12 thoughts on “An alternative history: how poverty fell under Thatcherism”

  1. Posted 13/03/2009 at 11:04 | Permalink

    In my economics textbook I based an exercise on the following example.
    Two countries start with identical levels and dispersions of income. Incomes of the four quartiles amount to 50%, 25%, 15% and 10% of national income respectively. In Egalitaria, the top quartile is to lose each year 1% (of national income) of its excess over 25%, to be split pro rata between the bottom two quartiles. So in 25 years, all four quartiles will receive exactly 25% of an (assumed)unchanged national income.
    In Growthland, % shares of each quartile remain the same, but real national income grows by 2% a year. In 49 years the bottom quartile in Growthland exceeds the top quartile in Egalitaria.

  2. Posted 13/03/2009 at 11:04 | Permalink

    In my economics textbook I based an exercise on the following example.
    Two countries start with identical levels and dispersions of income. Incomes of the four quartiles amount to 50%, 25%, 15% and 10% of national income respectively. In Egalitaria, the top quartile is to lose each year 1% (of national income) of its excess over 25%, to be split pro rata between the bottom two quartiles. So in 25 years, all four quartiles will receive exactly 25% of an (assumed)unchanged national income.
    In Growthland, % shares of each quartile remain the same, but real national income grows by 2% a year. In 49 years the bottom quartile in Growthland exceeds the top quartile in Egalitaria.

  3. Posted 13/03/2009 at 18:18 | Permalink

    A Townsend-type response would be: “The bottom quartile of Growthland may have more money than the bottom quartile of Egalitaria, but they are nevertheless poorer, because a monetary unit in Growthland buys less social participation. Poor citizens of Egalitaria may wear shabby clothes, but since everyone in Egalitaria wears shabby clothes, they are not met with disdain. A shabbyly dressed citizen of Growthland, in turn, will find access to restaurants and clubs refused, even if his clothes were not even so bad by Egalitaria-standards.”

    But all of this assumes that Growthland and Egalitaria are closed societies. What if they are interlinked, and Growthland is the “cultural agenda setter”?

  4. Posted 13/03/2009 at 18:18 | Permalink

    A Townsend-type response would be: “The bottom quartile of Growthland may have more money than the bottom quartile of Egalitaria, but they are nevertheless poorer, because a monetary unit in Growthland buys less social participation. Poor citizens of Egalitaria may wear shabby clothes, but since everyone in Egalitaria wears shabby clothes, they are not met with disdain. A shabbyly dressed citizen of Growthland, in turn, will find access to restaurants and clubs refused, even if his clothes were not even so bad by Egalitaria-standards.”

    But all of this assumes that Growthland and Egalitaria are closed societies. What if they are interlinked, and Growthland is the “cultural agenda setter”?

  5. Posted 13/03/2009 at 20:13 | Permalink

    One argument used by some academics (e.g., Layard, Frey)recently is to suggest that people in more equal societies are happier. Of course, this has the benefit of avoiding the economic arguments altogether and relying on the tendentious measurement of subjective values and opinions.

  6. Posted 13/03/2009 at 20:13 | Permalink

    One argument used by some academics (e.g., Layard, Frey)recently is to suggest that people in more equal societies are happier. Of course, this has the benefit of avoiding the economic arguments altogether and relying on the tendentious measurement of subjective values and opinions.

  7. Posted 15/03/2009 at 22:03 | Permalink

    Peter, much of the work by Layard is very much undermined by the IEA monograph by Johns and Ormerod. Also, I am not sure that institutionalising envy is a good policy prescription for anything in the long term. Essentially, the Layard prescription is that I am happier if you are poorer. I don’t really find that a very satisfactory basis for conducting public policy.

  8. Posted 15/03/2009 at 22:03 | Permalink

    Peter, much of the work by Layard is very much undermined by the IEA monograph by Johns and Ormerod. Also, I am not sure that institutionalising envy is a good policy prescription for anything in the long term. Essentially, the Layard prescription is that I am happier if you are poorer. I don’t really find that a very satisfactory basis for conducting public policy.

  9. Posted 16/03/2009 at 14:44 | Permalink

    Peter:
    Does Layard really compare happyness across countries? I thought he was ‘merely’ saying that within each society, the better-off are happier than the not-so-well-off.
    He clearly concludes from that that more equal societies are happier ones – but I would say his own data does not show that. If you compress the income distribution, you do not change anyone’s position in it, but merely narrow the gap between the positions. From purely anecdotal evidence, I would argue that if the income distribution is a topic of political debate all the time, people get obsessed with it, and in the end do not even tolerate small differences. So you might end up with more equal but less happy society.

  10. Posted 16/03/2009 at 14:44 | Permalink

    Peter:
    Does Layard really compare happyness across countries? I thought he was ‘merely’ saying that within each society, the better-off are happier than the not-so-well-off.
    He clearly concludes from that that more equal societies are happier ones – but I would say his own data does not show that. If you compress the income distribution, you do not change anyone’s position in it, but merely narrow the gap between the positions. From purely anecdotal evidence, I would argue that if the income distribution is a topic of political debate all the time, people get obsessed with it, and in the end do not even tolerate small differences. So you might end up with more equal but less happy society.

  11. Posted 17/03/2009 at 10:56 | Permalink

    Bruno Frey makes the claim that more equla societies are happier, as does Daniel Cohen. But the sort of societies they use to demonstrate this are all what might be termed as affluent. Hence they do not compare the UK and the USA with North Korea and Zimbabwe, but with France and Sweden.

  12. Posted 17/03/2009 at 10:56 | Permalink

    Bruno Frey makes the claim that more equla societies are happier, as does Daniel Cohen. But the sort of societies they use to demonstrate this are all what might be termed as affluent. Hence they do not compare the UK and the USA with North Korea and Zimbabwe, but with France and Sweden.

Comments are closed.