New Labour and poverty reduction (Lane Kenworthy)

I have been reading a very good book by my friend Lane Kenworthy, Progress for the Poor. It's a short book, but packed with information, insights, and thought-provoking arguments. Lane also has a gift for discussing complex subjects, including ones that require graphs and charts and the kinds of statistical analyses that many readers find off-putting, in clear and illuminating ways. (Anyone who follows his excellent blog, Consider the Evidence, already knows that—and if you don't follow his blog, why not?) Here's the back-cover blurb:

One of the principal goals of antipoverty efforts should be to improve the absolute living standards of the least well-off. This book aims to enhance our understanding of how to do that, drawing on the experiences of twenty affluent countries since the 1970s.

The book addresses a set of questions at the heart of political economy and public policy: How much does economic growth help the poor? When and why does growth fail to trickle down? How can social policy help? Can a country have a sizeable low-wage sector yet few poor households? Are universal programs better than targeted ones? What role can public services play in antipoverty efforts? What is the best tax mix? Is more social spending better for the poor? If we commit to improvement in the absolute living standards of the least well-off, must we sacrifice other desirable outcomes?

=>Right now I just want to quote a passage from p. 109 that highlights one legacy of Britain's New Labour governments. headed by Tony Blair and Gordon Brown, which I don't think has gotten enough attention:

One of the most successful recent antipoverty efforts in affluent countries was that of the New Labour governments in the United Kingdom from 1997 to 2010. Though Tony Blair and Gordon Brown's governments focused much of their rhetoric and policy reform on increasing employment and economic opportunity, they also increased benefits and/or reduced taxes for low earners, single parents, and pensioners. Tom Sefton, John Hills, and Holly Sutherland calculate that benefit and tax changes between 1997 and 2005 increased real disposable income for bottom-income-decile households by about 20 percent.  [JW: In the US, by contrast, the average income of the lowest 10%, including taxes and transfers, barely budged during that period; I suspect it may even be lower now than it was in 1997, though I don't have those precise figures readily available.]  My calculations using data from the Luxembourg Income Study suggest a similar increase (Figure 2.2). It was one of the largest in any of the rich countries for which reliable data are available.

Blair and Brown did not initially campaign on an antipoverty program. And there is little indication of demand among the British public for a surge in government generosity toward the poor. If anything, public support for redistribution and assistance to the poor was declining during the late 1990s. Yet a year into New Labour's first term, the government made a commitment to end child poverty in the United Kingdom within a generation, and this led to a raft of policy initiatives that boosted income among Britain's poor.

One reason this part of the New Labour story is less well known than it might be is that Blair and Brown didn't boast about it very much. Johann Hari once suggested, with only some exaggeration, that they seemed to treat helping the poor as something to be embarrassed about. Presumably, they didn't think the issue was a vote-getter, and they may well have been right. Yet they pursued the substantive policies anyway. That's worth pondering, too.

—Jeff Weintraub

(P.S. Full disclosure: I happen to be one of the people mentioned by Lane Kenworthy in the acknowledgements to this book—perhaps too generously in my case, though I won't pretend I'm not gratified. But that doesn't affect my rigorous objectivity regarding the book itself, which is genuinely first-rate and worth reading.)

=> For a follow-up (11/7/2011), see here.