Closing the gap

The OECD has found that the gap between rich and poor fell between 2000 and 2005, because the poor have been getting richer more rapidly than the rich. Since the year 2000, their income growth has been about three times larger than the rich.

Their analyst writes that "The main reason is probably because of the increase in employment. Wages have continued to widen the gap between rich and poor, but because we have had a lot more people in employment and a lot more redistribution, these two effects combined have actually increased the incomes of the poor quite dramatically.

"We have seen quite rapid increases in employment among the low-skilled and particularly among mothers, which is a very effective way of reducing child poverty."

The Brains Trust over at CentreRight.com are cross about this report, and have a couple of articles in response.

Charles Elphicke, who is apparently one of their parliamentary candidates, posts a couple of unsourced graphs to "prove" that the report is garbage (the graph compares the income of people in the top 20% and bottom 20%, and in fact confirms the OECD findings that the gap fell between 2000 and 2005, though has risen subsequently because of lower levels of redistribution by the state - a point that for some reason Mr Elphicke chooses not to mention). A couple of commentators chip in with helpful contributions about how all the extra money has gone to the immigrants, and that relative poverty doesn't exist anyway.

Andrew Lillico, one of their regular commentators and a right of centre think tanker, links to a paper from the Bow Group about how to measure child poverty. It argues that the Conservative Party should not sign up to reducing income inequality, because that implies a "socialist" set of solutions which commit governments to placing more money in the hands of the poor, but instead should commit to a target around 'material deprivation and general well-being', which 'should attempt to consider issues such as parenting quality, access to religious instruction, access to countryside, access to safe play, and so on'.

This in turn gets one response from a man who wants us to realise 'that anyone who persists in being poor under our grotesquely munificent Welfare State is so un-evolved as to deserve little charity anyway' and another who appears to want to replace benefits for lone parents with loans which they can pay back when their children are older and they go to work.

For what it's worth, I think Labour supporters shouldn't be boasting about how the OECD report shows the wonderful achievements of the government, but instead using its findings to demand our government redoubles its efforts. The evidence is abundantly clear, that where the government has taken action and made use of the powers of the state to redistribute wealth and help people get jobs, it has been extremely successful in reducing poverty and promoting equality, making the poor richer without making the rich poorer. But there is an awful lot more to do, and there are a lot of people who have been missed out and haven't benefited - not by accident but because decision-makers haven't seen them as 'deserving' help.

But it's interesting to see quite how far from the evidence the centre right, whether old style Thatcherites or New Conservatives, actually are. The Conservative Party are committed to policies such as inheritance tax cuts and US style welfare reform. We don't have to guess at the effect of these kinds of policies, their effect has been tried and what happens is that 'rich households in America have been leaving both middle and poorer income groups behind' and 'the effectiveness of taxes and transfers in reducing inequality has fallen still further in the past 10 years'.

So the Conservative base talks about the 'unevolved poor', their parliamentary candidates try to cherry pick evidence and spin the facts, and their think tanks try to redefine poverty so that it isn't about how much money you have, but instead includes whether children are getting enough 'religious instruction'.