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02-Sep-07

Not always with us

01-Sep-07

The Economist blog again:

Many on the left would like to ditch the current poverty measure for a relative standard that indexes the poverty line to, say, 50 percent of the median income, or the means to buy 80 percent of the average level of consumption on a socially determined set of “basic needs”. This would ensure that the poor will always be with us, by definition, even if the meekest among us haul in $1,000,000 per year, or if anti-gravity sky yachts come to be widely accepted as a “basic need”.

This is self-evidently wrong. Using the 50% of median income definition there would ‘by definition’ be no relative poverty if the poorest person had an income of 51% of the median. There is no logical or mathematical reason this can’t happen. There may be practical reasons (the income of some self-employed people can often plummet in one year only to jump again the next) or political ones (opposition to a citizens basic income or higher conventional benefits), and I suspect it is opposition to the political solutions that’s behind this suggestion that relative poverty can’t be eradicated.