More on poverty

Now that we've had a snigger at Greg Clark's confusion over what is poverty and what is inequality, we can speculate a little about what exactly the problem is. This might at least set us on the road to a solution. As in my earlier piece I will refer to poverty and inequality as two distinct phenomena. I wish everyone else would do the same.

Various commentators, Clark included, have talked about a "lack of social cohesion" and the poor being "excluded from society". None of them seem to be willing or able to explain precisely what they mean by these terms. Are we talking about those who work, but whose income is low? People, in other words, who are upright, law-abiding citizens but who do not have much money? Is Greg Clark saying that these people are the problem? If so, then in what way are these people excluded from society? What is it that they are unable to do? They work, they meet friends, they can go to churches and schools, join clubs, vote, go shopping. They are part of society in every way and cause no problems to their fellows.

Then again, we might be talking about those who are unemployed, but are in other ways no burden to the rest of us - upright and law-abiding in every way. Are these people excluded from society? It's hard to see how they are: because of the crazy marginal tax rates endured by low-paid workers, the upright unemployed probably only have slightly less money. In other ways their circumstances are very similar and society is open to them in the same way.

I conclude then that the problem must be with the underclass - those who are not upright citizens. They are probably unemployed, perhaps criminal. They are certainly a nuisance to their neighbours, most of whom will be the upright low-paid and upright unemployed.

The thing to notice is that money or inequality are at best only contributory factors. The underclass has no less income than the upright low-paid and the upright unemployed - probably they have more, given their access to illicit earnings. They are no more unequal either. So Clark and his co-enthusiasts for inequality need to demonstrate the other factors which cause someone in the lower echelons to join the underclass rather than the upright classes.

The corollary to this is that money or inequality might not actually be contributory factors at all. Again, Clark needs to make his case. He needs to describe the mechanism by which a doubling of someone's income can help make someone else decide to join the underclass. It should be interesting if he ever sticks his head above the parapet to explain. In the absence of this "inequality mechanism" it's reasonable to conclude that there are other causes to the underclass problem. What these other causes might be will have to wait for another posting.