Have you noticed the Barnardos ad on bus shelters with a picture of a little boy staring out at you under the caption “It’s only poverty, he’ll grow out of it”?
It is one of those ads that make you stop and think. How will he grow out of it? Why do some children, who are born into poverty, escape it while others remain excluded from all the possibilities that a society has to offer? The ad suggests that your charity will help him; I’m not so sure charity alone will do the trick.
The problem of persistent poverty is a real one and an issue that has never been solved. If it had, it would have been eradicated years ago, not just for the good of the individuals afflicted by it, but also for the good of society.
Society is like an engine — if it is firing on all cylinders, it will operate smoothly, demand less attention. If one or two of the cylinders are broken, then the entire machine will suffer.
With that in mind, it is interesting to look at American studies of its underclass and the persistent poverty particularly amongst a large section of the black American population.
In recent years, a yawning gap has emerged between the black middle class and the black underclass, so much so that a recent survey concludes that close to 40pc of American blacks “can no longer be seen as a single race”. This — only 40 years after the unflinching race solidarity of Martin Luther King — is a phenomenal finding.
The easiest and possibly laziest explanation of black or any other group’s poverty is that it is all down to racism, discrimination or some other orchestrated societal bias. This may be a factor but it can’t explain the substantial black middle class.
Many other reasons have been proffered. Four decades ago, Daniel Patrick Moynihan — the Irish American politician who did so much behind the scenes coming up to the Good Friday Agreement — published a revolutionary paper. In it he ventured that the out-of-marriage birth rate and the percentage of black families headed up by single mothers — both at 24pc — might have something to do with poverty. He was dismissed as a bigot at the time.
Now many mainstream thinkers would say that he had a point about family structure as a possible contributory factor.
The New York Times recently carried an article about a study in Harvard by academic Henry Gates which is startling. Gates traces the family tree of 20 successful black Americans including Whoopie Goldberg and Oprah Winfrey. He discovered that 15 out of the 20 descend from freed slaves who had managed to obtain small plots of property by 1920. Back then only 25pc of black Americans owned property.
So if you are prepared to accept that there is a correlation between the success of middle class American blacks and their descending from black property owners, the question you must ask is, had all the freed slaves bought property, what impact would it have had on the fortune of their descendants?
Many have argued that property is wealth and wealth is the springboard for economic development. If you have wealth rather than income you can plan for the future, you can borrow against it and you can pass it on from one generation to the next. Property/wealth acts as a sort of pulley which allows right-minded people to borrow sensibly and thus, winch themselves upwards socially. In short, it accumulates. The idea of property rights and the centrality of property is the basis of Hernando de Soto’s groundbreaking work on persistent poverty in the Third World.
An extension of this idea might go some way to explaining how, after 15 years of a boom, Ireland still has persistent poverty. At the end of a binge, when the average income rose dramatically and the country went from being relatively poor to absolutely rich, how come we still have children below the breadline?
And now that consensus economic forecasts have suddenly admitted that the housing market has ground to a halt, what impact will the economic slowdown have on the prospects of those represented by the little boy staring out of the poster?
Despite all the allegations to the contrary, there has been a serious political effort to address income disparities in Ireland. In fact, in terms of the income gap between rich and poor, Ireland is right in the middle of the EU income league. The salaries of the top 20pc are over four times the average of the salaries of the bottom 20pc. This places Ireland above the UK, Spain, Italy and Greece but below Germany, France, Denmark and Belgium. However, the big problem in Ireland is not income — where all the Government’s efforts have been centered — but wealth. The gap between the wealth of the top 20pc in Ireland and the bottom 20pc is phenomenal. For example, the top 1pc of the country owns 24pc of the wealth and the top 5pc hold 40pc of the country’s wealth, according to Bank of Ireland figures. The poor cannot get their hands on wealth-generating assets.
As a result we have the typical Irish situation of no joined up thinking because one government policy negates the other. What is the point of throwing more and more cash at social welfare, if the core policy of inflating the housing bubble drives house prices out of the reach of the very recipients of social welfare who the Government purports to give a stake in society in the first place? The reason wealth is so important is that, unlike income, it can be used to borrow against, plan and dream of a better future. Borrowed credit allows people to live in the future and it is this ability to plan rather than just exist from day to day which distinguishes income from wealth. Income is spent today; wealth, in contrast, offers a platform for future progress.
This is why the property binge has been so damaging to the fabric of our society. It has put property, possibly the one true comprehensible wealth creating asset, out of the reach of thousands. So it doesn’t matter how much income you transfer in budgets and the like, because without wealth, income disappears like sand through your fingers.
More egregiously, by turning property into a speculative game of Paddy last, the poor Paddies who bought last will now experience the ludicrous situation where land, in one of Europe’s least populated countries, becomes an instrument of gradual indebtedness rather than wealth creation. In this situation, what chance has the little boy in the poster?
One of the problems I see with Ireland’s way of fighting poverty is that it mainly focuses on “giving money” instead of “making services unexpensive”. Lots of taxpayer money are given every year in child benefit instead of guarantee for example free health care for under 18’s. For those whose parents take care of, that child allowance will cover the medical expenses or even be saved for the future, but for those whose parents don’t worry about, they can be treated as livestock. Take the money and let them to be cared of by charity. With this system we will… Read more »
big_fredi I agree. Could you imagine how things would change in deprived areas if only we had sex education from primary school upwards like they do in the Netherlands. The results there are astounding, few single mothers pushing prams around caught in an unending cycle where the child in the pram ends up like it’s mother. In certain parts of the USA children are sent to ‘money camp’ during school holidays so they can learn to structure thier future. The standard of education in Ireland is high in terms of it being hard to get into college, get that A1… Read more »
And we have had a govt that decided to tax wealth creation for the rich at 20% ( Capital Gains ) and Labour at very low levels at 40%…go figure!?….The thing that bugs me the most about the new landlord class in Ireland is that because the present govt are in hoc to property developers/landlords etc…they have refused to amend our tenancy laws to reflect the same type of security of tenure that is found in Germany/Italy etc……people there mostly rent…because they know that some “robopaddy” cannot chuck them out or raise their rent whenever they feel like it….I bought… Read more »
It would be interested to see how many of the 1% who own a quarter of the country’s wealth are in the Parliament. Or even more interesting what is the percentage of those in the Parliament who do not belong to the 1% class of ‘The Richest’. Or even more interesting with the time involved. What is the percentage of those who are not in the ‘Top 1% Richest Class’ when they are entering the Parliament, and what is the same percentage when they are leaving a Public Job. Since a Public Job that we elected them to do certainly… Read more »
David, Very true what you are saying. Sand through the fingers. I earn 43,000e yearly as a structural engineer but I have problems meeting all the bills. I know there are many worse than me and I am grateful but I feel sometimes that I am making little progress. Rent, fuel, food etc. for 2 child family. Borrowing then worsens the situation. If, however, I had been given property I would be wealthy and my kids would have been born into it. I dont mind though, I won’t buy a house anywhere unless it is reasonably priced. Renting means that… Read more »
This piece does an excellent job explaining how inequalities in the distribution of wealth so distort economic opportunity. Earlier today, the Boston-based group, United for a Fair Economy, released a fascinating report of how these inequalities have played out in the ever-escalating subprime mortgage crisis. More at http://www.faireconomy.org/
I think that it is time that we changed our attitude and approach with regards to inequality. Inequality of incomes and living standards in later years is largely a result of inequality of opportunity in early life. Solving the problem is a different issue all-together. In the past, those on the right have either told those in poverty to ‘get on your bike’ or more productively used monetarist ‘trickle-down’ theories as a means of solving poverty. To an extent the approach is correct; in providing a stable and growing economic background, more employment, especially in the private sector is created.… Read more »
Overall I concur with most of the comment except one by conor. It is the work of the Right to make good and sure that the Left is peaceful, for if the left is not happy then the right does not exist. France and Imperial Russia, from one came the modern republic and the other …
either way, the old right you might say, lost the run of them selves.
David, please tell us more about “Joined Up Thinking”. What do you means by this? Please stop being all clever and writing catchy bestsellers; you have shown you can do that. Now start putting forward programmatic constructive proposals for what we can do to build for future generations.
BTW do you REALLY think citizenship should be based on blood?
All replies to this comment eagerly awaited!
David, please tell us more about “Joined Up Thinking”. What do you mean by this? Please stop being all clever and writing catchy bestsellers; you have shown you can do that. Now start putting forward programmatic constructive proposals for what we can do to build for future generations.
BTW do you REALLY think citizenship should be based on bloodlines?
All replies to this comment eagerly awaited!
Fergal, Surely there are enough qualified people somewhere that can be used to analise different government policies to see where they contradict, overlap or where one policy defeats the purpose of the other. An intra-departmental examiner in the government or the like to help achieve targets and objectives. An overhall of the Dept. of Education would be no harn either. As for citizenship it seems crazy we are allowing so many to enter the country with no Irish connections at all, especially the illegals-Nigerians topping the list. Roughly 600,000 newcomers (including 200,000 illegal), what if things take a downturn here?… Read more »
http://www.irishrefugeecouncil.ie/
enough said
Necessity is the mother of invention. We’ve had 10 years of no necessity. So we turned off the brain and binged or bought property. A little bit of hunger will start to get the brains fired up methinks – can’t wait for what the next 2-3 years will bring. Things will looking up as the waistlines will start shrinking. :)
David,
There is more than a hint of outright snobbery in your last article. Would you prefer to see your stereotypes drinking all day rather than trying to make some money? There is a large part of middle class Ireland who are willing a recession so that the so-called robopaddies will be put back in their place and the old order will be restored.We can go back to the Doctor/Solicitor/BankManager on top and all the rest kow-towing. No thanks!
John You’re being a little disingenuous here. The economic problems that Ireland, US, UK, Spain,and Australia are starting to feel, have their most obvious face as property, but do not really relate specifically to property. The explosion of the financial services sector rests squarely on cheap credit. The fundamental problem could be desicribed as: People & businesses have been borrowing money at unsustanablely rates, and spending it on overheads – directly or indirectly. This has created a business sector (including property) that now relies on a level of expenditure that is completely unsustainable. If you read ‘Smartest guys in the… Read more »
John,
Nobody wants a recession , but the property sector got out of control and threatened the rest of the economy. The “Galway Tent” brigade high jacked the government and together they were heading straight for a wall taking everybody else with them. David warned against this time and time again, but the powers that be castigated him at every opportunity as though he were a traitor. The latest excuse from the Government is that the present downturn is outside their control – they only take credit for upswings.
I’m sick to death of the guilt trip mawkish ‘charidy’ adverts that infest my evening televisual viewing, and give me indigestion whilst eating late night chips, drunk at the bus-stop. It’s not that I don’t care, it’s just that it’s hard to see it as anything other than cynical focus-group marketing. “Who will cough up the cash and how do we make them empty their pockets?” The generic ‘kid in the advert’ in not a victim of economic poverty but of overt neglect and/or abuse. ‘Poverty’ cannot be solved. At least ‘Relative’ poverty versus ‘Absolute’. If you’ve got a dishwasher… Read more »
Andrew! You have thouroughly provoked me as I rarely ever post. What you have written is most definitely well thought out and in my opinion accurate. Well done! I always thought of economists as boring oul number crunchers but you have added so many other dimensions to the subject. Plitical thought, social studies, parenting, ethics and of course oratory and english. Maith an fear. keep on truckin
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Dear Robert! Cheers for that generous endorsement. I’m glad you enjoyed reading my response to David’s article as much as I enjoyed bashing it out! I used to think Economics was dry and for the nerdy boys at school, so went the literature / philosophy route. Then, one day, I read the following Nietzschean quote: “Economics are the method, but the object is to change the soul.” Margaret Thatcher. I realised there was ‘a serious gap in my education‘. I still think Art, Culture and Ethics define Economics, but I accept the ideas of Economists have an enormous impact on… Read more »
In 1865 the freed slaves in Montgomery Alabama formed the First Baptist Church. A few years later the Second Baptist Church was formed by the ex house slaves who found the company of the freed field-hands unsavoury. Among them was Martin Luther King’s grandfather.The house slaves became the black middle class of today and the field hands became the black underclass. Culture is destiny. Think of the Irish maids of 19th century and their laboring husbands.
Very good observation on wealth v income. I was a parenting a large family alone in the 1980’s when the government introduced an excellent scheme which allowed council tenants a grant of £5000 to surrender their council house. This enabled me to put a deposit on a house on an acre in my own neck of the woods down the country. I had to massage the truth a little, but managed to get a mortgage and I have never looked back. I really struggled in the first few years – I had absolutely NO money and we were very poor,… Read more »
The damning statistic that the top 5% of the population own 40% of the countries wealth-and that this imbalance will worsen in the coming years puts Ireland in a kind of Argentina status where the wealth owning figures are pretty similiar. There a solid middle class were recently impoverished when fiscal juggling and devaluation wiped them out. The irish currency is happily protected from all this despite having the worst inflation record in the EEC. What happens when a huge imbalance in prices occurs within a common currency area.? Well, for a start, flight of capital.People from Italy and England,… Read more »