As opposition leader Mark Latham vowed to wage war on poverty. It’s an idea he revives for his latest Quarterly Essay, Not Dead Yet: Labor’s Post-Left Future.
According to Latham, poverty isn’t about a lack of money. The dole is generous enough to cover people’s basic needs, he says. It isn’t about a lack of opportunity either. He says our thriving post-Keating economy has plenty of jobs for those with the ambition to pursue them.
According to Latham, the real problem is an underclass mired in a culture of poverty. It’s a group of people trapped by shared sense of hopelessness and a pervasive lack of aspiration. Instead of taking responsibility, these people have gone feral "leading lives of welfare dependency, substance abuse and street crime."
The underclass is sustained by large public housing estates that concentrate disadvantage, says Latham. When disadvantaged people are clustered together, young people lack positive role models and dysfunctional behaviour becomes normal.
To destroy the culture of poverty and persuade the underclass to help themselves, he argues that governments should break up these dysfunctional communities. "The starting point for reform must be a policy of dispersal, " he says.
It’s easy to see the political advantages of Latham’s plan. If poor people cause poverty there’s no need to risk a popular backlash by challenging stereotypes about welfare recipients. And if welfare payments and services are already adequate there’s no need to run deficits, raise taxes or look for unpopular budget cuts. The system is basically ok.
The only serious problem with Latham’s plan to end poverty is that it won’t do much to end poverty. As US researchers Jens Ludwig and Susan Mayer explain:
Many public discussions assume that reducing poverty among future generations and reducing the intergenerational transmission
of poverty are equivalent goals. They are not. The poverty rate in the children’s generation depends not only on how many poor children grow up to be poor adults, but also on how many nonpoor children grow up to be poor adults. Reducing the chances that poor children become poor adults will dramatically lower future poverty rates only if most poor adults begin life as poor children.
In the US, most poor adults do not begin life as poor children. While the percentage of children from well functioning non-poor families who become poor is low, the group is very large. As a result, most of tomorrow’s poverty will from today’s non-poor families. The same is likely to be true in Australia. Most poverty will emerge from non-underclass suburbs.
This isn’t to say that a place-based approach to poverty is a bad idea. Preventing the next generation from inheriting their parents’ poverty would be an important achievement. But there’s little evidence that Latham’s plan to move people out of disadvantaged neighbourhoods would work.
It’s not that the idea hasn’t been tried. In the US, the Moving to Opportunity (MTO) demonstration tested the idea that moving households with children from government-subsidized, project-based housing in selected high-poverty areas to areas with lower poverty rates. The results the experiment were disappointing. As Ludwig and Mayer write:
Although evaluations of MTO after four to seven years find that moving to less disadvantaged communities reduces risky and criminal behavior in girls, they find that such moves on balance increase these behaviors in boys and have no detectable effects on children’s academic performance, such as achievement test results or the chance of dropping out of high school. It is possible that the benefits of moving away from very disadvantaged neighborhoods may become greater over time, or that the benefits may be more pronounced among children who were very young when they moved. But there is as yet no strong evidence that moving poor families to less disadvantaged areas will substantially change children’s life chances.
While preventing poverty is better than dealing with it after it happens, it’s a lot harder than it looks. So as Ludwig and Mayer write: "To reduce poverty among future generations, there may be no substitute for a system of social insurance and income transfers for those children who end up poor as adults."