On the subject of poverty porn

We here at the ASI thoroughly support the idea of food banks. Who wouldn’t support the idea of voluntary cooperation to feed the hungry? Even, of a private sector organisation that was able to fill in for the malevolence and or incompetence of the State?

However, that’s not to say that we need go overboard and swallow uncritically everything we’re being told by the poverty porn campaigners. To take just one example, this piece in The Independent.

 Christmas shoppers are expected spend £1.2bn today, as 13 million consumers hand over £21m every minute. But while those who can afford it stock up in the desperate rush for gifts on “Panic Saturday”, another 13 million people will have more sobering reasons to worry – living in poverty in a festive Britain characterised as “two nations” divided.

That 13 million living in poverty. It’s a highly arguable number. Depends on what your definition of poverty is and how you’re calculating it. And the way that it is calculated is that it’s a measure of inequality, not of poverty. It is less than 60% of median income adjusted for household size either before or after housing costs. To get that 13 million figure it is after housing costs. If before, it is rather lower:

The number of people in the UK living in poverty fell by 100,000 in the past year to 9.7 million, according to official figures.

The data suggests the percentage of those in poverty is at its lowest level since the 1980s.

Poverty is defined in this context as when households have an income before housing costs below 60% of the median.

Note that this is still not a measure of poverty. It is a measure of the income distribution perhaps, of inequality, but not of actual poverty.

Fortunately we do also have a measurement of poverty, of actual material deprivation:

Trends in combined low income and material deprivation and severe poverty:
New material deprivation items were introduced in 2010/11. The proportion of
children living in low income (below 70 per cent of equivalised median household
income, BHC) and material deprivation and severe poverty (below 50 per cent of
median household income and in material deprivation) for 2011/12 has fallen to 12
per cent and 3 per cent respectively in 2011/12, representing a 1 percentage point
fall for both measures compared to 2010/1122. As the proportion of households with
children falling below the 70 per cent and 50 per cent low-income thresholds
remained the same in 2011/12 compared to 2010/11, this fall was primarily driven by
a decrease in the proportion of families experiencing material deprivation.

That is, whatever it is that is being done about poverty is reducing it by the measure that most of us would use in a colloquial sense. Material deprivation is falling. This might even be at the cost of more inequality in the use of those relative numbers. Possible causes there are reductions in general benefits and the targeting of that benefit and or tax system at the truly poor rather than simply at those just under 60% of median. Which, if reducing poverty is your goal seems like a pretty reasonable idea to us really.

What has really happened here is that in the past few decades the institutional definition of poverty has changed. Beveridge was not worrying about whether families had 50% or 60% of what everyone else had. He was worrying about whether there was dripping on the bread for tea. As that problem largely became solved the definition was shifted so that we are all urged now, in the official figures, to worry about inequality, not that actual poverty that so effectively tugs at our heartstrings.

Essentially, as the problem was solved the definition was changed so that there would still be something to berate us all with.

There are, of course, other inconsistencies in the numbers being thrown about:

The Trussell Trust warned it is expecting its busiest Christmas ever in providing emergency rations – with one million people now relying on food banks run by the charity and other organisations.

That’s not so either. The general meaning, the colloquial takeaway from that, is that 1 million people are dependent all of the time on those food banks. Not so at all. The actual number is that over the past year 1 million people or so have been served by a food bank once or more times (and generally the limit is three days food in one visit and only three visits allowed). That gives us 8,200 people actually relying upon a food bank on any one day.

Yes, we can still say that that’s too many people, we can still say that we’re delighted that people give up their own time and money to fill in for the inefficiencies of the State. But it is a rather different picture of the scale of the problem being solved, isn’t it?

As 2014 draws to a close there are 13 million people in poverty – including 27 per cent of the 2.5 million children in the UK, according to the Child Poverty Action Group (CPAG).

Again this is inequality of income, this is the below 60% of median equivalised household income. This is not poverty nor is it material deprivation.

Inequality in the UK is now so extreme that the five richest families are wealthier than the bottom 20 per cent of the entire population, according to Oxfam.

Of course. This happens with absolutely every conceivable wealth distribution. For it is entirely possible to have negative wealth (in a manner that we do not record negative incomes). That newly minted Oxbridge graduate about to start earning £100k a year in the City is recorded as having negative wealth as a result of student loans. The truth is that if you’ve got a £10 note and no debts then you are richer than all of the bottom 20% households in the wealth distribution. No, not just richer than each one of them, richer than all of them in aggregate.

Meanwhile, the housing charity Shelter predicts that 93,000 children will be homeless this Christmas, as the number of homeless families trapped in temporary or emergency accommodation exceeds 60,000.

Interesting how that number is made up don’t you think? As a society we provide temporary and emergency housing for those that need it. When we do so they are still classed as being homeless. This does have an inevitable effect: the crisis never goes away, does it?

The general numbers we get thrown at us about poverty in the UK are not actually about poverty in the general meaning of that word. They are about inequality in the distribution of income. Of course, you can worry about that inequality if you want to do so. But the reason those measurements have been changed, the reason that the “relative” so often gets dropped from “relative poverty”, is because those who wish to spread this poverty porn know very well that most of us are concerned about, would happily do something about, actual poverty and as to inequality, well, there’s a general reaction of “Meh”.

As such we must be fed the figures about relative poverty so as to tug at our heartstrings as if it were absolute poverty, that material deprivation.

Or, the TL:DR version: they’re fiddling the figures.

Finally, one further calculation. There’s some 8,000 people a day receiving those food parcels. Let’s say each parcel is worth perhaps £30 (we’ve got to use some sort of estimate after all). That’s around and about a £90 million a year problem. One of the solutions proposed is that the minimum wage should be raised up to the Living Wage. That’s a pay rise of £2,000 a year for 1.3 million people or so (taking only the number paid the current minimum wage, not including any effects on those between it and the Living Wage).

It’s a £2.6 billion partial answer to a £90 million problem.

It might well be better to continue with the food bank solution.

Bankers earn more than medics: what can we do?!

A common criticism leveled against the financial services industry concerns their remuneration compared to those from more ‘noble’ professions – such as Medical Doctors. Proclamations such as “it’s ridiculous that the average Doctor earns less than the average investment banker” are not unusual to hear in common parlance; Doctors cure ailments and save lives whereas Investment Bankers supposedly wreck households and exploit taxpayers. It is, therefore, unfair that Bankers are paid more than Doctors. The oft-proposed solution is heavier taxation and regulation on Investment Banks.

However, these critics conveniently forget the other side of the coin – the inadequate remuneration for noble professions. Increased taxation and regulation on Investment Banks does nothing to address the inadequate gratitude expressed to them (which these same critics seem to implicitly believe is measured purely by financial compensation).

For Doctors to be remunerated fairly, we need only look at the USA to find that, on that side of the Atlantic, it’s Medics (Anaesthetists, Gynaecologists, General Practitioners etc.) who dominate lists of the most highly paid professions. Their average pay in the USA is higher and their hours worked less than average Investment Bankers. Freer markets ensure fairer, more just remuneration.

Nursing and teaching are also considered noble professions (though they are often undervalued, and wrongly so, relative to Doctors). Fair remuneration and freedom with which they can care and teach in an appropriate, effective and efficient way is only viable in a mostly (if not, completely) free market.

In Higher Education, the phenomenally high research activity of US Universities is unrivalled. This can be attributed to the flourishing mix of private alternatives, the relatively generous remuneration of Professors and the abundance of private funding opportunities available for academic pursuits.

One might argue that healthcare and education must be universally accessible and it would greatly harm society if we repealed the public healthcare available via the NHS. However, a pragmatic compromise would be issuing healthcare vouchers so that individuals are given the money that they can spend freely on their own healthcare. In this way, the public can choose between public and private alternatives with their vouchers.

Free markets lead to an improvement in welfare for all those involved by providing the consumers with more choice (whether they be patients or students) and higher quality products through competitive mechanisms whilst ensuring the fair remuneration of producers – whether they are medical professionals or involved in education.

How can we possibly survive?

The recent computer crash of the UK’s aircraft control system which downed scores of aircaft landings and takeoffs and which could have caused a disaster of huge proportons has been blamed on the faiure of one line of computer code. The authorities have given some very lame excuses why this should have happened, entirely ignoring the fact that this particular line of computer code has served the system well enough for 40 years despite the huge growth in aircraft traffic since then.

It is unlikely that the real reason will ever be willingly or fully revealed by the various enquiries that will now be undertaken because it might cause widespread panic all over the world, both among airlines and passengers. Almost certainly the reason why it failed is that a particular cosmic ray from outer space hit a particular transistor junction in the computer. Many of the circuits (on which the old computer codes worked) are still very simple ones. Thus the breakdown of one transistor could do a huge amount of damage — in this case striking at the total functioning of the many systems surrounding it. What you can be certain about is that the software people did not re-write that particular line of computer code — it is as good as ever — instead, the engineers replaced some of the physical computer elements.

Millions of cosmic rays from outer space rain down on earth every second of every hour and every day. They are sub-atomic in size but very powerful for all that. Cosmic rays do a tremendous amount of damage. Every second of every hour of every day, cosmic rays are penetrating life-forms on earth — and that means us also. We might also mention that, every second, highly damaging rays are also penetrating us from the natural radioactivity that is occurring in rock strata beneath our feet. (In some places — Cornwall for example — radiation from underground granite is quite high. The aircaft control system could also have been hit by such radiation — it will be impossible ever to know but cosmic radiation is more likely.)

As with computer circuits, the DNA in our bodies is being assaulted and damaged constantly. Every day each of us receives radiation which cause small explosions in our genes and potentially could completely disrupt the functioning of our bodies. How can we possibly survive? What’s more, how can some of our oldest genes remain just as perfect and useful today as they were billions of years ago when originally formed?

The answer is that our chromosomes (the 23 immensely long strings of DNA, each of which contains something like 1,000 genes) have what can only be called “gene repair ambulances” (more like hospitals!), constantly travelling up and down each chromosome at great speed. Whenever they reach a piece of damaged gene they compare it with its mirror-template on the opposite helical strand, thus knowing how the damaged gene should be restored, and repairing it. This happens thousands of times an hour in each of us, because our genes are infinitely more sensitive to radiation damage than, say, the damage to a computer transistor — which, in comparison, is a rare event. Nevertheless, the latter occur from time to time. Unlike us, however, computer circuits don’t have repair mechanisms.

Not being a computer techie I have no idea how aircraft control systems will be improved in future years all over the world. Whether they will have repair mechanisms virtually similar to nature’s own I don’t know. But I think we can take it that they will be as well instituted as man can devise. Airlines and passengers need not worry unduly about safety in future years.

However, we can take it that, because nature has had billions of years to devise its own safety methods, man’s systems will never be as good — at least not for hundreds or thousands of years to come. Our computers will always be prone to radiation damage, rare though the serious events may be. But there’s another intriguing aspect to all this. This is that some research biologists are already looking at the possibility of DNA, being self-repairable and thousands of times smaller than computer circuits, might be an infinitely better type of memory device than our present, relatively crude computer circuits. Combine this thought with the ever-increasing automatons being devised for manufacturing (and services) and we have the highly likely prospect of DNA-based machine tools, not in hundreds or thousands of years’ time, but fairly imminently (say, in 50 or 100 years?).  Not only this but we have the prospect of future production tools not only being able to make products of great sophistication but, by changing their DNA-code, are able to switch from making one product one day to a different one the next. This is not science-fiction with its time-travel worm-holes and other nonsenses but an almost certain development one day. Just a thought to leave you with.

Maybe Keynes was right after all?

It has to be said that we’re not great fans of macroeconomics around here. Not enough good data from enough different places to definitively answer most questions: and that’s before we get onto Hayek’s point about simply not being able to calculate the economy without using the economy itself to do so. However, this makes us think that Keynes might well have been right on one point:

It took far too long but Britain’s traumatic national pay cut is coming to an end. Even on the somewhat crude median earnings measure, pay is finally going up again, even after accounting for the effects of price rises. Wages are rising a little faster and inflation has collapsed, a golden combination for employees across the country.

Ever since the Industrial Revolution and the spread of capitalism, gradually rising wages have been the norm, apart from in wartime and during brief periods of extreme economic dislocation. The fact that this process went into partial reverse over the past few years despite the recovery came as a shock and helped to explain why so many people began to fall out of love with capitalism. It is therefore excellent news that normality is finally re-establishing itself.

One view of unemployment is simply that it happens when labour is more expensive than people are willing to pay for it. That’s obvious in that one sense of course. The question becomes then well, how quickly will the repricing happen if we do ever get to that stage? There are those who insist that it happens immediately and thus unemployment and recessions cannot happen. Not an entirely convincing view. There are also those who insist that it can take forever and this justifies all sorts of interventions. And then we’ve got the evidence of the past few years.

It could be argued that labour in the UK did become too expensive. We had just had the largest and longest peacetime expansion of the economy after all. So, a repricing was necessary. And this is where Keynes could be said to be correct. It takes time because nominal wages are sticky downwards. People really, really, don’t like lower numbers on their paycheques. They’ll grumble about their real wages falling if it’s disguised with a little bit of inflation but they’ll riot if the equivalent fall were at a steady price level.

We don’t say that the past few years prove it: only that what evidence we have is consistent with this explanation. And, given the paucity of our evidence base, that’s probably the best we can do.

Ease up on Assisted Reproductive Technologies to close the gender wage gap

Of course, there is debate over whether the gender wage-gap exists or not. I, for one, believe it does exist but that the answer does not lie in legislating protection for maternal (or even paternal) leave. Charlotte Bowyer wrote about how firms such as Apple and Facebook have begun to offer female employees the opportunity to freeze their eggs (so that they can delay pregnancy until later in their career).

One reason for the gender wage-gap is that women in modern society most often face the dilemma of having children earlier and potentially jeopardising career progress or having children much later and hopefully advancing their career. Each option has its pros and cons but neither is particularly appealing for many women. It’s a choice between probable fertility, children and significantly lower pay or probable infertility, childlessness and career success. Unsurprisingly, a sizeable proportion of women opt for the former and this means that the gender wage-gap persists (of course, econometricians can make it disappear using a bunch of control variables and certain methodologies).

Assisted Reproductive Technologies (ART) helps alleviate the situation for many women. Sure, they don’t provide what many might currentlyconsider a ‘natural’ conception, pregnancy or birth (as contemporary social perceptions depict them) but it does mean that there is an alternative to women being constrained one way or another.

Some Assisted Reproductive Technologies are completely unregulated, some are loosely regulated and some are definitely quite heavily regulated. For example, in certain jurisdictions where forms of ART is available, laws stipulate that only heterosexual couples (as opposed to say, a homosexual couple or a single person) can use these technologies. Such a restriction means that marriage is a pre-requisite for ART; again, however, this constrains her. We need to completely abolish restrictions like these (which exhibit a clear, conservative bias) in order for ART to be an effective means by which the biological causes of gender wage-gap persistence are overcome.

More importantly, we should ensure that the current freedom of access to ART is defended against misinformed, prejudiced zealots. This ensures not only that people have more freedom to choose but also partially addresses the social inequity and labour market outcome inequity arising from biological gender-inequality via the technological innovation that a relatively free market makes possible.