The last gasp of the Labour government

From the IFS:

A poverty boom? Wait for the real expert

The claims from the Institute for Fiscal Studies – that the government’s tax and spending plans will increase the number of people in poverty – are eye-catching and alarming. But as with all such superficially striking headlines, we should reserve judgement.

Within a day or two, we can expect an independent analysis of the merits of these claims to be issued by the non-partisan Office of the Deputy Prime Minister, headed by the independent academic Nick Clegg.

The ODPM proved at the time of the Budget and the Spending Review that it has the rigour, expertise and impartiality to provide reliable and honest assessments of the many politically motivated statements, produced by the IFS and other third-rate Marxist outfits, about the effects of government policy on poor people.

IFS: Labour hit the rich, Tories and Lib Dems hit the poor

Forget the spin that yesterday’s Budget was “progressive”, with policies that make “the richest pay more than the poorest”. Actually, don’t forget it: denounce it as a filthy lie. The exact opposite is true.

It’s been well noted over the last day that George Osborne is guilty of subterfuge in publishing a distributional analysis that ignored policy changes applying after 2012-13, that included Labour’s NI increases, and that omitted some of the new policies in the Budget.

And now, thanks to the Institute for Fiscal Studies, we have a clearer picture. And it’s stunningly different. This chart shows the impact on different income groups, by 2014-15, of the tax and benefits changes Labour introduced since the financial crisis broke and also the effects of the policies announced yesterday:


Labour’s are textbook egalitarianism, hitting the richest hardest and the poorest hardly at all. Yesterday’s Tory/Lib Dem policies are the exact opposite.

The IFS adds that it hasn’t been able to take into account “cuts to housing benefit, DLA [disability living allowance] and reforms to in-year changes to tax credit awards”. But: “These are all likely to hit the poorest half more than the richest half.”

Funny how it doesn’t get called ‘class war’ when you attack the poorest.

Turnout, unemployment, safe seats and marginals

Two things that everyone knows: poorer areas have lower voting turnouts than richer areas, and safer seats have lower turnouts than marginals.

I’ve looked at these effects in this general election: they both exist, but one is much bigger than the other. I used data on 2010 election turnout, 2005 election closeness and the April 2010 Jobseeker’s Allowance claimant count for each constituency in Britain.

The JSA numbers are hardly a perfect guide to unemployment, but they’re all I can find available on a constituency basis, and the result is striking:


The dots are mostly grouped pretty closely around a very clear line; the correlation between unemployment and turnout is -0.76. So some of those most affected by government policy are least likely to vote.

As for the safeness or marginality of a seat, here the correlation with turnout is still significant, but a much more modest -0.45:


There’s still a clear tendency, but the dots are mostly a lot farther from the line of best fit than they are in the unemployment chart. (The correlation between turnout and 2010 majority is a even feebler -0.13.)

So to all those electoral reformers who say that abolishing ultra-safe seats would boost turnout: on these figures, abolishing pockets of high unemployment would boost it even more. And it might even be a good thing in itself.

“There are far fewer children in poverty”

A timely letter in today’s Guardian explains why I’m voting Labour:

David Cameron has argued that "the evidence as well as our instincts" shows that "Britain is broken" and that our social problems are getting worse. He has also claimed that "the Conservatives, not Labour, are best placed to fight poverty". But voters should be clear that the evidence he cites on poverty, worklessness and social mobility is deeply misleading (Tories discover poverty, 5 May).

Comparing Britain now to Britain in 1997, there are fewer children living in relative poverty (and far fewer – less than half the number – in absolute poverty). Figures relating to the "very poorest", the bottom 3% of the income distribution, are statistically problematic, with the Institute for Fiscal Studies cautioning against their use. The percentage of children living in workless households is also lower than in 1997, despite the current recession. Widely cited negative trends in social mobility refer to the difference between those born in 1958 and those born in 1970, who grew up under Margaret Thatcher. The latest figures, relating to children born in 2000-01, suggests that this upward trend has now been stemmed.

Labour inherited extremely high levels of poverty, inequality and social exclusion. Their ambitious strategy to tackle these problems has had an impact; that the impact was not greater does not indicate a failed strategy, but that more of the same was needed. Conservative plans to cut back on successful government programmes such as child tax credits and Sure Start (while simultaneously lowering inheritance tax for the wealthy) will damage precisely those whom Cameron purports to help.

Dr Kitty Stewart, Dr Ruth Lupton
Professor Anne Power
Centre for Analysis of Social Exclusion, LSE

And then there's this article in today's (Tory-backing) Financial Times:

Life in Britain’s most deprived neighbourhoods has improved during Labour’s time in power, a Financial Times analysis has revealed, casting fresh doubt over David Cameron’s claims that society is “broken”.

The Conservative leader has been forced to tone down his rhetoric about “broken Britain” in the run-up to Thursday’s vote after he was accused of painting a false picture of a crime-ridden country beset by social ills.

Instead, the Tory high command has trained its fire on the poorest towns, arguing that they are a potent symbol of the government’s failure to create a fairer country. In a speech last week, Mr Cameron said “the evidence – as well as our instincts – shows that our social problems are getting worse, not better”.

FT research shows that even the most deprived local authorities have shown signs of improvement over recent years when looking at figures ranging from crime and truancy to teenage pregnancies and children living in unemployed households.

The only way to end poverty

(This excellent post by Neil Robertson, about wider awareness of poverty and coverage of things like the Edlington child torture case, prompted me to write the below – not a reply, just a riff on one of his themes.)

We hate the poor. And we’re right to hate them.

We try to ignore them, and usually we succeed. Then sometimes they go and do something monstrous, and they’re all over the news. We see it and we hate them all the more, and resolve to ignore them even harder. Everything we’re forced to find out about them is disgusting, and proves how right our instincts were, and proves that their material poverty is caused by their poverty of conscience. Is it any wonder we want to keep them far away?

But we’re good people. Really, we are. After all, we’re not poor, so that pretty much makes us good by definition. And, of course, hate isn’t a bad thing when it’s justified. So even despite our loathing for them and our desperate need to have nothing to do with them, we still want to help the poor. Even though they don’t deserve it, we show them such saintly kindness.

So we gave them social services. These are people we pay to go into whatever noxious holes poor people live their repellent lives and make them become, if they can, just a little bit less vile, just a little bit more like us. Especially the children. Because children born poor haven’t yet proved that they deserve their poverty (although almost inevitably they will grow into the kind of people who bloody well do – it’s like a kind of predictive natural justice, or at least a sign of their tainted genes).

Anyway, social services seemed like a good idea. And they did achieve some good – or, at least, we presume so. We weren’t really paying attention. But now two things have gone horribly wrong.

First of all, the people from social services sometimes give our own lives some of their suspicious, interfering attention. How dare they? We’re good people! What the hell right do they have coming into our homes and telling us how to raise our children? Don’t they know who we are?

Their attacks on us clearly prove that they too have been infected with the moral sickness of the poor, eager to cause us harm in their bitter resentment of the things that they have become. And we’ve had to protect ourselves from this contagion – which, after all, we’d only been trying to help with. Because if an intruder in your house threatens to come between you and your children, then you’re entitled – no, obligated – to defend yourself by any means necessary.

So we’ve done the only thing we possibly could, and got our politicians and newspapers to savage these jumped-up do-gooders who wouldn’t survive a day in the private sector, so that they would be too intimidated and too entangled in bureaucracy to ruin our lives, as the poor so surely ruin their own.

And then something else went wrong. Social services started tolerating the poisonous, callous irresponsibility that the poor are naturally driven towards. These dead-eyed, clipboarded council drones have clearly gone completely native and lost any sense of right and wrong. Overexposure to the poor has made them degenerate into part of the problem.

Poverty is a pestilence in our society. The poor corrupt everything and everyone that comes near them. We’ve tried, god only knows we’ve tried to help them, but in return they just threaten to engulf us in their plague.

This can’t go on. They don’t deserve our help, and we don’t deserve the evil that they spread. We can’t tolerate the threat the poor pose to us any more.

It is tragic that it’s come to this, but there is no alternative. And of course we must insist that it be carried out as humanely as possible.

We have to save ourselves. And in a way, by destroying the poor, we’ll be saving them too.

Poverty: a tale of two and a half terms

The latest figures on poverty and inequality are out, covering 2007/08, and the Institute for Fiscal Studies has crunched the numbers.

Let’s be completely clear about the bad news. For the third year running, a Labour government – a Labour government – has allowed child poverty to rise. Now, these rises haven’t been big, and things are still better than in 1997, but even so – what the hell? This is not what they promised, this is not what we voted for, this is not nearly bloody good enough.

Percentage of children in households below 60% of median income (before housing costs):

And looking at the overall population, the income distribution has also recently shifted in the wrong direction. The IFS helpfully divides Labour’s time in power into its three terms, which have been very different. The first term saw pretty even income growth across the range from rich to poor; the second term was strongly redistributive; and the three years of the third term that we have data for have seen the sort of rich-get-richer-poor-get-poorer that we associate with the Tories.

Annual real income growth by quintile group, poorest to richest:

Across the whole two and a half terms:

Taking the period 1996–97 to 2007–08 as a whole, incomes have grown relatively evenly across the bulk of the income… However, income growth at the very top and very bottom of the distribution looks more similar to the pattern seen under the Conservatives – with the lowest growth at the very bottom of the income distribution over this period and the fastest growth at the very top.
…
broadly, the income distribution became more equal between around the 20th and 85th percentiles, but it has grown more unequal at the very top and the very bottom.

Not nearly bloody good enough.

So what happens next? We have a recession on – what might that do?

There are two main effects to bear in mind when thinking about relative poverty during recessions. First, increasing levels of unemployment seem likely to lead to falls in household incomes, thus leading to greater numbers of individuals being classed as living in relative poverty. Second, these falls in income will also lead to falls in median income, which on its own would tend to reduce relative poverty, as the threshold for classifying people as living in relative poverty will also fall. Therefore, in principle, the likely effects of the recession on relative poverty are uncertain.

But there’s also a third factor affecting the years beyond 2007/08: government policies that have been announced but were not implemented in time for the latest figures.

Another IFS study has calculated that child poverty would fall by 600,000 by 2010/11 as a result of such policies, “even after accounting for likely falls in earnings and employment”. That would make the first chart look like this:

Percentage of children in households below 60% of median income (before housing costs):

The government’s record – particularly their more recent record – is, as I think I may have mentioned, not nearly bloody good enough. They did pretty well for a while, then took their eye off the ball. But stronger redistribution – even given how politically spent the Cabinet seems, even given the recession – seems to be in the pipeline.

Two big caveats. First, these are just predictions. We won’t know the results this side of the general election. Second, with the explosion of the budget deficit, it’s hard to see how much any government will be able to do after that.

Georgie Osborne and the Factoids of Fairness

George Osborne has released a Tory dossier called An Unfair Britain. This explains in detail how unfair it is that Labour won the last three elections, how unfair it is that while they’re in government they get to implement policies and stuff, how unfair it is that even now they’re still in government, and how unfair it is that Osborne can’t get his facts straight or his sums to add up properly.

I paraphrase slightly. Officially, this “compelling dossier… shows that across the board, Labour's policies have made Britain more unfair”.

So let’s see, shall we? The dossier offers a torrent of statistics and factoids; here are some:

New Conservative Party analysis reveals over two million of the poorest pensioners will lose nearly £100 this year as the rise in Pension Credit is wiped out by inflation.

Well done Conservative Party analysers! Heating and food prices have shot up. But this has happened the world over; it isn’t an unfair Labour policy. Does Osborne want more money spent on pensioners? At the same time as he wants taxes to be lower and borrowing to also be lower? The laws of mathematics might have something to say about that. How unfair.

There are 2.5 million pensioners living in poverty (living below 60% of median income measured before housing costs…) which is 100,000 more pensioners than in 1997.

They’ve been wrong about this before. In reality, the number of pensioners below the poverty line so defined is either unchanged or 100,000 lower depending on whether they mean 1996/97 or 1997/98 when they say “1997”.Worse still, this is the number of pensioners below the poverty line. And there are now many more pensioners than there were back then, which means that the proportion of pensioners below this line is significantly down.

Labour’s increased use of complex means testing of pensioners has resulted in reduced take-up of benefits. … Between 1.2 and 1.8 million pensioners failed to take up their entitlement to Pension Credit last year.

But no figures are given for how many pensioners failed to take up Pension Credit before Labour introduced it.

Gordon Brown’s reckless borrowing – on and off the balance sheet – has simply shifted the burden of paying for today’s public expenditure on to the next generation.

Except that, as Snowflake explains, national debt as a share of GDP is now substantially lower than in 1997.

The gap in life expectancy in Britain between rich and poor is now at its widest since the Victorian era.

The BMJ paper that the dossier cites gives no figures for the Victorian era, but it does give life expectancy figures for more recent periods.

During 1995-97, life expectancy at birth for the richest tenth was 4 years longer than that for the poorest tenth. During 2001-03 (the most recent figures), this difference was 4.1 years. Between the two periods life expectancy for the richest rose by 1.5 years; for the poorest, it rose by 1.4 years: apparently a tiny increase in inequality.

But, as John Rentoul notes, those figures were disputed in a later issue of the BMJ, where it was pointed out that the margin of error in the numbers is plus or minus one year. A 0.1 year rise in the gap therefore seems meaningless – life expectancy has risen under Labour, for rich and for poor, by pretty much the same amount.

The gap in infant mortality rates between the poorest social groups and the population as a whole has increased since Labour came to power.

This one is technically true but less than horrific when you look at the detail. Since 1997, there’s been a small rise in the child mortality rate gap between the ‘routine and manual’ socioeconomic group and the population as a whole. However, and again, actual child mortality rates have improved for every socioeconomic group, including the poorest. More to the point, the overall rise in the gap since 1997 consists of an increase up to 2002, followed by a (slightly smaller) decrease since then.

There are 900,000 more people living in severe poverty than there were in 1997.

“Severe poverty” is a concept the Tories have fortuitously discovered, defining it as below 40% of median income. It’s a complete coincidence that they like to focus on this measure, because it makes Labour’s record look worse than if you looked at the improvements at the 50%, 60% or 70% thresholds.

The reference they give for their 900,000 figure is an “IFS calculation”, which is pretty sneaky. I can’t find where that number comes from, but figures 4.1a and b here show that the proportion of people (remember, the population has grown) in “severe poverty” more than doubled in the late 1980s and has pretty much flatlined since then – it is slightly up on ten years ago.

But, and this is why I say the IFS citation is sneaky, the IFS don’t think this 40% threshold is a good measure of poverty. They note that the surveys used to supply the income data are a snapshot, so “amongst those people recorded as having very low incomes there will be some individuals who would not generally be considered poor but who do genuinely have few sources of income in the short run. For example, there are a disproportionate number of individuals who are selfemployed at the very bottom of the income distribution, whose incomes tend to be erratic”.

In support of this, it turns out that “the level of material deprivation [covering things that households can afford to buy] for those with incomes below 40% of the median is lower than it is for those with incomes between 40% and 60% of median income”. They conclude that “‘severe’ poverty is probably the wrong term to attach to those with incomes below 40% of the contemporary median”.

Research by the Sutton Trust on social mobility has shown that a poor child born in Britain in 1970 is less likely to escape its upbringing than a poor child born in 1958

True. But what does it mean? The researchers also found that educational achievement, labour market participation in early adulthood, and psychological traits at school age could explain most of the fall in social mobility. The greatest determinants of life chances happen in the early years of life, and those born in 1970 were 27 when Labour came to power.


There are many more numbers and factoids, and I certainly accept that some of them hit the mark. But here’s the thing: given the vast array of different statistics that bear on inequality or ‘fairness’, it’s no surprise that the Central Office internet pixies can find several that show things getting worse – particularly if, as the dossier does, you pick whichever date comparisons make things look worst (now vs one, two, five, ten years ago – there’s no consistency, and many of the claims don’t have a past comparison at all). It would be staggering if any government could produce improvements everywhere you looked.

By contrast, under the Tories in the 1980s there was a spectacular worsening of inequality on pretty much any measure you care to look at. Thatcher’s so-called ‘fixing’ of the ‘broken economy’ involved ripping up the fabric of society. Next to this, Labour’s flawed record has been brilliant.

On other thing: Osborne quotes Gordon Brown as saying that “only the state can guarantee fairness”. The Tories have been trying to pin this quote on Brown for over two years, but to the best of my knowledge (and the best of my Googling), he’s never said it (if anyone knows better, do tell).

I think it’s a deliberate misrepresentation, being used to paint Brown as a clunking top-down statist who thinks that everything should be done by central government, and that all anti-poverty policies have to involve throwing benefit money at people. Not so. On guaranteeing fairness, what Brown has actually said is:

Our voluntary organisations should neither be captured by the state nor used as a cut price alternative to necessary public provision…
Charities can and do achieve great transformative changes, but no matter how benevolent, they cannot, ultimately, guarantee fairness to all. Markets can and do generate great wealth, but no matter how dynamic, they cannot guarantee fairness to all. Individuals can be and are very generous but by its nature personal giving is sporadic and often conditional.
So fairness can be advanced by but cannot, in the end, be guaranteed by charities, however benevolent, by markets, however dynamic, or by individuals, however well meaning, but guaranteed only by enabling government.

Britain’s divided cities – nothing to do with us, guv

The Tories say:

New evidence has revealed the true scale of the social divide between rich and poor in Britain's cities.
…in Westminster, there are pockets of 100% child poverty right next to areas where no children live in poverty at all.

Hmm, something is faintly ringing a bell in the back of my head. Something to do with the Tories, Westminster Council, housing policy and relocating poor people. But it’s probably nothing. What matters now is that we build stable communities.

This week’s poverty news

On Tuesday, the Households Below Average Income survey for 2006/07 was released. As ever, the Institute for Fiscal Studies went over the small print with a magnifying glass, a hefty dollop of brainpower and astonishing speed, producing on Wednesday morning a thorough report.

Later on Wednesday, Gordon Brown took PMQs in the Commons, where nobody mentioned the poverty figures. On Thursday, Brown held his monthly press conference, where nobody mentioned the poverty figures. I feel lonely sometimes. Oh well.

The headlines, you may have noticed, reported a small rise in child poverty as well as overall poverty from 2005/06, which makes the second year in a row we’ve had some bad news from these figures. Also there was a surprising (to the IFS) rise in pensioner poverty, which it puts down largely to the removal of age-related payments for pensioners in that year, as well as partly because of increased under-reporting of pension credits by recipients in the HBAI survey.

Something really did go wrong
On the rise in the number of children below the poverty line, Cassilis says that “we're looking at relatively small movements around an entirely arbitrary point used to define poverty”, and that “this sort of micro-management based on arbitrary poverty definition isn't really about impacting peoples lives - certainly not on any significant scale”. I almost wish this were right.

Yes, the Government’s headline 60% median income target is an arbitrary line, and when you have a target based on such a threshold, it can distort what you do. But Labour’s progress in reducing poverty – and then the setbacks in the most recent two years’ figures – are much broader than that. You can look at eight different ‘poverty lines’ (here I’m talking about the whole population) and see that the numbers below rose between 2004/05 and 2006/07 – these lines are 40%, 50%, 60% and 70% of median income, each measured either before or after housing costs (BHC or AHC).

If lines, however many, aren’t your thing, then look at it this way: dividing the population into income quintiles, from 1996/97 to 2004/05, the poorest fifth experienced (slightly) faster income growth than either the middle or the richest fifths; but from 04/05 to 06/07, the fastest gainers have been the top fifth and the real incomes of the bottom fifth have actually dropped.

This is a broader phenomenon than precision-targeting followed by target-missing. Alas.

Why have things gone awry over these two years? Unfortunately the IFS gives less detail than I’d like to corroborate this, but it does appear to be largely to do with benefit levels:

given that the majority of net income of individuals in the second and third deciles (roughly those just below and just above the poverty line) comes from state benefits and tax credits, this is a key determinant of what happens to relative poverty.
…
it is notable that child poverty has risen in the two years with particularly small rises in entitlements to benefits and tax credits.

If so, then redistribution works. And less redistribution works less well.

Things can only get better
Yes, my tongue was in the vicinity of my cheek as I typed this heading. But only in the vicinity. Given that rises in benefits and tax credits have been reducing poverty, and that slowing these rises had the opposite effect for two years, we can consider what’s to come given policies that have come into place since 2006/07 and those that will start in the next year or two:

IFS researchers predict a fall in the numbers of children in poverty [from 2.9 million in 2006/07] to 2.2 million (using incomes measured BHC) in 2010–11

That’s not far off double the average rate of fall over the preceding eight years. And yes, this is looking at that arbitrary poverty line, but I say again that it’s just not possible to get that many families across a line without having significant real improvements to their living standards and those of many others. Labour’s campaign against child poverty stumbled, needlessly, but it hasn’t collapsed; in fact, it looks like it’s already back up and running again. However, we won’t know for sure what progress is made until the figures come out in late spring 2012. That may not be much political use to Gordon…

It’s also worth mentioning that the Government isn’t simply trying to chuck ever-increasing amounts of taxpayers’ money at poor people. Just as the Tories aren’t really going to cut all the poor off without a penny, so Labour hasn’t exactly been avoiding more punitive and pro-active measures to get people into work. There are big differences in emphasis, of course, but more solid comparisons are hampered by the facts that the Government supertanker turns slowly, and that the Tory polices are still often elusively vague.

One contrast: in 2006/07 a workless lone-parent household had a 57.5% risk of being below the 60% BHC poverty line. Moving into part-time work takes that risk down to 19.4% and full-time work down to 7.4%. Becoming a two-parent household, though, takes the risk down to only 46.6% if either or both parents work part-time, and 20.2% if one works full-time and one not at all. It seems that promoting employment is a better way to cut poverty than promoting marriage.

Some are more unequal than others
‘Inequality’ is a tricky beast to define, and the IFS looks at a number of different measures of it. It finds that the ’90:10 ratio’ – the income of the 10th richest percentile to the 10th poorest – has varied a bit but is basically unchaged under Labour. Likewise the 90:50 and 50:10 ratios. So income inequality for the middle 80% has remained pretty constant. It’s actually quite an achievement for Labour to have engineered continuing economic growth where the bulk of the population participate equally – under the Conservatives, periods of growth involved a general rise in inequality right across the spectrum.

On other measures of inequality, such as the Gini coefficient, there have been slight rises under Labour. What this means, in combination with the steady 90:10 ratio, is that the very richest are speeding away from the rest of us, and the very poorest aren’t keeping pace (although in absolute terms they’re mostly better off).

The IFS recently published a study (noted here) of the super-rich and how they get their income; a future paper, looking at the ‘super-poor’, was hinted at. Soon, I hope. It’s important to know what’s going on in these people’s lives that prevents them from getting more income – indeed, whether they’re even the same people years after year (see below) – and how things could be improved for them.

Poverty is becoming less of a trap
One other silver lining from the figures [PDF, table 7.1] is that regardless of the number of children in poverty in any given year, there’s more ‘churn’ than there was under the Tories – that is, fewer of those who are poor are staying poor for long periods. One might think that as the proportion of people below a given poverty line falls, you’re left with a ‘core’ who are harder to shift at all. That’s not supported by this data.

This graph (using my calculations from table 7.1 here and table 4.1tr here [PDFs]) shows the percentage of children in households below 60% of median income who have been in that same position for at least three out of the preceding four years, starting with the period 1998-2001 and running to 2002-05 (BHC in blue, AHC in red):


Child poverty (at least on this measure) has not only fallen, but those who still below the threshold are spending less time stuck there.

Damn, damn, damn

The income distribution figures for 2006/07 are out, and they’re just not bloody good enough.

Measured before housing costs, the proportion of children living below 60% of median earnings is unchanged on 2005/06; the proportion below 70% is unchanged and the proportion below 50% is up one percentage point (about 100,000 children).

After housing costs, the proportion below each of these thresholds is up one point.

There’s a lot to read, and I’m sure the IFS will have a lot to add in the next day or two, so I’ll hold off any more detail for the moment.

What lies beneath

Greg Clark, Tory front-bencher, says that “tax credits are masking the extent of underlying poverty in Britain today”.

This concept of underlying poverty he defines as covering those people “who either are in poverty or would be without tax credits”. Hmm. So that’s those people who are in poverty plus some of those who aren’t but would be if not for a particular government policy.

But why, among all government policies, just tax credits? Why not child benefit and jobseeker’s allowance too? I bet they’re masking some poverty. Or the minimum wage? There must be plenty of poverty underlying that. Or the Sure Start childcare provision that allows parents the chance to go out and earn money? Or state education? That must help a few people get decent jobs who otherwise wouldn’t. Or Bank of England independence? Without that, the economy would have done less well these last ten years…

It’s almost as if Clark has it in for tax credits. Although he swears he doesn’t:

Let's be clear: tax credits are an essential part of a modern welfare policy, because it is obviously better to increase someone's income in work than to see them either in poverty or out of work.

But there’s a but:

But, surely, something has gone badly wrong with our economy - and our society - when more and more people every year are unable to earn enough to keep themselves and their families off the breadline.

By “unable to earn enough” he really means “unable to earn enough in the absence of certain government policies, namely tax credits”. Has something gone wrong with our economy – and our society – if this is true?

Well, that’s two questions. The point of the economy is to… actually, there isn’t a point to the economy. It’s the aggregate of the buying, selling, working, hiring, producing, consuming and other such activities that we all carry out. We carry these out to advance our own interests. If the untrammeled workings of the market would leave some people badly off, that’s no fault of the economy per se.

But most of us don’t want an economy with no government intervention. We expect our governments to do just that, in various ways and to various extents. Our society thus affects the working of the economy. One of the key reasons it does this is to ensure that those who’d lose out from laissez-faire are in a better position. There are many ways of doing this.

Clark mentions skills, and of course the government can make itself useful there. But there will always be a lot of low-skilled jobs. For every office block full of well-educated professionals, you’ll need catering and cleaning staff. If we want these people to be able to keep their families off the breadline, then we can’t imagine that the free market will do that. Society – via government – will have to compel employers to pay them more or will have to add to their wages directly. Or both.

As we do.

‘Underlying poverty’? The notion seems to treat anything achieved by government as somehow illegitimate and even unreal. Perhaps we should also have figures for underlying crime (counting those that would be committed if there were no prisons), underlying child mortality (including those deaths that the NHS prevents) and underlying school league tables (showing what exam results would be if schools stopped getting public funding).

Measuring inequality: a story with two ends

John Hutton says:

tackling poverty is about bringing those at the bottom closer to those in the middle. It is statistically possible to have a society where no child lives in a family whose income is below the poverty line – 60 per cent of median average income – but where there are also people at the top who are very wealthy. In fact, not only is it statistically possible – it is positively a good thing.
So rather than questioning whether high salaries are morally justified, we should celebrate the fact that people can be enormously successful in this country. Rather than placing a cap on that success, we should be questioning why it is not available to more people.

Ruth Lister responds:

On the question of inequality, the only real difference between Hutton’s ‘new progressive individualism’ and Thatcher’s reactionary individualism would appear to be that he is at least concerned about poverty. But his attempt to square his enthusiasm for inequality without limit with Labour’s commitment to the eradication of child poverty rests on shaky ground.
It may be the case that it is ‘statistically possible to have a society where no child lives in a family whose income is below the poverty line…but where there are also people at the top who are very wealthy’. However, it is not very likely. Cross-national analysis shows that poverty and the persistence of poverty are closely related to inequality: contrast the Nordics with the UK and the US. … It is easier to climb a ladder where the rungs are closer to each other and where the top is not detached from the bottom, as it is here.

The concepts of ‘poverty’ and ‘inequality’ (particularly where the former is defined partly in terms of the latter) are liable to tie people in knots.

Hutton’s right, statistically speaking, but Lister’s reply on that point is also right. Although being “at least concerned about poverty” is a bigger difference than she credits: Thatcherites didn’t care how rich the rich got or how poor the poor got; one of those attitudes is far more harmful than the other.

There’s research strongly suggesting that inequality causes personal and social ills over and above the effects of absolute levels of prosperity/poverty; this happens all the way through the income distribution, with fairly rich people stressed about keeping up with the very rich people.

But I’d argue that inequality lower down the scale is worse than that at the top: very poor people have disadvantage resulting from both their absolute and their relative conditions, whereas those on middle or moderately above average incomes only have one of these problems.

On the other hand, a society in which everyone had the same amount of money would be a disaster, and nobody seriously proposes it. I’m not aware of any attempt to calculate an optimum level of inequality.

Here’s the thing, though: economic inequality is not one single phenomenon, and trying to treat it as such will result in confusion. The Gini coefficient, for instance, is commonly used to measure overall inequality: if one person in a society has all the money, the Gini is 1; if everyone has the same amount of money, it is 0.

But this doesn’t distinguish between inequality caused by those at the top racing farther ahead and that caused by those at the bottom falling farther behind. These two phenomena have different causes, different consequences and (if they are both seen as problems) different solutions. Lister talks about “a ladder where the rungs are closer to each other” – but in fact rungs at different heights of the ladder have different gaps between them.

If there are different types of income inequality at each end of the scale, then any measurement of these has to be done separately.

Here’s a suggestion: divide the population into, say, the poorest 20%, the richest 20% and the middle 60%. Then work out separate Gini values for each of those three groups. I’d expect the middle value normally to be lower than the two end ones.

For an indication of differences within income groups, look at this chart [PDF, page 6] from the IFS:


The alternating dark and light areas represent successive deciles of the income distribution (ignore the individual bars and their heights). The middle deciles are narrow, meaning that those people’s incomes are quite similar; the sections widen as you go higher up the scale (which is perhaps only to be expected given that this chart shows cash differences rather than percentage differences). But the really wide ones are at the top and bottom, so the high- and low-income Ginis would be larger than the middle-income one.

A particularly large low-income Gini will mean that those at the bottom are a long way behind; a very large high-income Gini will mean those at the top shooting ahead.

I’m assuming that some unspecifiable degree of income inequality is a good thing (consultants earn more than nurses, etc.). I’m also assuming that a very steep slope simply won’t exist across the whole of the income scale – in the middle, a lot of people are bound to be bunched not too far apart. So we can use the level of inequality in the middle as a baseline for measuring those at either end.

We could then compare countries (or the same country over time) using the ratio between the low-income and middle-income Ginis: a higher ratio means that the income distribution becomes very unequal as you get to the bottom. Similarly for the rich-to-middle ratio.

Then, rather than arguing for the reduction of ‘inequality’ per se, one could argue that inequality at the top and/or bottom shouldn’t be so much higher than that in the middle. (Indeed, some proposals to provide a minimum income could result in a much smaller Gini at the bottom.)

Correction: child mortality

My reach has exceeded my grasp. In a post in December I noted with dismay a government report apparently recording that child mortality had worsened under Labour.

It seems that I misunderstood. In that report, an indicator called ‘infant mortality’ was being used as one of many measures of deprivation. But it appears that - in line with the view of poverty as relative rather than absolute - what was actually being looked at was the difference in child mortality rates between socioeconomic groups.

A new report yesterday gives a clearer picture. Since Labour came to power, child mortality per 1000 live births has fallen, from 5.6 to 4.8 across the whole population. Among the ‘routine and manual’ socioeconomic group, the rate also fell, from 6.3 to 5.6.

The fall among the poorer group is a little less than the overall fall: so inequality in child mortality rates has increased since 1997 (although since 2002, it’s fallen).

That’ll teach me to speed-read fat PDFs. It’s something I’m happy to have been wrong about, though.

Find the gap

An unsatisfying opinion poll in the Guardian:

A large majority, 75%, say the gap between high and low incomes is too wide in Britain, the highest ever level found by ICM. Only 15% think the wealth gap is about right. That suggests public unease about the so-called super-rich

Well, it’s hard to know whether the response does suggest that – rather than unease about the rarely mentioned ‘super-poor’. The question asked was: “Thinking about income levels generally in Britain today, would you say that the gap between those on high incomes and those on low incomes is too large, about right or too small?”

‘The’ gap between rich and poor is a vague notion, and however defined comprises any number of lesser gaps. What would be much more useful would be to see what people had to say about the gap between those on high and those on middle incomes, and that between middle and low incomes.

It’d also be interesting to gauge roughly how much different groups would class as being high, middle or low income (I’d guess that most people up in the top 10% would imagine themselves to be ‘middle-income’).

Inequality, tax and spending

Can we reduce inequality without tackling the super-rich?

Yes, apparently. An interesting analysis by Lane Kenworthy (via Chris) suggests that redistributive government spending plays a much bigger role than progressive tax in reducing economic inequality.

He compares the Gini coefficient (measuring the degree of inequality) for household incomes in ten rich countries, but he does so both before and after tax, and both before and after government transfers. The amount of inequality reduction that the tax and redistribution systems achieve is shown here:


Two things are clear: income transfers reduce inequality by much more than tax does; and there is much more variation in the amount of equalisation that results from redistribution than in that from tax.

Lane also observes that the degree of inequality reduction does depend on the overall level of government spending, which of course depends strongly on the total tax take. These taxes need not be strongly progressive, though, in order for equalisation to take place.

I have two thoughts to add to this, by way of possible explanation.

First, increasing tax rates on the highest earners will only reduce their income by a proportion above the given threshold – it won’t put a cap on it. (And, as Vino says, the wealthy may be able to avoid many taxes, so reducing the scope for higher taxes on them to have real bite.) But redistributing to the poor guarantees their income won’t drop below the level of the benefits they receive. So the latter would seem likelier to have an effect on overall inequality.

Second, a recent Institute for Fiscal Studies study looked at high-income individuals in the UK. They found that the average income for all taxpayers (in 2004/05) was a little under £25,000. To get into the top 10% of earners, you needed to earn over £35,000. To get into the top 1%, you needed £100,000. And to get into the top 0.1%, you needed £351,000.

Clearly, the most striking inequalities are those appearing in the steepening curve at the top of the income scale; however, these inequalities involve a fairly small number of individuals.

To substantially cut inequality by taxing these people more, you’d need quite a large number of income tax bands at the top end of the income scale, each covering fewer and fewer people with higher and higher rates (a single high rate for the top 1% would ignore the huge inequalities within that group). Quite apart from whether this would be politically feasible or what economic effects it might have, it seems pretty impractical.

Conversely, though, to promote equalisation via benefits, you’d need to give the most to the poorest – which administratively (and politically) is much easier. There’s far less variation within the bottom 10% than there is in the top 10% – or even the top 1% – so precision targeting is far less of a problem.

What’s more, my own view is that the ‘poor people falling behind’ side of inequality is more troubling than the ‘rich people zooming ahead’ aspect. The Gini coefficient doesn’t distinguish between the two, but I think the former is obviously bad while the latter is very debatable.

(None of this is an argument against higher taxes on the very rich; it’s just to caution that this would not in itself reduce inequality by nearly as much as government redistribution could – whether the money comes from the top or across the board.)

Poverty and simplicity

Don Paskini takes issue with Tory MPs Greg Clark and Jeremy Hunt for misrepresenting Labour’s approach to poverty in a pamphlet of theirs.

In the same vein, I don’t accept their claim that “the Conservative Party is developing a deeper understanding of the subject than New Labour has ever manifested”. They argue that “Government policy revolves around a simplistically defined poverty line”, but “measures of relative income are… not sufficient” because there are “other important indicators of deprivation” that the Government ignores.

Phooey.

The Department for Work and Pensions publishes an annual report called ‘Opportunity for All’. In this years’s edition, as in every year’s, it discusses 59 different measures of deprivation.

I think you can guess what I’m going to do now. There are four categories of indicator, and progress under Labour on each is given in brackets. As you’d expect, it’s a mixed bag, but the mix is mostly positive.

Children and young people

• Children in workless households (insufficient data)
• Relative low income (better)
• Absolute low income (better)
• Persistent low income (better)
• Teenage conceptions (better)
• Teenage parents in education, employment or training (better)
• Proportion of children in disadvantaged areas with ‘good’ level of development (insufficient data)
• Key Stage 2 (11-year-olds) attainment (better)
• 16-year-olds’ achievement (better)
• Schools below floor target (better)
• 19-year-olds with at least a Level 2 qualification (insufficient data)
• School attendance (no change)
• Looked after children: education gap (worse)
• Looked after children not in education, employment or training (insufficient data)
• Stability in the lives of looked after children (better)
• 16–18-year-olds in learning (no change)
• Infant mortality (worse)
• Serious unintentional injury (better)
• Smoking prevalence for pregnant women (better)
• Smoking prevalence for children aged 11-15 (better)
• Obesity for children aged 2-10 (worse)
• Re-registrations on Child Protection Register (better)
• Housing that falls below the set standard of decency (better)
• Families in temporary accommodation (worse)

People of working age

• Employment rate (better)
• Disabled people employment rate (insufficient data)
• Lone parents employment rate (insufficient data)
• Ethnic minority people employment rate (insufficient data)
• People aged 50 and over employment rate (insufficient data)
• Lowest qualified people employment rate (insufficient data)
• Working-age people in workless households (better)
• Working-age people without a Level 2 NVQ qualification or higher (insufficient data)
• Long periods on income-related benefits (better)
• Relative low income (no change)
• Absolute low income (better)
• Persistent low income (no change)
• All adults smoking rate (better)
• Manual socio-economic groups adult smoking rates (better)
• Death rates from suicide and undetermined injury (better)
• Rough sleepers (better)
• Use of Class A drugs by 16–24-year-olds (no change)
• Frequent use of any illicit drug by 16–24-year-olds (better)

People in later life

• Relative low income (better)
• Absolute low income (better)
• Persistent low income (better)
• People contributing to a non-state pension (worse)
• People making continuous contributions to a non-state pension (no change)
• Healthy life expectancy at age 65 (insufficient data)
• Receiving intensive home care (better)
• Receiving any community-based service (insufficient data)
• Housing that falls below the set standard of decency (better)
• Fear of crime (better)

Communities

• Employment rates in deprived areas (insufficient data)
• Crime rates in high-crime areas (better)
• Housing that falls below the set standard of decency (better)
• Households in fuel poverty (better)
• Life expectancy at birth (worse)
• Attainment gap at Key Stage 2 (11-year-olds) (better)
• Road accident casualties in deprived areas (better)

Simplistic my arse.

Child poverty: swimming against the tide?

Never mind discs. Forget about donors. Ignore Gordon Brown’s difficulties in speaking like a human being. There’s a potential crisis for the government brewing, although depressingly few people seem to think it’s much of an issue.

According to the Joseph Rowntree Foundation’s annual report [PDF] on poverty and social exclusion:

the strategy against poverty and social exclusion pursued since the late 1990s is now largely exhausted. … ‘Doing nothing new’ no longer means, as it did a few years ago, slow but steady progress. Instead, it essentially now means that nothing changes.

Child poverty rates have been more or less stagnating since about 2003; the latest figures are for 2005/06, which recorded a fall of 600,000 children living below the official poverty line (60% median earnings after housing costs) since the 1998/99 baseline.

Tax credits, though, continue to have a substantial effect:

tax credits have been lifting a million children a year out of poverty since 2003/04. The comparable figure for the early years of the decade was around 0.6 million a year. In the late 1990s, the predecessor benefit Family Credit lifted about 0.3 million a year above the poverty line.

This figure of a million fewer in poverty is larger than the 600,000 I mentioned because the latter is a simple comparison of numbers across years, while the former is comparing against a calculation of what things would be like now without tax credits.

The trouble is that other economic factors are pushing more families into a position of pre-redistribution poverty:

At the same time, however, the number of children in working families who either are, or would be, in poverty but for tax credits, has risen steadily… In short, as the number of children helped by tax credits to escape poverty has increased, so too has the number needing tax credits in order to do that.

Another new report, from the Commons Treasury Select Committee, suggests that there is some recent progress that hasn’t yet showed up in the figures:

The Government's proposals in the 2007 Budget… are expected to mean that child poverty will be 200,000 lower than it would have been had no changes to tax credits or benefits been announced in that Budget.

The committee adds that the Chancellor expects further measures, announced in the pre-budget report this autumn but obscured by the inheritance tax idiocy, to lift 100,000 more children out of poverty (I’ve not seen an independent audit of this claim).

Barring a surge in employment (particularly among lone parents) or a big rise in benefits, the target of halving child poverty by 2010/11 would seem beyond reach.

True, this deadline and the 60% poverty line itself are arbitrary, but stalling progress is stalling progress. It can be argued, though, that focusing on such a threshold may lead to perverse results, with a focus on those just below it rather than those in the direst poverty.

In light of this possibility, the committee recommends that the Government should prioritise “measures concerned in particular with the very poorest households”, and I think they’re right.

Looking more broadly at the income distribution, the JRF notes (figure 6A) that, from 1996/97 to 2005/06, the richest 10% of people have done well in terms of income rises. The second- and third-poorest deciles have also done well, with those in the top half (barring the top tenth) doing progressively less well. An equivalent graph for 1979-97 would show a very straightforward ‘the more you start with, the richer you get’; there is very substantial redistribution going on.

However, the bottom 10% have had, by a good distance, the smallest income rises over the decade. These people are where attention is most desperately needed.

For me – and I glumly know I’m in a minority on this – child poverty is the single most important political issue there is. I’m proud of what Labour has achieved here, and I’m frustrated by what it hasn’t yet achieved. I don’t want to end up growing less and less proud, and more and more frustrated.

Wedding bells and dog whistles

David Cameron’s Tories are turning right.

This is not about preaching to people about how they should lead their lives.
…
government has a responsibility to help people make the right choices.
…
We propose that government send a clear and unambiguous signal about marriage
– Conservative Social Justice Policy Group report

Why give taxpayers’ money to married couples (but not cohabiting couples) regardless of whether they have children? One might understand wanting to incentivise and/or financially help supposedly stable families for the benefit of the children involved, but what’s the sense in spending money on childless couples and couples that are already well off?

Here’s the Tory policy commission’s argument. First their report [PDF, p64] quotes an American researcher called Nancy Burstein:

Policymakers are prone to focus on marriage penalties and bonuses for low income families, because that is the most vulnerable segment of the population. I would argue, however, that these families do not make their decisions in a vacuum. They are affected by societal norms, reflecting marriage patterns of higher-income couples with and without children. Policymakers should therefore be concerned about these less vulnerable populations as well. While they may never need government assistance, their choices to marry or cohabit have cumulative effects. Marriage needs to be encouraged, honored, and rewarded for all.

The report agrees, saying that this:

indicates the need to avoid the trap of only focusing on the most vulnerable families in this area. Support for marriage cannot be simply dismissed as giving money to those who are already comfortable.
…
Marriage is concentrated in these more educated… middle class… sections of the population. To acknowledge the enduring value of this institution is to shore up marriage in its heartland. It also sends the signal to the lower deciles, characterised by greater informality and therefore instability, that marriage, to which many aspire… is a social good.

Let me try to summarise this. It would be good to get poor people to marry, and offering them some money will encourage them to do so. However, as poor people look up to rich people for inspiration in their relationship decisions, it would be good to encourage the rich people to get married as well. So let’s offer them some money too.

A few things occur to me here. First, how paternalistically patronising can you be? Second, given that higher earners already have much higher marriage rates, where is the need to spend my hard-earned money on what they’re doing anyway? Third, if the lower orders – sorry, the “lower deciles” – already “aspire” to marriage, then they hardly need state-financed inducement, either directly or given to their better-off role models.

Fourth, will this have any effect? The report says (p71) that the proposed transferable tax allowance

would provide only modest financial support for marriage - £20 a week to those making use of it – encouraging rather than incentivising it. The main rationale for the allowance would be to provide symbolic recognition of the institution of marriage. It would indicate that marriage is valued because of its benefits to children and the wider society.

I’m not completely sure what the difference between “encouraging” and “incentivising” is, but I presume this means that the money itself won’t make any difference: it’s about sending a message. But if so, then why not, well, just send a message? That David Cameron’s got a lovely speaking voice and he comes across as ever so encouragingly earnest.

The report suggests that the policy would cost £3.2 billion a year. And this calculation doesn’t seem to anticipate any projected increase in the marriage rate resulting from this “encouragement”. As such, the idea seems to be an even more expensive and ineffectual piece of public relations than the new Olympic logo.

A fifth point is that it’s still unexplained why marriage is a social good even in the absence of children. There’s a fraction of a hint of an answer in the comment (p71) that there are “proven advantages to children and the wider society (for example, married couples play a key role in caring for elderly relatives)”.

Well wrap me in a red flag and call me a clunking top-down statist, but why not just target the financial help on people who are in fact caring for their children or for their elderly parents, or doing whatever else that might be beneficial to society?

What makes families stable?
There’s another key strand to the Tory case, which is that marriage is not just associated with but positively causes increased family stability:

Statistics indicate that cohabitation is inherently less stable, so there is not the same justification for recognising it in the tax system.

In this respect, the report relies heavily on the argument made in the policy group’s previous report [PDF] that married couples are less likely to split up than cohabiting ones. A study included as appendix 3 to that report by the Bristol researcher Harry Benson carries much of the intellectual weight.

It’s an analysis, carried out recently in the UK, of differences in family stability in the first three years of a child’s life. Benson finds that 6% of married couples split up during this period, whereas 20% of cohabiting couples do – thus a topline result that cohabitees are about 3.3 times as likely to separate over this period.

However, there are demographic differences between married couples and cohabiting couples: the latter tend to be poorer, younger and less well educated, all of which account for some of the difference. After accounting for these factors, and a couple of others, Benson calculates that a cohabiting couple remains about 2.2 times as likely as a married couple to split up in the first three years.

This seems suggestive. However, I’d venture two observations. First, in looking at income and age differences, Benson groups couples by income quintile and by decade of age (a 20-year-old mother is grouped with a 29-year-old and a household earning £5,000 a year is grouped with one on £15,000). These are fairly wide categories, and given that both factors have been established as causally relevant, their contributory role will almost certainly have been underestimated.

Second, there is no mention of relationship duration. If it’s the case that new relationships are more likely to end in any given period than more established ones, and that married couples that have new children have been together longer than cohabiting couples that do so, then that would be another contributing factor unaccounted for here. There may well be other relevant demographic factors.

Furthermore, Benson himself accepts that there are “selection effects” – pre-existing differences between the kinds of people that choose to marry and those that cohabit – which will affect the different separation rates. Most notably: “married couples have a higher level of commitment to one another compared to unmarried couples in the first place” (p127).

So the evidence for a specific causal link from getting married to staying together, independent of other factors, is uncertain at best.

One interesting question is whether the Tories are concerned to promote marriage instrumentally as a powerful engine of family stability or to promote it moralistically for its own sake. If the latter, we would expect a few flaky arguments for why marriage is good regardless of whether there are children. There are certainly those.

But if the former, we would expect that some non-marriage tools for promoting family stability might be promoted as well. If cohabitation really is less stable, then why not try to make it more stable? Ah, but remember, cohabitation is “inherently less stable” than marriage. So all hope may be lost.

There is a fascinating part of Benson’s paper that unwittingly packs a killer punch here. Table 3 (p124). compares the post-birth separation risk for married and cohabiting parents in different income quintiles.

Married couples in the bottom quintile have an 8% risk; in the second quintile a 6% risk. Cohabiting couples in the bottom quintile have a 23% risk; in the second quintile a 12% risk (disregarding other factors). Benson comments, correctly: “Across every income group, cohabiting couples are at least twice as likely to split up compared to married couples.”

But what he misses is this: the drop in separation risk for cohabiting parents between the bottom and the second income quintile is far greater than that for married parents (23% to 12% vs 8% to 6%). This means that prioritising financial help and economic opportunities for low-income cohabitees is a better way to increase family stability than prioritising low-income married couples.

This is not proposed. So, it seems that the aim in throwing £20 notes at married couples is to blow the ‘dog whistle’, playing to Tory prejudices and moralising at the rest of us. Hence the following two reactions.

The Child Poverty Action Group’s Chief Executive, Kate Green, said:

A marriage certificate does not end addiction, it does not cure a mental health condition, it does not cancel debt, it does not increase skills and qualifications and it does not provide employment. Addressing these problems will do more to support relationships and lift children out of poverty than using the tax and benefit system to penalise children for their family background.
… David Cameron must resist the temptation to squander the resources needed on tax breaks that will do nothing to help the majority of children living in poverty.

And the Daily Mail said:

Finally! After months of wittering about wind-power and the work-life balance - not to mention the spectacular own-goal over grammar schools - David Cameron has come up with something recognisable as a true Tory policy.
With his support for the family as 'the most important institution in our society', he's given great cheer to the mass of traditional Conservative voters who were beginning to despair of him.

Recall that the report said it wanted to “shore up marriage in its heartland”. No. The real aim is to shore up Tory support in its heartland. Where Peter Lilley had his “little list”, Cameron and Iain Duncan Smith have a huge report – but they’re creeping back to Tory basics all the same.

Reward success and punish failure!

Chris Dillow is unimpressed with the Tory plan to give tax breaks to married couples:

I've got an idea to solve the so-called obesity epidemic. It works like this. Professional footballers are mostly slim and healthy. So, let's give a tax break to footballers. This'll give people an incentive to get healthy.

Fair call. But the principle behind this policy can be extended to generate a Tory way of abolishing poverty:

Poverty is bad and prosperity is good. Furthermore, research proves that poor people are more likely to be in poverty and rich people are more likely to be prosperous. So we need to devise some ingenious incentive for people to be rich rather than poor, because giving people ‘social responsibility’ always work whereas top-down ‘clunking’ state intervention always fails. Can we think of a system that means people who earn more are better off?

Yes: let’s give a tax break to rich people. We can finance this by raising taxes on the poor – after all, we should tax social ills rather than social goods. This’ll deter people from being poor and give them an economic motive to be wealthy.

The only downside of this policy would be creating a ‘wealth trap’ in which rich people find themselves dependent on the state. If that happens, though, we can just move the ‘wealth line’ higher and higher up.

“For he that hath, to him shall be given: and he that hath not, from him shall be taken even that which he hath.” It’s in the Bible, people! You know it’ll work!