16 Oct 2010, 11:38am
economy:
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  • child benefit, the law of unintended consequences

    You know how it is, sometimes, when you have to let the heart of darkness shine through. This is one of those times…

    One of the comments made me think, as they should 🙂 on my careless use of Gore Vidal’s comment

    it is not enought to succeed, others must fail

    in my post on entering a family-unfriendly economic system

    I’m not actually that mean. I don’t take any particular pleasure in seeing others take the shaft here, and I don’t expect to gain from the withdrawal of CB from the better off. It’s not like I suddenly expect to get a non-child benefit, and somehow I don’t expect any tax cuts to happen while I am still working 😉

    However, I do wonder if Labour’s approach of trying to eliminate child poverty by slinging cash around didn’t have some pretty ropey results that we are going to have to live with for a long time.

    What’s that again – how can any right-thinking person be against an attempt to reduce child poverty?

    I can. And before I get hammered for being a mean and nasty child-hating SOB who wants children to be poor, it may be necessary to point out that not being for something doesn’t necessarily mean I am for the converse. If you are not intellectually up to understanding that, please read no further!

    There are some things that are assumed to be good regardless. A reduction if poverty is always good, natch? What kind of mean-spirited git must this guy be, does he want to see the workhouse and children sweeping the chimneys?

    Well, get this.

    the government’s target of halving child poverty by 2010 is defined in terms of relative poverty. [1]

    Now that, I do have a problem with. The trouble with relative poverty is this (from the same reference)

    The reason that we believe that relative poverty is important is because we believe that no one should live with “resources that are so seriously below those commanded by the average individual or family that they are, in effect, excluded from ordinary living patterns, customs and activities.

    I didn’t realise that Labour had changed the definition of poverty to this. (oops, they didn’t change it at all. My bad, see SG’s comment and BBC reference below) and To me child poverty means being cold, not having enough to eat, being deprived of emotional connection. It doesn’t mean not having a mobile phone or a games console.

    The problem here is that I believe there is more variation in intellectual talents, drive and capability that can be encompassed by the spread which is inherent in the definition living in a household with less than 60% of the median income.

    Don’t get me wrong – if there were an easy way to prevent this happening (ie households spending < £100 a week excluding housing costs) I’d say go for it. It is when it has the result of bankrupting the country

    that I start to think it’s gone too far.

    There are other things that are wrong with this sort of social engineering. When I was at school, the average number of children per household was 2.4. Most people think it’s the poor that have all the kids, but there is some economic effect on people’s decision of how many children to have. It first struck me when I started at my current company, at the callow age of 28, just how many people there were there with three children, and in some cases four or five. These were people who were reasonably well-off at the time.

    For more recent examples,  David and Samantha Cameron have three children. Nick Clegg and his wife have three sons. Ed Miliband has two, the Browns had three kids, the Blairs had three. I’ve chosen politicians because this information is easy to get hold of, but it shows having larger than usual families isn’t just something the poor do. I would say that where there is more money around, people have more kids than the replacement norm of two, just not the crazy numbers we associated with the Victorian poor.

    And so finally I reveal my heart of darkness. If poverty is measured relatively, why did we throw money at people who have poor prospects so they could have more children than their economic situation permitted?

    Relative poverty isn’t about putting food on people’s plates, or heating their homes. It is so that they can live the typical lifestyle people are accustomed to. Child poverty is about having a mobile phone and being able to go on school trips these days.

    Let’s take a moment to think about this for a moment. My parents didn’t have a television set when I was a child. Does than mean they were poor? I don’t have a mobile phone personally. Does that mean I am poor? No. My parents, and I, think for ourselves, and we choose not to spend money on things that other people regard as essential needs…

    Benefits are about securing the bottom two of Maslow’s hierarchy of needs. When we drift into the upper reaches we run the risk of distorting behaviour. These children will continue to have poor prospects, all other things being equal. Having children isn’t the sort of thing that improves your economic situation in industrial economies. Once poverty in terms of the lowest parts of Maslow’s needs have been addressed, it becomes devilishly hard to address the others. Everybody has a mobile phone and Playstation? There’ll be a new set of consumer thneeds that the kids will think they need. And so on and so on.

    So by sponsoring the poor to have children, we are actually damning more children to poverty. These are children that wouldn’t exist were it not for the distorting effects of well-meaning efforts to reduce child poverty. The reason for this is that social mobility has dropped in Britian from a high-water mark in the late 1960s.

    Why has social mobility dropped in Britain? According to Blanden et al this is because of the right cods that we have made of university education because we couldn’t man up to the task of telling some of the little darlings that their classmates were brighter than them. So we make the exams tell everybody they are great, and tell wannabe university students that of course there is equality of opportunity, as long as they can pay about £65k for the fees. Then we wonder why for some reason there are fewer kids from poor backgrounds going to university. D’oh, perhaps the reason is they can’t find the money?

    So all that, in a roundabout way, is why I’m asserting that the result of efforts to attack child poverty by paying the poor to have more children than they can afford may result in more child poverty in the future, as the poverty echoes down the generations. Perhaps we should have been smart here and only sponsored the first, or first and second child.

    I can relate to addressing child poverty in terms of food, heating etc. But in terms of relative poverty, then what on earth does success look like?Is there a standard kit of consumer goodies children should have not to feel left out? Do we take the rich kids’ toys away and give them to the poor kids? Oh, and shouldn’t we have asked ourselves what success looks like before we embarked on this journey, anyway?

    There’s a separate argument about whether we as a society want people to have more kids rather than, say, importing people for the workforce. However, if that is the issue, then we want to sponsor rich people to have kids, because they will push them and help them educationally. We’ve actually been doing that for a while, and have only just recently announced that we want to stop. Perhaps we are going about this all the wrong way.

    We really need to have the courage and honesty to ask ourselves what it is that all this social engineering is aiming to do, rather than starting out with a muddle-headed goal like eliminating relative child poverty. If we want bright kids to become the dynamic knowledge workforce that will drive Britain into the 21st century, then we first need to fix the education system so we can distinguish the bright kids, and we probably wouldn’t go about it by sponsoring the people to have children that we’ve been sponsoring for the last 10 years… If their kids are bright we’ve queered the pitch for them educationally so they can’t afford to get ahead anyway.

    It doesn’t greatly upset me to be 4% poorer to do this sponsoring. But it does upset me that we don’t seem to know why we are doing it, we have chosen a metric that seems to be unachievable by definition, and that by our actions we might be adding to the sum total of human unhappiness in Britain to come as the extra children of the poor have extra children themselves. The road to hell is paved with good intentions…

    Source:

    1. http://www.poverty.org.uk/summary/social exclusion.shtml
    15 Oct 2010, 4:30pm
    economy personal finance:
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  • we’re entering a family-unfriendly economic system

    There’s been a lot of hue and cry about the changes to child benefit and stuff, and Stephanie Flanders of the BBC has spelled it out over a couple of posts.

    She gets away with it where it’s probably incendiary for me to tackle this, because

    a) she’s an established writer and understands the subject better
    b) she’s a woman
    c) she has kids

    But I’m going to tackle it anyway, because the reason why we are entering a family-unfriendly economic future surprised me, even though I had a gut feel of it. The thrust of her argument is that

    Labour tilted the tax and benefit system in the direction of children and families, particularly low income single parent families. For better or worse, that is what their target of eradicating child poverty encouraged them to do. It is going to be hard to raise serious money from the benefit system without tilting it back.

    Now I had been aware that I wasn’t personally getting any of the gravy over the last 10 years. That’s a good thing in many ways, having managed to screw down my outgoings there are limited ways the government can manage to shaft me. They can’t take away my benefits because I don’t get any. They can raise taxes and obviously the VAT increase next year will hit me.

    But what I hadn’t realised is just how much gravy people with children did get out of Labour. The government can reduce the deficit by either taxing more or spending less, and because the ConDems emphasis is on the latter, it means that people with children will be taking most of the pain, just as they took most of the gain in previous years. Single parents are apparently about 16% better off as a result of Labour’s changes, whereas I am about 4% down. That great sucking force you hear out there in the distance is the sound of much of that about to be rolled back.

    Relative to people with children I expect to be 20% better off when Cleggeron have finished. Unfortunately this will be achieved along the lines of the second part of Gore Vidal’s aphorism

    it is not enough to succeed, others must fail

    I don’t expect to be any better off at all, it is just that families with kids will lose a lot of the extra bungs and sweeteners society has given them to make having children easier/less expensive.

    Before people start screaming that it isn’t fair, perhaps you might want to ask yourself whether getting free gravy was fair in the good times. It wasn’t fair to me, for instance. Twice in my life I asked myself the children question, and each time I didn’t really feel I could manage to support a family for 18 years.

    Before the aggrieved hordes of the Daily Mail and the Torygraph seize on that as proof positive that as a higher-rate taxpayer it shows I know you can’t raise kids on 44k of course I could have kept the wolf from the door, but to me life is about more than that. Many people get an awful lot out of having children, and if I had that sort of desire I would prioritise this up the stack and manage somehow.

    I didn’t do it because I didn’t want to hard enough. It’s called making choices in life, knowing your values and acting accordingly. It’s not the Government’s job to get involved in my lifestyle when if comes to such individual and personal decisions, unlike with services we all need, like healthcare and policing. And yeah, I know it’s different for guys.

    It’s going to be a rough ride, people.

     
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