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Britian, throwing money at poverty

The “why bother” society

Earlier this month, a British think tank, Reform, released a report entitled, “Shifting the unequal state: From public apathy to personal capability”. Reform describes itself on its website as “…an independent, charitable, non-party think tank whose mission is to set out a better way to deliver public services and economic prosperity.”

The report concluded that Britain had become a “why bother” society. The combination of generous benefits, a poor education system and high taxes resulted in the lowest social mobility in Europe. Both the poor and the middle class have very little incentive for bettering their positions and so those two classes pretty well remain where they are. The report recommended not only that taxes be lowered but that there be less government intervention in the economy.

According to the study, throwing money at poverty has had the opposite effect to what the well intentioned but misguided governments tried to achieve. Simply giving benefits to lower income people failed to take into account the role that the individual plays in increasing his or her capabilities. Instead of helping people become socially mobile these payments did nothing other than pay people to be poor. Lowering taxes would also give people a greater incentive to better themselves.

It is not surprising that the decrease in social mobility; keeping the poor, poor, was found to have begun in the 1960s and 70s. Nor is it a shock to discover that all governments, both Conservative and Labour, tackled the problem of poverty and low social mobility in much the same way.

This report is a perfect précis of why the type of liberalism that has been practiced in the U.K., Canada and much of the Western world for the past 40 years simply doesn’t work. Those who live in poverty are thought of by the political elites as a permanent class; people who need and will always need the help of those who are better off. This help consists of a redistribution of income from the rich and mainly middle class to the poor. A lot of tears are shed over how hard the poor have it, how they are not able to solve their immediate problems but almost no consideration is given to lifting these people out of their poverty and assisting them to help themselves achieve a better life. Another consequence of these policies is that the money given to the poor that allows them to remain poor must come from somewhere. And of course it comes in the form of higher taxes that acts as a disincentive to the middle class that stifles investment and the creation of more jobs that could assist those in the lower income brackets to improve their lot.

There are reasons why liberals prefer just to throw money at problems rather than attempt to find long term solutions to problems. One is that such solutions, if you can call them that, are easy. It is much easier to simply dole out a bunch of money at a group of people than to try and come with a long term solution that would lift some members of the underclass out of their poverty. And, there is nothing more simplistic than to take a tax, any tax, and increase it. It sure beats trying to improve incentives for people to earn more money and create more jobs.

Secondly, there is the matter of middle and upper class guilt. Most politicians have accomplished backgrounds and come from the ranks of the middle class or high income earners. They feel guilty about the fact that they have a lot more than the poor do. Simply throwing money at the poor helps them ease their guilt. It all boils down to feelings. Feeling good is inherently better than working on real solutions that would allow the poor to better themselves. Liberals don’t look at individuals but at groups. All of society is divided into groups and the net effect is that the individual is irrelevant. Spending a lot of money on the “poor” group gives the politicians satisfaction and no thought is given to the individuals in that group.

Society would be much better off if these disincentives to be productive were eliminated and the poor were given more of a chance to get themselves out of poverty. But with the current prevalent thinking, this is not likely to happen soon.