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John Redwood is right, but real poverty is more important than inequality

    There’s an interesting piece by John Redwood over at the Guardian, which refutes John Harris’s assertion that right-wingers do not care about inequality. Mr Redwood rightly argues that there is much agreement between left and right about the need to improve the lot of the least well off in society – the difference comes in how to achieve it. John tackles two key areas of difference: the debate about the extent of trickle-down, and the need for active redistribution.

    I don’t think you’d meet a conservative who doesn’t believe that a rising tide raises all ships. True, there are still some very poor people in the UK, and we have a duty to protect them and provide the opportunities to alleviate conditions of poverty. But it is madness to suggest that the increase in both wealth and inequality seen in the UK over the past twenty years has come to the active detriment of the poorest deciles of households. Material well-being has improved dramatically in the UK – for all levels of income – and can be seen through the expansion of products and opportunities available to all.

    Where I think John’s emphasis is wrong is that we cannot treat the debates surrounding trickle-down and active redistribution as mutually exclusive topics. In UK government policy under the last Labour government, a lack of belief in the first was used, to a certain extent at least, to justify the second. The wealthiest in society should share a larger share of the burden in the taxpayer funding of social services, but an obsession with relative wealth, or relative poverty, has led to too much focus on shifting people over a notional poverty line and not enough focus on those suffering from more absolute forms.

    There has in a sense been a conflation of two issues: poverty and inequality, and a viewing of prosperity as a zero-sum game.

    This is misguided. In fact, as Fraser Nelson eloquently pointed out in the dying days of the last Labour government, greater inequality is often the price that you have to pay for the alleviation of poverty. Take India – inequality is increasing as it embraces free-markets and opens itself to global pressures, but this comes at the same time as millions of people are being lifted out of absolute poverty.

    Likewise, Bosnia, Ukraine and Vietnam are all more equitable countries than the UK, but where would you rather live as a poor person?

    The US is often held up by those on the left as an example of a country where inequity is an ‘even greater problem’ than here in the UK. But there’s a telling story about the average US family defined as ‘poor’ using relative measures, as highlighted recently by the Heritage Foundation and worth quoting at length:

    ‘According to the government’s own survey data, in 2005, the average household defined as poor by the government lived in a house or apartment equipped with air conditioning and cable TV. The family had a car (a third of the poor have two or more cars). For entertainment, the household had two color televisions, a DVD player, and a VCR. If there were children in the home (especially boys), the family had a game system, such as an Xbox or PlayStation. In the kitchen, the household had a microwave, refrigerator, and an oven and stove. Other household conveniences included a clothes washer, clothes dryer, ceiling fans, a cordless phone, and a coffee maker. The home of the average poor family was in good repair and not overcrowded. In fact, the typical poor American had more living space than the average European. (Note: that’s average European, not poor European.) The poor family was able to obtain medical care when needed. When asked, most poor families stated they had had sufficient funds during the past year to meet all essential needs. By its own report, the family was not hungry. The average intake of protein, vitamins, and minerals by poor children is indistinguishable from children in the upper middle class, and, in most cases, is well above recommended norms. Poor boys today at ages 18 and 19 are actually taller and heavier than middle-class boys of similar age in the late 1950s, and are a full one inch taller and 10 pounds heavier than American soldiers who fought in World War II. The major dietary problem facing poor Americans is eating too much, not too little; the majority of poor adults, like most Americans, are overweight.’

    Now of course, these are averages, and there are of course many poor people both in the US and UK who live in far worse conditions than this. However, this report highlights the danger of sensationalising inequality rather than focusing on seeking to eliminate absolute deprivation. If there is a trade-off between inequality and absolute poverty, I know which I’d rather eliminate.

    This debate keeps bringing me back to one of Margaret Thatcher’s final exchanges in the House of Commons, with Simon Hughes. When faced with his question, which implied that she should be ashamed of her record on increasing inequality, Thatcher replied, “All levels of income are better off. But what the honourable member is saying, is that he would rather the poor were poorer, provided the rich were less rich.”

    In the past twenty years we have seen wealth of all income levels increase in the UK at the same time as inequality. So I pose two questions to my left-wing friends: what is more important to you, ensuring improved material well-being or reducing inequity in society? And if you consider the societal consequences of inequality as a bigger problem than absolute material wealth, then would you be willing accept a stagnation or reduction in absolute living standards to achieve it?

    It would take a very brave commentator or politician to say yes.

    Ryan joined the Centre for Policy Studies in January 2011, having previously worked for a year at the economic consultancy firm Frontier Economics.

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