06 April 2013

Why Are "The Poor" Poor?

This is the age old question but goes to the heart of the current poisonous debate about welfare.

The Victorian notions of "deserving" & "undeserving" poor are back with a vengeance & it is no accident.

The United States, as ever, are 20 to 30 years ahead of us in the powerful right wing rhetoric & dismantling of the welfare state. For them as usual, the debate was racialized by the term "welfare queen" - supposedly feckless single (black) mums milking the system by excessive irresponsible breeding. But the tough sanctions over there including locking up 2.5m people in jail don't seem to have made the poor & "feckless" reduce in number or "come to their senses". Quite the opposite!

Whatever you think the reasons for the growth of "benefit dependency" or inequality, the result is EVERYONE at the low income end, regardless of how hard they try, are suffering because of the stigmatizing of the poor by our media & political establishment & the resultant public support for the removal of state help.

The tide of propaganda has turned neighbour on neighbour in the poorest areas & a majority now seem to want welfare cuts, even though the most hardworking low paid will lose the most.

So to the crux of the argument. Are there more (millions more) lazy feckless people defrauding & abusing our benefits system than there were, say 30 or 40 years ago? And if there are, where have they come from? How have they been created? Is it because welfare is now "too generous"?

The starting point to answering this, is not to look at the welfare state but to look at the jobs market.

With the emergence of "stagflation" in the 1970s, largely caused by massive oil price inflation, governments abandoned the concept of "full employment".

One of the founding pillars of Beveridge's welfare state was the removal of the evil "idleness". To do that there has to be not only "plenty of jobs", but at wage levels that provide a "reasonable" standard of living, i.e. "a living wage".

While the economy was booming in the 25 years after the war with massive technological advances in labour saving devices mass produced for "consumerism", there seemed to be an acceptance by the ruling class of having large numbers of reasonably paid jobs, low unemployment & less excessive salaries at the top. Low skilled workers were in demand, could achieve livable wages & have a choice where they worked.

As well as this, houses were being built at an unprecedented rate - four times the numbers of today & this kept housing costs down allowing a decent & growing disposable income for most. And of course this building (mostly with borrowed money!) greatly increased the assets of the country well into the future and economic growth for future generations, as well as helping pay the debt down easier in the long term. In the last 20 years by building a millions houses less than France we have deprived our country of wealth for generations to come.

Where I'm going with all this, is that the financial DIFFERENTIAL between low wage jobs & welfare benefits was much greater then than today. Not only are low wages lower today but we tax low wages far more (and high wages far less). Council tax hits the low paid far more than the rates ever did & VAT & National Insurance that hit the low paid most, have both been more than doubled. While the top rate of tax & taxes on profits have been halved.

Put simply, the "lazy & feckless", if we really insist on labelling millions as such, were mostly in work because there were big financial incentives to do so & jobs were in plentiful supply. Yet excluding housing costs, welfare is actually less generous now than it was then, in fact "the dole" has been halved from around 20% of the average wage to about 10%.

The attractiveness of welfare is largely to do with the housing crisis. Whereas housing costs were less than a fifth of wages 30 years ago, they are now more than half of low paid wages.

The skill levels & determination required are far higher today to secure a living wage. Consequently, even though people are generally more disposed to work harder & accumulate more skills, more of these "lazy feckless" find themselves without a job or fall into despair at how daunting & unrewarding the whole process of low paid work can be.

So why are welfare "scroungers" seemingly far more visible than in the past? Well partly because the media focus relentlessly on them, but also because long periods of worklessness ARE far more prevalent ever since Thatcher encouraged long term sickness to massage down unemployment figures.

But also it is inequality - a deliberate government policy made worse by the pressures of US global influence. Whereas in the past the middle class gladly took council houses and architects could live next door to street cleaners or bricklayers. Nowadays we are very ghettoised between rich and poor who lead very separate lives usually miles apart. This separation means the middle class mainly know the poor through the media and they don't get a very flattering picture!

1 comment:

  1. Interesting post. The question is why are the poor, poor. Well I guess the answer is because there are rich people in the society. First of all, the obvious is that if all the people were earning more or less the same amount of money then there wouldn't be a category of poor people, or at least you could say that everyone is equally poor.
    But the main cause of the poor people I believe is the capitalist society that we are living in. The "capital" or lets say the rich people in a capitalistic society they will always try to increase their profit. This will happen with either reducing the salaries of the people who work for them, or reducing the spent money for the manufacturing process of their product, or by reducing money spent for raw material, or by increasing the price of their product. In all cases the person who suffers is the employee. In the first case his salary will be reduced, in the second case he will be fired to be substituted from a machine, in the third case the company or provider of the raw material will have to reduce his prices to be competitive and thus in the same process affect the well being of his own employees. Finally in the last case again the consumer will pay higher price thus again burden his economic status. Following the fallen economic power of the employee, will end up getting a loan or mortgage or generally get in debt in order to be able to provide and be "happy" in the society we are living. The poor also are very convenient for the "capital", since a poor person has not the capabilities to educate himself, and thus grasp the understanding that he is being a victim and try to change the situation. The poor learns that this is his fate, that is how the society and being bombarded by the media and the other allies of the "capital", becomes the perfect slave in a consumer society, where an iPod, iPhone a fast car, a 50" TV etc. are all important for the happiness of a person. So from my understanding "The poor" people are poor because the greediness of the capitalism society is uncontrollable. And since they say it is always good to think out of the box, none of the existing politicians, analysts, financial advisers etc is capable to solve this problem, because all of them belong and think only in the box of capitalism. In order for the poor not to be poor we need to think out of the box and move to a society that doesn't measure it's success on growth and financial prosperity. In order for that to happen thought we will have each one of us to look inside and face and accept what such a change means. That's the hard part!