What is the ‘poverty industry’?
Which is perfectly logical. These groups have to focus their limited resources on where they get the biggest return on investment, and in a country where government spending accounts for about half of national income, no prizes for guessing where that might be. For households in the bottom quintile of the income distribution, state transfers now account for three quarters of disposable income, corrected for underreporting. This means that a relatively small change in social policy – say, a change in the uprating mechanism of a benefit – makes a large difference to these people’s incomes. Poverty activists have become political activists because their constituent’s living standards are largely determined by political decisions.
And while the poverty lobby is quite heterogeneous in other aspects, their political views converge. What most of them share is a visceral hostility to the market economy. Publications by the Child Poverty Action Group, probably the most overtly political group among the poverty campaigners, typically start with statements like:
‘The roots of the current economic crisis lie in deregulated economic policies that prioritised GDP growth over income and wealth distribution. Policies of “trickle-down economics” have left the UK a highly unequal country.’
Oxfam takes the same line:
‘Anti-poverty policies that focus on economic growth, to the detriment of social cohesion and sustainability, are doing little to eradicate poverty, even in one of the world’s richest nations. […] Clearly, trickle down is not working, and an economy is being created that is not delivering for a large and growing number of people.’
As you can see, it is more realistic to think of these groups as left-wing think tanks rather than charities. There is nothing wrong with that, of course. It just means that they are now operating in the same line of business as we are. We are now competitors in the business of ideas.
So, about time to take a closer look at what our new competitors are up to. This will be the topic of the next article in this series.
Kristian Niemietz is the author of Redefining the Poverty Debate: Why a War on Markets is No Substitute for a War on Poverty.