LibertyVoter.Org

By Ryan Bourne

Ryan Bourne

Ask mainstream politicians in the UK or the US what can be done
to alleviate poverty, and the answers will probably be predictable
and unimaginative.

Progressive politicians will talk up the need for more
redistribution, minimum wage hikes, government job schemes and
subsidies for services, with childcare nowadays a favoured
priority. Conservatives will advocate targeted tax cuts and welfare
reform to encourage people to earn their way out of poverty.
So-called moderates will split the difference.

All implicitly agree the primary way to help the low paid is
through raising their incomes, either by government transfers, wage
mandates, shifting service funding responsibility to taxpayers, or
increasing the returns to working. But there’s good reason to think
this “income-based” consensus on poverty alleviation has
had its day.

Income is still extremely important, of course. Money matters to
human well-being. Progressives are correct that giving the poor
money or stuff makes their lives easier, and helps reduce poverty
for a large number of recipients (as are conservatives correct that
means-tested benefits disincentivise earning more money).

But what really matters is what people can afford with their
income. And it’s here where the political focus on income-based
solutions has left a huge blind spot which undermines anti-poverty
efforts — for government policies in other areas raise the
cost of living for poor people by increasing the price of essential
goods and services. This not only makes the poor worse off, but in
itself leads to demands for vast amounts of intervention and
redistribution.

Rather than instinctively
proposing new spending and regulations, our politicians should
instead adopt a “first do no harm” approach that unpicks
interventions that increase prices in the first place.

The poorest 20pc of households in the UK see close to 60pc of
their spending go on housing, food, clothing, transport and
utilities; in the US, on slightly different definitions, it’s 68pc.
Those with children see higher spending on clothing and footwear,
and childcare for those with infants can be hugely expensive too.
Families in inner-successful cities face much higher rents (and
often receive higher housing benefit or subsidies).

In all these sectors, government policies push prices
structurally higher. Land use planning laws in the UK and around
major US cities are a key driver of high house prices and rents.
Childcare regulation such as stringent staff-child ratios and group
size limits have been shown to raise prices, without improving
child outcomes. Significant tariffs are imposed on food imports at
an EU-level, and in the US sugar subsidies, milk marketing orders,
and ethanol mandates make food more expensive.

Highly regressive trade barriers on clothing and footwear
likewise raise the costs of dressing ourselves, and …read more

Source: OP-EDS