PUBLIC LECTURE

David Gordon

Professor in Social Justice

Inaugural Lecture

Eradicating Poverty in the 21st Century:

When will Social Justice be done?

Monday, 18th October, 2004

PowerPoint is Evil

Five Themes

•The Rhetoric

• The Reality

•The Consequences of Poverty

•The Causes of Poverty

•The Solutions to Poverty

Child Poverty in the UK

The UK Government is committed to tackling the problem of child poverty. In March 1999, the Prime Minister Tony Blair set out a commitment to end child poverty forever:

“And I will set out our historic aim that ours is the first generation to end child poverty forever, and it will take a generation. It is a 20-year mission but I believe it can be done.

In 2000, the whole world came together to make a solemn promise for 2015 - the Millennium Development Goals:

the promise of primary education for every child;the promise of an end to avoidable infant and maternal deaths;the promise of a halving of poverty.

But on current rates of progress, in Sub-Saharan Africa:

The promise of primary education for all will be delivered not in 2015 but 2130 (115 years too late);The promise for the halving of poverty not by 2015 but 2150 (135 years too late); And the promise of cutting infant deaths not by 2015 but by 2165 (150 years too late).

And I say:150 years is too long for a people to wait for justice;150 years is too long to wait when infants are dying in Africa when there are medicines in the rest of the world to heal them; 150 years is too long to wait for promises to be redeemed and a bond of trust to be honoured; 150 years is too long to wait when all the world lacks is the will to act.

Prosperity and justice for all? Gordon Brown, October 2004

More than half the people of the world are living in conditions approaching misery. Their food is inadequate. They are victims of disease. Their economic life is primitive and stagnant. Their poverty is a handicap and a threat both to them and to more prosperous areas.

For the first time in history, humanity possesses the knowledge and the skill to relieve the suffering of these people.

Harry S. TrumanInaugural AddressThursday, January 20, 1949

Man holds in his mortal hands the power to abolish all forms of human poverty

Every blow we inflict against poverty will be a blow against its dark allies of oppression and war.

In the quiet of American conscience, we know that deep, persistent poverty is unworthy of our nation's promise. And whatever our views of its cause, we can agree that children at risk are not at fault.

John F. KennedyInaugural AddressFriday, January 20, 1961

Ronald ReaganSecond Inaugural AddressMonday, January 21, 1985

George W. BushInaugural Address January 20, 2001

...within a decade no child will go to bed hungry, [...] no family will fear for its next days bread and [...] no human being's future and well being will be stunted by malnutrition.

No More Hungry Children?

Henry Kissinger, First World Food Conference, Rome 1974

Do not weep; do not wax indignant. Understand.

Baruch Spinoza (1632 - 1677)

The Reality of Poverty

Age at death by age group, 1990-1995

Source: The State of the World Population 1998

Cause of death for children under five

Bars show estimated confidence interval

Only the good die young? – what kills children

“The world's biggest killer and the greatest cause of ill health and suffering across the globe is listed almost at the end of the International Classification of Diseases. It is given code Z59.5 -- extreme poverty.World Health Organisation (1995)

Seven out of 10 childhood deaths in developing countries can be attributed to just five main causes - or a combination of them: pneumonia, diarrhoea, measles, malaria and malnutrition. Around the world, three out of four children seen by health services are suffering from at least one of these conditions.World Health Organisation (1996; 1998).

Champagne glass of income distribution

The stem of the glass is getting thinner. In 1960 the income of the wealthiest fifth was 30 times greater than that of the poorest fifth; now it's more than 80 times greater.

Wealth in the UK

What is Poverty?

Jules Feiffer’s America

Low Income in Britain 1961-2003

Change in Real Median Weekly Incomes 1979 to 1996 by Decile Group at April 1998 Prices (After Housing Costs)

Income Decile 1979£

1996£

Change%

Bottom 10% 81 71 -12

10-20% 104 106 +2

20-30% 121 132 +9

30-40% 139 164 +18

40-50% 157 200 +27

50-60% 177 236 +33

60-70% 199 277 +39

70-80% 227 327 +44

80-90% 263 402 +53

Top 10% 347 582 +68

Total Population (mean)

185 264 +43

(Source: Calculated from HBAI, 1998)

Number and percentage of the population living on incomes below 60% of the median in 15 EU countries, 1999.

Millions %

United Kingdom 11.1 19

Italy 10.3 18

Germany 8.9 11

France 8.7 15

Spain 7.4 19

Greece 2.2 21

Portugal 2.1 21

Netherlands 1.7 11

Belgium 1.3 13

Austria .9 12

Sweden .8 9

Ireland .7 18

Denmark .6 11

Finland .6 11

Luxembourg .1 13

EU15 55.7 15

Source: Dennis and Guio (2003) analysis of the ECHP

European Union definitions of poverty and social exclusion

The European Union (EU) definition of poverty is one of the most longstanding and widely known. First adopted by the Council of Europe in 1975, it defines those as in poverty as: “individuals or families whose resources are so small as to exclude them from a minimum acceptable way of life in the Member State in which they live.” (EEC, 1981).

The concept of ‘resources’ was further defined as: “goods, cash income, plus services from other private resources”.

On the 19 December 1984, the European Commission extended the definition as:

“the poor shall be taken to mean persons, families and groups of persons whose resources (material, cultural and social) are so limited as to exclude them from the minimum acceptable way of life in the Member State in which they live.” (EEC, 1985).

These are clearly relative definitions of poverty in that they all refer to poverty not as some ‘absolute basket of goods’ but in terms of the minimum acceptable standard of living applicable to a certain Member State and within a person’s own society.

IncomeLow Income High

Income

Standard of Living

High

Low

Optimal Position ofthe Poverty Threshold

Poverty ThresholdSet Too High

Poverty ThresholdSet Too Low

Not Poor

Poor

Scientific definition of poverty

The Growth of Poverty in Britain

Between 1983 and 1990, the number of households living in poverty increased by almost 50%. In 1983, 14% of households were living in poverty and, by 1990, 21% of households were living in poverty. Poverty continued to increase during the 1990s and, by 1999, the number of households living in poverty had again increased to over 24%.

This rapid increase in poverty occurred during a period when the majority of British households were becoming more and more wealthy.

The Growth of Poverty in BritainPoverty increased at an average rate of 1% of households per year during the 1980s and at a slower average rate of 0.3% of households per year during the 1990s.

This is the equivalent of all the households in a city the size of Liverpool or Sheffield becoming poor each year during the 1980s. During the 1990s, poverty grew at a rate equivalent to the all the households in a city the size of Brighton or Milton Keynes becoming poor each year.

The Consequences of Poverty

Roughly 9.5 million people in Britain cannot afford adequate housing. That is, they are unable to afford to keep their homes adequately heated, free from damp or in a decent state of decoration.

About 8 million people cannot afford one or more essential household goods (eg. refrigerator, telephone, carpets), or to repair electrical goods or furniture.

Almost 7.5 million people cannot afford to participate in common social activities such as visiting friends or family, attending weddings or funerals, or celebrating special occasions.

One third of British children go without social or material necessities (eg. three meals a day, toys, out-of-school activities, adequate clothing). Nearly one fifth (18%) go without two or more necessities as defined by the majority of the British population.

About 6.5 million adults go without essential clothing such as a warm waterproof coat because of a lack of money.

Around 4 million people are not properly fed by today’s standards. For example, they cannot afford fresh fruit and vegetables, or two meals a day.

Over 10.5 million people are financial insecure, they cannot to afford to save, insure their possessions, or spend even small amounts of money on themselves.

The Consequences of Poverty in Britain (PSE 1999)

Absolute and Overall Poverty

After the World Summit on Social Development in Copenhagen in 1995, 117 countries adopted a declaration and programme of action which included commitments to eradicate “absolute” and reduce “overall” poverty.

Absolute poverty was defined as "a condition characterised by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information. It depends not only on income but also on access to services."

Overall poverty takes various forms, including "lack of income and productive resources to ensure sustainable livelihoods; hunger and malnutrition; ill health; limited or lack of access to education and other basic services; increased morbidity and mortality from illness; homelessness and inadequate housing; unsafe environments and social discrimination and exclusion. It is also characterised by lack of participation in decision-making and in civil, social and cultural life. It occurs in all countries: as mass poverty in many developing countries, pockets of poverty amid wealth in developed countries, loss of livelihoods as a result of economic recession, sudden poverty as a result of disaster or conflict, the poverty of low-wage workers, and the utter destitution of people who fall outside family support systems, social institutions and safety nets. (UN, 1995)

No Deprivation Extreme Deprivation

Mild Moderate Severe

Deprivation can be conceptualised as a continuum which ranges from no deprivation through mild, moderate and severe deprivation to extreme deprivation.

Continuum of deprivation

In order to measure absolute poverty amongst children, it is necessary to define the threshold measures of severe deprivation of basic human need for:

1. food2. safe drinking water3. sanitation facilities4. health

5. shelter6. education7. information8. access to service

Over one billion children – half the children in the world- suffer from severe deprivation of basic human need and 30% (650 million) suffer from absolute poverty (two or more severe deprivations).

Child Poverty in the World

‘severe deprivation of basic human need’ are those circumstances that are highly likely to have serious adverse consequences for the health, well-being and development of children. Severe deprivations are causally related to ‘poor’ developmental outcomes both long and short term.

Severe Deprivation of Basic Human Need

•Almost a third of the world’s children have to live in dwellings with more than five people per room or which have a mud floor.

Over half a billion children (27%) have no toilet facilities whatsoever.

Almost 400 million children (19%) are using unsafe (open) water sources or have more than a 15-minute walk to water.

About one in five children (aged between 3 and 18) lack access to radio, television, telephone, computers or newspapers at home.

Fifteen percent of children under five years in the world are severely malnourished, almost half of whom are in South Asia.

300 million children (14%) have not been immunised against any diseases or have had a recent illness causing diarrhoea and have not received any medical advice or treatment.

144 million children aged between 7 and 18 (11%) are severely educationally deprived - they have never been to school.

Percent of the world’s children severely deprived of basic human needs

Percent of Children Living in Absolute Poverty in 2000

The Causes of Poverty

Weather Map, New Internationalist

Most poverty has a structural cause, rather than being the result of an individual’s ‘bad’ behaviour or choices.

Since the pioneering studies of poverty in 19th Century (such as Charles Booth’s in London), six groups have been identified as being especially vulnerable to poverty -

•the elderly;

•the unemployed;

•sick and disabled people;

•the low waged;

•large families, and

•lone parents

In many developing countries two additional groups are also at risk of poverty:

•Landless and small farmers, and

•fishermen and women

Structural Causes of Poverty

Low Wages and Child Poverty

Source: UNICEF (2000)

Social Expenditure on People of Working Age and Child Poverty

Source: UNICEF (2000)

The Solutions to Poverty

When in a Hole Stop Digging

But it can take some people a long time to learn

Me in another hole

Nice view but not the best way to end poverty

The cost of achieving universal access to basic social services

Need Annual cost(US$ billions)

Basic education for all 6

Basic health and nutrition 13

Reproductive health and family planning 12

Low cost-water supply and sanitation 9

Total for basic social services 40

The Price of Life?

The Cost of Food and Health for All

Over ten million of the world’s young children die each year and, in over half of these deaths, malnutrition is a contributory cause.

The cost of preventing these deaths is relatively small: $13 billion a year for ten years would provide basic health and nutrition for every person on the planet (UNDP, 1997).

By comparison, $30 billion was spent on pizza in the US in 2002 (Pizza Marketing Quarterly, 2003) and $12 billion on dog and cat food (Euromonitor International, 2003).

The Cost of Ending Child Poverty: the amount needed to raise the incomes of all poor families with children above the poverty threshold

The World Banks Solution to Poverty

The Washington ConsensusThe World Bank has pursued the same set of anti-poverty policies for almost 40 years;

These have three elements:

• Broad-based economic growth• Development of human capital, primarily through education• Minimum social safety nets for the poor

The World Bank has pursued these policies by rigidly adhering to neo-liberal economic orthodoxy. (Joseph Stiglitz, 1998; 2000)

1. Privatisation – which tends to raise prices for the poor2. Capital market liberalisation – which can allow speculators to destabilise

countries’ economies, as has happened in Asia and South America3. Market-based pricing – which raises the costs of basic foods and fuel for the poor

and has caused rioting, particularly in South America, eg Bolivia, Ecuador and, recently, Argentina (economists should not be provoking riots around the world)

4. Free trade – which is governed by World Trade Organisation (WTO) rules that often severely disadvantage poorer countries

European Solutions to Poverty

Inter-governmental agreements at Lisbon, Nice and Amsterdam have rejected a ‘race to the bottom’ for labour conditions and established anti-poverty policy based upon:

Active labour market intervention to help create jobs and improve working conditions

Progressive taxation and redistribution through a comprehensive welfare state

The key planks of the European socio-economic security model are the commitment (CEC, 1999);

1) to promote social inclusion;

2) to make work pay and provide secure incomes;

3) to make pensions safe and pensions schemes sustainable; and

4) to ensure high quality and financial viability of health care

Growth is Good for the Poor?

Source: Dollar and Kraay, Journal of Economic Growth, 2002

“Average incomes of the poorest fifth of a country on average rise or fall at the same rate as average incomes …. in a large sample of countries spanning the past four decades. This relationship holds across regions and income levels, and in normal times as well as during crises ….

. This supports the view that a basic policy package of private property rights fiscal discipline, macroeconomic stability, and openness to trade on average increases the income of the poor to the same extent that it increases the income of the other households in society. ….

. On the other hand, we find little evidence that formal democratic institutions or a large degree of government spending on social services systematically affect incomes of the poor”

Dollar and Kraay’s Conclusions: Did they Discover a New Law of Nature?

10.00 20.00 30.00 40.00 50.00

Percentage of the average Income of the bottom 20%

0.00

5000.00

10000.00

15000.00

20000.00

25000.00

Ave

rag

e In

com

e in

US

$

Random Average Income Vs Random Income Share of the Poor

Are Random Numbers Good for the Poor?

R2= 0.79

Faith in the Market

“At present almost all elite Americans, with corporate chiefs and fashionable economists in the lead, are utterly convinced that they have discovered the winning formula for economic success – the only formula – good for every country, rich or poor, good for all individuals willing and able to heed the message, and, of course, good for elite Americans:

Privatisation+Deregulation+Globalisation=Turbo-Captialism=Prosperity”

Edward Luttwak (1998), Turbo Capitalism

The world is plagued not so much by poverty but by a rampant “suspicion of wealth…everywhere these ideas prevail…poverty persists and spreads”

George Gilder (1981) Wealth and Poverty

“It is the entrepreneurs who know the rules of the world and the laws of God”

George Gilder (1984) The Spirit of Enterprise

Towards the end of the century, many developing countries—China and India among them—finally threw off this victim's mantle and began to embrace wicked capitalism, both in the way they organised their domestic economies and in their approach to international trade. All of a sudden, they are a lot less poor, and it hasn't cost the West a cent.

Economist editorial, 11/3/2004

"Faith is believing what you know isn't so."

Your faith is what you believe, not what you know."

  --  Mark Twain

Can Economic Growth Halve Poverty by 2015?

Developing World

East Asia and Pacific

Eastern Europe and Central Asia

Latin America and Caribbean

Middle East and North Africa

South Asia Sub-Saharan Africa

Annual growth rate needed to halve world

poverty by 2015

3.8% 2.7% 2.4% 3.8% 3.8% 4.7% 5.6%

Historical growth 1960–1990

1.7% 3.3% 2.0% 1.3% 4.3% 1.9% 0.2%

Total growth needed to halve world poverty by

2015

95% 70% 61% 94% 95% 117% 141%

How likely is it that the annual economic growth rate in Sub-Saharan Africa can be increased from 0.2% to 5.6% - a 28 fold increase?

Can Redistribution Halve Poverty by 2015?

Developing World

East Asia and Pacific

Eastern Europe and Central Asia

Latin America and Caribbean

Middle East and North Africa

South Asia

Sub-Saharan Africa

Poverty decline after a one standard deviation reduction in inequality

67% 31% 42% 45% 34% 17% 62%

Source: Besley and Burgess (2003)

Why is nothing done?

Neo Liberal Concepts of Justice

A Neo-liberal philosophical position equates justice and liberty with freedom from intentional coercion (Plant, 2000). Intentionality is seen as the key concept for defining ‘liberty’.

Neo-liberals argue that, although the operation of the market may result in mass death and disease, since it is not the ‘intention’ of anyone that this should happen – no injustice occurs.

To take this argument about intentional coercion to its extreme would mean that a family starving in rural Sub-Saharan Africa has more ‘freedom’ than say Bill Gates’ family, as the African family are not being intentionally coerced into paying ‘taxes’.

Hayek

Hayek developed this argument to its logical conclusion, that societies had no obligation to meet the social and economic needs of people, as societies did not exist.

In his 1979 Heidelberg lecture, he argued that the word ‘social’ had no objective meaning as an adjective or a noun; he stated that nobody knows what the ‘social’ in fact is.

Hayek concluded that a social market economy is no market economy, a social constitutional state is no constitutional state, a social conscience is not conscience and that social justice is not justice (Piper, 1997).

Thatcher

Margaret Thatcher (1987), then UK Prime Minister, spelt out the logic of this argument in simple terms:

I think we've been through a period where too many people have been given to understand that if they have a problem, it's the government's job to cope with it. 'I have a problem, I'll get a grant.' 'I'm homeless, the government must house me.' They're casting their problem on society. And, you know, there is no such thing as society. There are individual men and women, and there are families.

OECD analysis of income poverty rates in the 1990s pre and post transfers

Percentage of households receiving social benefits in 1996 in EU countries

Pensions(%)

Other social benefits

(%)

All social benefits together

(%)

Ireland 23 82 90

Belgium 28 69 89

Portugal 36 68 89

Luxembourg 29 66 86

Austria 34 69 86

Denmark 19 75 85

United Kingdom 28 71 85

Netherlands 19 66 81

France 25 62 79

Germany 29 57 78

Spain 34 33 58

Italy 40 18 51

Greece 39 19 50

EU-13 30 52 73

Example: 39% of Greeks live in households where at least one member draws a pension. For other social benefits, the figure is 19%. For all social benefits together, the figure is 50% (not 58%, ie 39% + 19%, since some households receive more than one type of social benefit).

Progressive tax and income policies, with income redistribution from ‘rich’ to ‘poor’ and from men to women. As well as redistribution of income across an individual’s life span by taxing and reducing income levels in middle age balanced with then paying social benefits to increase income during childhood and old age

Active labour market interventions to create high quality jobs. Enforcement of minimum standards on wages and working conditions of the low paid within an international framework.

Universal social insurance and public social services - the ‘basic needs services’ – by introducing internationally agreed minimum levels of benefit – such as in International Labour Convention No. 102 concerning Minimum Standards of Social Security

Greater accountability and increased social and democratic control over trans-national corporations and international agencies, to remedy the ‘democratic deficit’.

Effective and Efficient Anti-Poverty Measures

“This would mean restoring to the centre of the tax system two basic principals: the first, that those who cannot afford to pay tax should not have to pay it; and the second, that taxation should rise progressively with income. Programmes that merely redistribute poverty from families to single persons, from the old to the young, from the sick to the healthy, are not a solution. What is needed, is a programme of reform that ends the current situation where the top 10% own 80% of our wealth and 30% of income, even after tax. As Tawney remarked, ‘What some people call the problem of poverty, others call the problem of riches’.”

(Gordon Brown and Robin Cook, 1983)

Poverty in the UK: The Solution?