty that is tied up with bad parenting, highlighting cases of alcoholic, crack-addicted parents and parents who abandoned their children to play bingo and survive only by running up huge debts. Makes instinctive sense right? (Be honest.) Poverty in families is about dysfunctional parents. Don’t let the facts get in the way of such self-evident truth.

It is almost as if the very word poverty is now to be regarded as tainted. Duncan Smith announced recently that the Child Poverty and Social Mobility Commission is soon to be known simply as the Social Mobility Commission.

So, what really causes poverty? The Child Poverty Action Group has a list of ‘Child Poverty Myths‘ on its site that are well worth checking out. They make the point that dependency on alcohol and drugs and family breakdown are societal issues across both those who are poor and those who are wealthy, but are relatively rare in both social groups. Best estimates are that around 93% of benefits claimants do not regularly use alcohol or drugs in a dependent way, and over 60% live in two parent families.

Then there is the myth of ‘benefits dependency’; the suggestion that people are captured in a culture that enforces idleness and rewards worklessness. The logical answer is to make benefits so unattractive that people are forced to find work; a return to exactly the same kind of thinking that gave us the Poor Houses.

  • Data also shows that many claimants rely on benefits for only short periods of time. For example, 67 per cent of Jobseekers Allowance claimants find work within 6 months while a further 22 per cent are no longer claiming benefits after 12 months.2
  • Recent Department for Work and Pensions focus group research offers an interesting insight into job-seeking behaviour of a sample of claimants.3 It showed that while 22 per cent of the group were not actively looking for work, half of these dedicated their energies instead to their families, a statistic that speaks to other types of important work that claimants may undertake but which has no monetary value.

It is clear however that worklessness, or low paid, temporary work is very much a direct cause of poverty. Some people can not work, through sickness, family caring responsibilities, lack of adequate childcare or a general lack of work opportunities for their skill set.

Then there is the general denudation of benefits. They are worth so much less in real terms than they were previously. This from a TUC paper entitled Welfare Benefits – A necessity not a lifestyle choice.

Benefits in the UK are comparatively lower than other industrialised countries; with one of the lowest benefit rates relative to earnings. In addition the actual value of benefits in the UK has declined over the last thirty years due to a change in the policy of up-rating benefits. In the 1970s, benefits were increased in line with earnings or prices whichever was higher, over the last 30 years they have increased each year in line with prices only. Prices usually rise by less than earnings, since 1978 average earnings have grown about 1.6 percent a year faster on average than prices. The effect of this, as Peter Kenway (2009) shows us, is that while real consumption per head has risen to a level that is now more than double what it was in 1978, the real value of unemployment benefit has remained fixed at or 3 around its 1978 level. Numerous studies show that the current level of benefits are too low to meet current expenditure levels and what the general public think is needed to afford an acceptable minimum standard of living. The consequence of benefits not rising as fast as other forms of income is that the income of benefit recipients will fall further behind those in employment. This inevitably contributes to a widening of income inequalities.

There is that word again; inequality.

There was a fascinating discussion about social mobility last week. The social equality that Duncan-Smith is deliberately selling us is based on the old American dream; we can all succeed with the right levels of effort. What was revealed recently however was this; in order for poor children to succeed, rich kids have to fail, and rich parents do not like that very much, so create a kind of ‘glass floor’ to prevent their offspring falling. No surprises there.

So, what do we know about the causes of poverty? Of course it is possible to point to lots of individual factors; poor choices, missed opportunities, broken families, bad luck even. But what we know is that at a societal population level, these are symptoms much more than causes. People are in debt because they are poor, not the other way round.

The cause of poverty is unequal distribution of resources, unequal opportunities to thrive and prosper and a society in which the rich are getting richer and the poor are blamed as being the cause of economic woes that they are subject to, not the cause of.

Back to the Child Poverty Action Group. This from here.

“Producing a way forward for tackling poverty that doesn’t recognise that poverty is about money is pretty astonishing,” Imran Hussain, the director of policy for the Child Poverty Action Group, said.

“The government should be keeping an eye on issues like kids living with drug-addicted parents, but this is not the same as poverty. The government seems to be suggesting that income doesn’t matter.”

Fiona Weir, the chief executive of Gingerbread, the charity that supports single parents, warned that “further stigmatising single parent families will do nothing to tackle child poverty”.

“Family breakdown doesn’t cause child poverty. It is unaffordable childcare, low levels of maternal employment and poor wages that push families below the poverty line,” she said.

2 thoughts on “Poverty; what causes it?

  1. competitive market principles sorta rely on deficit. why doesn’t our work day ever get shorter, with all our technological efficiency? when will we stop charging for our basic survival here on this smaller-than-ever planet? economies are made-up. no one wants a job really, because no one wants all their time sucked away. it’s quite mapped out..

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