Government and Institutions

Free stuff isn’t the answer to poverty


It is claimed that one in ten ‘menstruating people’ aged 14-21 are in ‘period poverty’ – unable to afford the average £156 a year spend on sanitary products, and so the British Medical Association is lobbying the government to provide them for ‘free’.

This follows a Scottish government trial of giving out sanitary products at food banks. This trial has been deemed ‘successful’, presumably in the sense that the free tampons and sanitary towels have been taken up. But as one of my female colleagues has observed, ‘you could leave free sanitary pads in the ladies room at the Ascot Royal Enclosure and I’m sure they’d disappear just as quickly’. People rarely refuse free stuff.

We should not belittle poverty, but giving things out for free is not a sensible way to approach the problem. Yet governments continually do this. It is inefficient and permanently locks in public spending even when people’s needs change. For instance, concerns over ‘fuel poverty’ led to the Winter Fuel Allowance, given to all pensioners, despite pensioner households now having higher average incomes than those of working age. Scrapping this benefit, or free travel on buses, or free TV licences for older pensioners, is now apparently politically impossible – although the resources involved could be put to much better use.

Something similar is happening with childcare, as Ryan Bourne and I have pointed out. The government’s offer of 30 hours free childcare is now considered a ‘right’. It will be very difficult to row back from it, even though it is having a negative effect on nursery workers’ wages, raising prices for those not eligible for the offer, reducing the availability of good quality care, and being disproportionately used by those who could afford to pay for it themselves.

It’s not quite the same thing, but we spend £25 billion a year on housing benefit to provide highly subsidised housing, which drives up rents and locks people into unsuitable accommodation, reducing labour mobility and thus productivity.

Many people would like to see the state go much further. The grandly-named ‘Institute for Global Prosperity’, an outfit based at University College London, is proposing we spend an extra £42 billion pounds annually on ‘universal basic services’ – free meals from a ‘national food service’, free phone and internet services, free housing, free TV licences for all and so on. Labour’s John McDonnell is unsurprisingly keen on this idea and has set up a working party to examine the proposal.

Advocates of this scheme explicitly see it as an extension of the principles underlying the National Health Service – which ought to ring some alarm bells. As we have again seen recently, this behemoth has an insatiable appetite for taxpayers’ money and is apparently unreformable. The idea of creating a range of similarly open-ended ‘services’ should give us pause.

One of the first things taught in economics is Lionel Robbins’s definition of the subject: “the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses”. Because we have an infinity of needs and wishes, we have to allocate resources sensibly. Providing things for free does not help with this. It creates a sense of entitlement and takes responsibility away from individuals. It encourages waste and misallocation of capital and labour, since people are happy to consume things for which they would not be prepared to pay the cost.

There is genuine poverty in Britain, as in all countries at all times. But a sensible anti-poverty policy helps people into work where possible, supports their income if need be – and could do so more generously if we cut back on freebies to those who don’t need them – and encourages people to make their own decisions on how they spend their money, rather than distorting free choices by giving them what pressure groups like the BMA think they should have.

 

Editorial and Research Fellow

Len Shackleton is an Editorial and Research Fellow at the IEA and Professor of Economics at the University of Buckingham. He was previously Dean of the Royal Docks Business School at the University of East London and prior to that was Dean of the Westminster Business School. He has also taught at Queen Mary, University of London and worked as an economist in the Civil Service. His research interests are primarily in the economics of labour markets. He has worked with many think tanks, most closely with the Institute of Economic Affairs, where he is an Economics Fellow. He edits the journal Economic Affairs, which is co-published by the IEA and the University of Buckingham.


3 thoughts on “Free stuff isn’t the answer to poverty”

  1. Posted 27/06/2018 at 16:07 | Permalink

    The Institute for Global Prosperity may be grandly titled but at least we know how it is funded, in stark contrast to the IEA. Len Shackleton is yet another mysteriously funded and sheltered IEA academic, with no understanding, expertise or experience of the social issues he discusses. In contrast, the IGP has strong links to grassroots workers. Shackleton’s comments about period poverty and mention of Ascot are ignorant, crass and shallow – so typical of the IEA, staffed as it by trust fund kids.

  2. Posted 28/06/2018 at 09:19 | Permalink

    @Fabian – You are good at throwing insults at Len Shackleton but your post contains no critique of his arguments. His point is an entirely sensible one – if you simply give out things free, then everyone will take advantage of this, not just the needy. This reduces the amount of money available to help the really needy, which could be done much better by giving them them to money to spend on their priorities.

  3. Posted 28/06/2018 at 09:59 | Permalink

    I am not ‘mysteriously funded’. My details are all in the public domain, unlike ‘Fabian’. Anybody is entitled to the view that I lack understanding and expertise, and am crass and shallow. We all have our faults. However Fabian says absolutely nothing to refute my contention, shared by many professional economists, that providing goods for free is a wasteful and inefficient way to tackle the genuine problem of poverty.

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