Inequality: Can Poverty Targets Be Met Without Tackling It Head On?

17 November 1999
Public event

Speakers:

Lucia Hanmer, Overseas Development Institute.
Fran Bennett, Oxfam Policy Adviser on EU/UK Poverty Issues.

Description

This meeting looked at the likelihood of halving the proportion of people worldwide living on less than $1 a day by 2015 (compared with 1990).

  1. The fourth meeting in the series was led by Lucia Hanmer of ODI, and Fran Bennett of Oxfam.
  2. Lucia Hanmer spoke first. She began by noting that the target of halving the proportion of people worldwide living on less than $1 a day by 2015 (compared with 1990) is likely to be met. This would not be true in some regions, though, for example Sub-Saharan Africa and South America.
  3. Turning to the central theme of her talk, Lucia reminded her audience that growth has less impact on poverty when income inequality is high. The effects of this can be seen at the country level, where the low inequality ones are projected to exceed the target rate of reduction by 2015, whereas the high inequality ones are projected to fall short. Assuming that unprecedentedly high rates of growth are ruled out (i.e. a sustained 7% per annum), reductions in income inequality in the high inequality countries are therefore needed, as well as growth.
  4. Tackling inequality head on, she argued, should focus on the distribution of assets: land, education and health; skills and capital and labour time. Gender relations determine income flows from assets as well as asset accumulation by households, and should therefore be taken proper account of.
  5. But it is also possible to find examples of governments in low income countries tackling income inequality directly. Taiwan, for example, has used redistributive fiscal policies to maintain an unchanging post-tax distribution of income while pre-tax income inequality has been widening.
  6. Lucia concluded by pointing to Tony Atkinson's argument that widening wage dispersion in the 1980s arose from changing social norms, and that these norms in turn affected governments' willingness to attempt redistribution.
  7. Fran Bennett began by arguing that while everyone tends to bracket 'poverty and inequality' together, they are not the same thing. In particular, relative poverty is not the same as inequality: we may want to reduce poverty and reduce inequality; or we may be concerned with inequality per se.
  8. The UK government's poverty targets, to abolish child poverty in 20 years and to halve it in 10 years, have been interpreted in terms of relative poverty. Yet in its first anti-poverty report, Opportunities for All, the government uses a plethora of income indicators, including 'absolute' poverty (an income level held constant from the baseline date) as well as range of thresholds (in addition to 50%) of both median and mean income to measure relative poverty.
  9. The need to attack inequality in order to achieve poverty targets arises first because of the mathematical relationships between the two, which apply (although in different ways) to all the various poverty measures. Inequality may need to be tackled directly to provide the resources (whether directly or indirectly) to meet the poverty targets. But income poverty, too, may need to be tackled head on if inequality, for example in educational performance, is really to be reduced.
  10. Inequality may need to be tackled head on, too, so that improvements for poor people are part of wider improvements (to avoid the trap of 'services for the poor becoming poor services'); lone parents, for example, tend do better in societies where women as a group do better, and there tend to be fewer poor children in societies where children are a higher priority for resources. But while the UK government does appear to be following redistributive policies, it is choosing to do so largely by stealth.
  11. Fran concluded by drawing some conclusions from the previous debate about what might be learned from the 'voice of the poor' about inequality. One message, she suggested, is that inequality of respect, including but not limited to race and gender discrimination, is a prime area of concern. But public discourse, over which government has much influence, often employs very damaging language (e.g. references to 'dependency' or 'abuse' of benefits) which then determines - and limits - the political and popular climate in which anti-poverty policies are developed and implemented.
  12. In the discussion which followed, the debate centred on three themes:
  1. The causal links in the growth-inequality nexus. The question of 'growth in what?' was debated, with contributors noting that this was important for both North and South. If tackling inequality called for a focus on assets, e.g. education levels, this might necessitate a different pattern of growth within an economy. The pursuit of appropriate technologies was seen as an important element within this.
  2. Empirical evidence on rates of reduction in inequality. While the 1980s showed that rapid increases in income inequality were possible, there did not seem to be much if any evidence showing that rapid decreases were possible too.
  3. The role of social norms. There was a wide range of opinions on how norms about what was politically and socially acceptable impacted on these matters, and in particular, the question of inequality. One view saw it as almost a taboo subject, necessitating any attack on poverty to be divorced from it. The opposite view argued that if it was unacceptable as a term, it was only so in some countries but not others.