Poor performance

May 28, 2012 by
Filed under: Credit crunch, Public policy 


In preparation for a discussion on social mobility on Saturday’s Today Programme , I read a report on the subject by the Sutton Trust. The top line of the report, quoted by both Nick Clegg in his speech last Tuesday and Neil O’Brien who was debating with me on Today, is that Australia and Canada have similar levels of inequality to the UK but much higher levels of mobility. The DPM and the Policy Exchange Director used the finding to rebut the view that reducing inequality is the best way to increase mobility.

In fact, looking across developed economies the relationship between lower inequality and higher mobility holds pretty well, but what about the Sutton Trust’s Anglophone quartet?  The Trust report contains a table providing figures for mobility but also for per capita income (2010) and the 2008 Gini coefficient (widely seen as the most reliable measure of inequality). I wondered whether bringing income into the equation might shed more light on the inequality-mobility relationship.

My calculation was pretty basic but still came out with a powerful comparison. First, I calculated the national per capita income as a percentage of the OECD average. This gave figures of: Australia 121%, Canada 115%, UK 106% and USA 138%. Then I did the same nation by nation comparison on the OECD Gini coefficient average: Australia 110%, Canada 103%, UK 110% and USA 123%.

Because the per capita range is significantly higher (32 percentage point spread) than the coefficient (20 points) I damped down the former by reducing each number by a third, making the new per capita comparisons; Australia 114%, Canada 110%, UK, 104% and USA 127%. Then I simply subtracted the coefficient from the per capita. The resulting figures for per capita income minus inequality are: Australia +4%, Canada, +7%, the USA +4% and the United Kingdom -6% (if I hadn’t damped the per capita figures the respective figures would have been Australia +11%, Canada +12%, USA +15% and UK -4%).

Whilst the crude and arbitrary nature of these calculations won’t impress a statistician, this is more evidence that the UK is now a pretty grim place to be poor. It’s a double whammy. The least well-off in the UK suffer both from our relatively poor per capita income and our high inequality; they are both absolutely and relatively worse off than the poor in many other developed nations. I haven’t got the data to hand, but it is a pretty safe bet that the UK poor are also lagging way behind Scandinavia, Germany, Holland, Belgium and France.

Despite our current severe economic difficulties, I suspect most middle class people in the UK still feel they live in one of the richest countries in the world. Inequality not only makes life tougher for the poor, it also disguises the nation’s performance from a middle class for whom intra-national privilege disguises international weakness.

An important omission from data based on per-capita income is the social wage of public service entitlements. Including this would improve the relative standing of the UK poor in comparison to the equivalents in US but make little difference in relation to the other better performing nations, which on the whole have reasonably generous provision. And with an estimated 90% of public sector cuts yet to be implemented in the UK, the social wage is also set to substantially decline.

Now, the fact that the well-off in the UK are in the global Premiership while the UK’s poor have been relegated to the Championship does not in itself imply a specific policy response. Those advocating reductions in benefit entitlements and tough conditionality regimes will argue that they care as much about the poor as the advocates of greater redistribution. However, in comparison to debates about social mobility and welfare dependency, the sheer fact of the declining fortunes of our least well off is something which tends to get underplayed in mainstream debate.

As the Jubilee weekend approaches, the European Championships beckon (for the English at least) and the Olympics hove into view there will be a lots of flag waving and national pride on view. Perhaps at this time we should also bear in mind the following sentiments:

“Any society, any nation, is judged on the basis of how it treats its weakest members – the last, the least, the littlest.”

Cardinal Roger Mahony, in a 1998 letter, Creating a Culture of Life

“A decent provision for the poor is the true test of civilization.”
Samuel Johnson, Boswell: Life of Johnson

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Comments

  • http://urbanpollinators.co.uk Julian Dobson

    Thought-provoking post. I’ll leave the statistical analysis to others, but it does make me wonder whether the current fascination with social mobility corresponds to a rather uglier tendency to blame the poorest for their circumstances. If we can slightly increase people’s chances of escaping poverty, does that enable us to justify high levels of inequality and let us off the moral hook when confronted with the poverty that persists?

    The reality of course is that social mobility on its own does nothing to address the underlying issues. For me, a better question to ask in difficult economic circumstances would be what would improve the quality of life of those who remain poor, as well as creating routes out of poverty – and how can these improvements be fashioned by those who live in poverty, not just dispensed by well-meaning policymakers with no concept of what it is like to struggle to get by?

    Perhaps we should add another quote to supplement Mahony and Johnson. ‘Washing one’s hands of the conflict between the powerful and the powerless means to side with the powerful, not to be neutral’ (Paulo Freire).

  • Ian Christie

    A good post. I agree fully with Julian D above about the politics of the current discussion of mobility by Nick Clegg.
    Neoliberalism means, among other things, that the poor will always be with us as a matter of policy, pour encourager les autres. Increased social mobility will still leave plenty of people at the bottom or heading that way. As Julian notes, the core question is what kind of quality of life we are prepared to support for the worst-off. There is plenty of evidence that there has been a trend for many years now for the poor to be blamed for their condition and for most people to resist redistribution of wealth. This implies a decrease in empathy, which is what might be expected if inequality has grown and the economic and social distance between the affluent and the poor has grown with it.
    Rather than discussing social mobility, we might be better advised to discuss what an acceptable basic Social Wage might be and what kinds of basic capabilities we think all people should have – the elements of economic citizenship.

  • http://ziobastone.wordpress.com/ Zio Bastone

    Neoliberalism relies upon strange sort of mereology. Mill’s ‘least harm’ principle and Smith’s ‘invisible hand’ fuse into the utopian notion that the sum of everyone’s untrammelled selfishness will produce a selfless ‘good': ‘Who is society? There is no such thing! There are individual men and women and there are families and no government can do anything except through people and people look to themselves first.’ So freeing everything up, unpicking ‘society’, will produce only positive outcomes. Inefficient businesses? Competition. Unfortunate market outcomes? Deregulate. Apathetic entrepreneurs? Reach for the Laffer curve. Social inequality? Enable ‘social mobility’. Unemployment? Let’s make sacking that bit easier. And so on.

    Unfortunately ‘social mobility’ is another of those phrases that hide from real critique, as though everyone (excluding ‘scroungers’ obviously but including ‘hard working families’) moves steadily upwards towards the economic condition of Bob Diamond and/or the social condition of Old Money, except as impeded by ‘barriers’. Philosophically what’s implied is an atomistic world of distributions (hence the use of Gini coefficients) in which Society and/or the commons cannot even be imagined any more rather than a world which is also combinative, in which the structures we create for ourselves oppress or liberate according to who ‘we’ are and whose power is set to prevail.

    Power relations and how you deal with them, as Paolo Freire has said once again on this forum, are exceedingly important. The prostitute forced to share her income 50/50 with her pimp (Gini coefficient 1, or 100 in your notation) is evidence neither of upward mobility on the pimp’s part nor of an outcome of perfect social equality in the relations between the two.

  • Naomi Eisenstadt

    Matthew I heard you on Sat. morning and thought you came across extremely well. I was at the social mobility conference. Ed Miliband opened with an excellent speech. He not only affirmed his view about the link between inequality and poor social mobility, he also made the point about the structure of the employment market and our failure to really deliver on vocation and technical skills, rather than just academic routes. I am not sure I agree with Alan Milburn on the likely huge increase in professional vacancies in the future, but I do agree with you that if we have a relative social mobility measure, either some of our children have to come down, or we need a greatly expanded job market of well paying jobs.

  • Sam Earle

    I wonder if it’s worth while distinguishing between social mobility (ideal at least) that can be horizontal and social mobility that is vertical. It seems that most of the time it is intended in the latter sense, the essence of the great American dream etc. The problem with that is that it is it necessitates inequality – rather than reducing it – because to be ‘up’ is contingent on being above something. This law is also implicit in pareto optimality.
    Perhaps narrowing the income-gap, and increasing the income of the lowest paid jobs, coupled with broader educational/training opportunities, may facilitate ‘horizontal mobility’, wherein the fundamental liberty/freedom (as a right or as an aspiration) remains in tact, but does not necessitate economic inequality….

  • Matthew Taylor

    Some really interesting points here. Thanks folks. I suspect you will also enjoy this post from the excellent Stumbling and Mumbling blog http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2012/05/social-mobility-cui-bono.html