Poverty? Pah. That doesn't REALLY exist any more

Growth spurt

By a couple of years ago China was where England was in 1948. Which should impress us in two ways: to get four centuries of economic growth into 35 years is pretty good going. But it's also worth reflecting that those Chinese factory wages of today, that $6,000 a year or so we all sneer at as being akin to slave labour, are indeed what our grandfathers would have regarded as a good wage in Wolverhampton or Wembley. And again, to emphasise: those numbers are in 1990s US dollars at 1990s US prices. We have already accounted for inflation in this.

Lots of Johnny Foreigner are still absolutely poor. The past was, by our current standards, largely absolutely poor. And we in this blessed rich world that we all inhabit simply don't have that sort of poverty any more.

What we do have is inequality: for our definition of poverty these days is people living on less than 60 per cent of median income. We adjust for household size, normally look at it after housing costs and so on, but it's not in the sense used above a measure of poverty. It's a measure of inequality in the society.

At which point we could just declare Lanchester correct and go home. We've no poverty but we do have inequality. Those who want to worry about inequality can do so, but the poverty problem is done and dusted. But that won't happen and it's interesting to know why.

That why being that the egalitarians noted a couple of decades back that poverty had indeed been solved. Now that the miners had been taught that water goes into bathtubs not coal, that bread and dripping was not a major food group, that poverty problem was indeed solved.

Ahh, semantics, you knotty bastard

Therefore, there was a determined effort to change the language. Inequality was recast as “relative poverty”. This isn't a bad concept in itself: it's Adam Smith's linen shirt. Being unable to afford a linen shirt doesn't make you poor. But living in a society where not being able to afford one means you are regarded as poor.

This is why that Joseph Rowntree work on what the “living wage” should be is calculating poverty in an entirely respectable manner. They're asking people “so, what do you have to be able to afford not to be poor?”. And in a society that has those opinions then that is the definition of poverty (and those definitions include a couple being able to have a few pints once a week, a cheap meal out once a month, etc.).

An artist's impression of political economist Adam Smith

But that's relative poverty, not absolute poverty, inequality not poverty. The linguistic change was to tag inequality as being “relative poverty” and then stop using the word relative when referring to it. Thus the left can now speak, as they do, about rising poverty levels when they actually mean that inequality has increased. It was all entirely deliberate, for most of us just don't care about inequality in the same way that we do about poverty.

We'd all be entirely outraged if we though that anyone at all in England was living on $1.25 a day. We're rather less concerned about someone getting 55 per cent of median income. Thus, the language change was required to keep the great redistribution bandwagon rolling on.

And that's why we'll not be adopting Lanchester's entirely sensible suggestion, to return to calling things what they are. Here's poverty and here's inequality and while they might both be problems, or not to taste and opinion, they're not actually the same thing.

The entire project of reducing inequality depends for general public support on obfuscating the difference between the two things.

Even if you're not all that sure about that bit of politics at the end I'd still urge you to consider the real point here. We might indeed have problems, it's even possible that inequality is one of them. But as Maddison's figures show by any reasonable global or historical standard we in Northern Europe, the US and a few other places (Oz, the Kiwis etc), just do not have poverty any more. We beat it. And accepting that glorious fact will enable us to deal more sensibly with the problems we do still have. ®