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Monday, December 25, 2006

Paul Krugman: Helping the Poor, the British Way

Paul Krugman looks at how much progress we've made in the war on poverty in recent decades and finds it's not nearly enough:

Helping the Poor, the British Way, by Paul Krugman, Commentary, NY Times: It’s the season for charitable giving. And far too many Americans, particularly children, need that charity. ...

[F]our decades after L.B.J. declared war on poverty ..., I’m not sure whether people understand how little progress we’ve made. In 1969, fewer than one in every seven American children lived below the poverty line. Last year, although the country was far wealthier, more than one in every six American children were poor.

And there’s no excuse for our lack of progress. Just look at what the British government has accomplished over the last decade.

Although Tony Blair has been President Bush’s obedient manservant when it comes to Iraq, Mr. Blair’s domestic policies are nothing like Mr. Bush’s. Where Mr. Bush has sought to privatize the social safety net, Mr. Blair’s Labor government has defended and strengthened it. Where Mr. Bush and his allies accuse anyone who mentions income distribution of “class warfare,” the Blair government has made a major effort to reverse the surge in inequality and poverty that took place during the Thatcher years.

And Britain’s poverty rate, if measured American-style ... has been cut in half since Labor came to power in 1997.

Britain’s war on poverty has been led by Gordon Brown, ... Mr. Blair’s heir apparent. There’s nothing exotic about his policies, many of which are inspired by American models. But in Britain, these policies are carried out with much more determination.

For example, Britain didn’t have a minimum wage until 1999 — but ... Britain’s minimum wage rate is now about twice as high as ours. Britain’s child benefit is more generous than America’s child tax credit, and it’s available to everyone... Britain’s tax credit for low-wage workers is similar to the U.S. earned-income tax credit, but substantially larger. And don’t forget ... Britain’s universal health care system...

The Blair government hasn’t achieved all its domestic goals. ... But there’s no denying that the Blair government has done a lot for Britain’s have-nots. ... Providing a strong social safety net requires a higher overall rate of taxation than Americans are accustomed to, but Britain’s tax burden hasn’t undermined the economy’s growth.

What are the lessons...?

First, government truly can be a force for good. Decades of propaganda have conditioned many Americans to assume that government is always incompetent... But the Blair years have shown that a government that seriously tries to reduce poverty can achieve a lot.

Second, it really helps to have politicians who are serious about governing, rather than devoting themselves entirely to amassing power and rewarding cronies.

While researching this article, I was startled by the sheer rationality of British policy discussion, as compared with the cynical posturing that passes for policy discourse in George Bush’s America. Instead of making grandiose promises that are quickly forgotten — like Mr. Bush’s promise of “bold action” to confront poverty after Hurricane Katrina — British Labor politicians propose specific policies with well-defined goals. And when actual results fall short of those goals, they face the facts rather than trying to suppress them and sliming the critics.

The moral of my Christmas story is that fighting poverty isn’t easy, but it can be done. Giving in to cynicism and accepting the persistence of widespread poverty even as the rich get ever richer is a choice that our politicians have made. And we should be ashamed of that choice.

Previous (12/22) column: Paul Krugman: Democrats and the Deficit
Next (12/29) column: Paul Krugman: A Failed Revolution

Update: [Repeated from this post.] Paul Krugman emails a follow-up to the discussion on poverty and inequality in his recent column, and in the discussion in the post below this one. Here are links to the analyses for the UK:

You might also want to provide the sources for poverty and inequality analyses. ...[H]ere they are:

Poverty analysis:

New policy institute: http://www.npi.org.uk/reports/mpse%202006.pdf


Institute for fiscal studies: http://www.ifs.org.uk/publications.php?publication_id=3575

The reason Britain's an interesting case is that there has been a real shift in policy, from Thatcherism to an attempt to revive the welfare state after a period of conservative ideological dominance. Continental Europe is less of a useful model because it never had a Thatcher and never had a surge in inequality.

    Posted by on Monday, December 25, 2006 at 12:15 AM in Economics, Income Distribution, Policy | Permalink  TrackBack (0)  Comments (76)


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