Re: Heard on BBC Worldwide

Topics: Welfare
23 Jan 2006

From: Ervan Darnell

I didn't hear the report, but what it suggests to me is the zero-sum
mentality. It is that all output is fixed and the only question is who
gets the spoils. Welfare is the classic zero sum game, because the
budget is usually limited in any given year, and what one group gets
another does not. Obviously, free markets are not this way in that more
work produces more output, and incentives produce more efficiency. But
if you are a liberal and confused about a concept like productivity,
then growth is suspect because the belief is that measured economic
output increases because of some hidden cost imposed on the poor.
Conversely, the belief is that the rich don't deserve their wealth
(since the pie is fixed, they didn't produce it, they merely seized it),
and with the pie fixed anyway, redistribution increases "social
justice", without making us poorer on average.

I read somewhere that liberals believe people are a victim of fate and
conservatives believe that everyone has free will to be whatever they
want (which is ironic since conservatives often believe in religious
fatalism and liberals give lip service to human achievement). The truth
is surely somewhere in between (*), but the naive version explains both
extreme political reactions. Liberals don't want to blame any one for
their crimes nor do they find any value in rewarding their labors. On
the flip side, conservatives see no allowance for circumstance in crime
and tend toward "get a job, you bum", no matter how impossible that may be.

As to the particulars, I take the evidence to be good that economic
growth lowers poverty (at least poverty once you exclude people who
qualify for welfare). And, the converse, that high welfare lowers it is
mixed at best, and obviously very painful for the rest of society
regardess ("Losing Ground" comes to mind). You asked the best question
in (3) below. What would the liberals do instead? Something worse for

(*) Before someone quibbles, I don't mean to assert anything
philosophical about the nature of free will, but mean only in the usual
operational world of incentives and choices, people often seem to
operate as if they are making choices, which is still distinct from the
blind circumstance position, which I find to be contradictory on its own
terms ('nobody has free will, except us elite liberals making up the

Eric Smith wrote:

>Yesterday on BBC Worldwide (one of the few worthwhile channels on
>XM satellite radio), there was a new item about some organization
>whose name I don't recall issuing a report stating that economic
>growth is not an efficient way to combat poverty, as for each pound
>of growth only 60p goes to ending poverty.
>Unfortunately I can't find anything about this report online, but
>the story (really only a blurb) was irritating for several reasons:
>1) Who is to say that the purpose of economic growth is to combat
> poverty? If it happened to do that as a side benefit, that
> would be nice.
>2) How do you account for a percentage of economic growth that
> goes to ending poverty? If you only count direct spending,
> the amount must surely be much less than 60%, but if you
> count indirect effects I'd expect it to be higher.
>3) What is the alternative? If we don't have a pound of economic
> growth, in what other way can we finance increasing poverty
> relief by 60p? Certainly economic contraction won't help.
>4) Not having seen the report, I'm not sure if it is really
> presented this way, but the reporter seemed to be insinuating
> that ecomonic growth is considered a bad thing because only
> 60% goes to combat poverty. What percentage would need to
> be spent combatting poverty in order to make economic growth
> qualify as "good"?
>I suppose I expect somewhat of a socialist slant from the BBC, but
>this seemed worse than usual.
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