Kristian Niemietz, 2011, London, Institute of Economic Affairs
Reviewed by Stewart Lansley and Joanna Mack
Underlying A New Understanding of Poverty is an explicit aim to decouple measures of poverty from concepts of inequality so that the poor would no longer be seen to be, in principle, entitled to share proportionately in economic growth. Under Niemietz's proposal for a new measure, the poverty line would thereby fall slowly behind the rise in wider levels of prosperity, with profound implications for the measurement of the extent and character of poverty in the UK.
In this review, Lansley and Mack welcome Niemietz’s recognition of the merits of a relative rather than an absolute measure of poverty, a significant development for a book published by the traditionally liberal market thinking Institute of Economic Affairs who, along with other right of centre think tanks, has tended to dismiss relative measures. Indeed, Lansley and Mack welcome Niemietz’s proposals for what he calls a ‘Consensual Budget Standards Approach’(CBSA), though they are surprised that he largely fails to recognise the extensive work already done on such a measure, in particular by the Minimum Incomes Standard project.
Lansley and Mack also accept much of Niemietz’s critique of purely income-based poverty measures, the limitations of which, they argue, have long been recognised. But they take issue with Niemietz’s conclusions from this that the link between poverty and inequality needs to be broken. In particular, they take issue with Niemietz’s argument that ‘one serious problem with relative poverty measures is that a commitment to minimising inequality cannot be an element of a free society’. This, argue Lansley and Mack, is entirely a value judgement that does not bear rigorous analysis.
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Free market think tank proposes new poverty measures