A pincer movement of sheer lunacy - Part II

In Part I (here) I bemoaned the absurd overreaction by the professionally smug to the non-news that newspapers buy information obtained by illegal phone tapping. A week has now passed since a Parliamentary committee manned by incompetent cross-examiners conducted a kangaroo court trial of three people connected to a particular newspaper and failed to pin a tail anywhere near the donkey's anus. The only public outcry of which I am aware concerns the distasteful bugging (tapping, hacking, call it what you will) of telephonic communications involving the families of deceased people. Reprehensible though I consider such activity to be, there is no evidence that disclosure of any improperly obtained material has caused inconvenience, embarrassment or upset to any family members. In short the whole thing is a bit of a non-issue over which politicians - sniffing the chance to pass laws preventing their own sordid secrets being exposed - have whipped themselves into an unnecessary lather.

Part II is about the apparent intent of all our main political parties to make electricity oppressively expensive. I am not going to rehearse the unanswerable arguments against reliance on generating electricity from wind and waves, nor am I going to rail against those in rabid servility to every scare story promoted by those whose financial position rests on acceptance of the catastrophic man-made global warming hypothesis. My concern is with something much more basic and, in my view, important.

As recently as twenty years ago I doubt many would have argued with the proposition that elected politicians in the UK had one duty above all other - to do what they considered to be in the best interests of the people they represent. Of course there can be honest disagreements about what is in the best interests of the little people but the focus of the exercise was unaltered by the outcome of the debate. MPs were in parliament to represent their constituents by acting in what they considered the best interests of their constituents. On local issues they would fight for what they felt was best for the constituency, on national and international issues they would broaden their remit to cover all the people living in the UK because the interests of their constituents were the same as the interests of every other person in the country.

Is it in the best interests of those living in a particular constituency and those living in all constituencies for electricity to be cheap or expensive? To my mind that is not a difficult question and should permit only one answer. Cheaper electricity eases pressure on household budgets and reduces the costs of doing business, as such it is a blindingly obvious desire for any right-thinking person whether or not he is a Member of Parliament. More expensive electricity hits the poorest hardest and hampers our businesses in their aim of selling goods and services to overseas customers. It takes a weirdly warped sense of priorities for any MP to promote a policy that impoverishes his own constituents and the country as a whole.

We all know why they continually pass laws making electricity ever more expensive. In part it is because they have fallen for the great global warming scam. In part it is because they hope it will bring in additional tax. In part it is because they want to set a pointless example to other countries in which politicians are not so craven to Saint Al of Gore and his distinctly unmerry fellow-travellers. In part it is because they have fallen for the "green jobs" scam. In part it is because they are scared of the party whips. In part it is because they think there might be votes in presenting themselves as "green". All these things explain why they support a particular line of policy, but none justifies voting for measures that hurt their constituents and damage the economy of the whole country.

Never let it be said I will miss an opportunity to state the obvious, and today is no exception. The reason we in the UK enjoy our current standard of living is that we have found ways of making physical comfort cheaper than it was before. Human beings have always been doing this and over the last two hundred years or so we have done it so successfully that we now measure material deprivation in the UK not in terms of basic housing, food and clean water but in terms of access to the internet, holidays and mobile telephones. Material comforts that are now taken for granted and deemed essential to subsistence living were either science fiction or oppressively expensive as recently as forty years ago. This happy state of affairs has been brought about by the amazing ability of human beings to invent new things and improve old things so that a luxury lifestyle of the 1950s is attainable on the minimum wage in 2011.

At the heart of all this improvement in the quality of everyday physical comfort is electricity. The cheaper it is, the better we all live. And do not ever forget that those earning good money will always be able to afford comfort, what really matters is allowing those of modest means the ability to get more comfort for their limited money. That is a fundamental part of the duty of MPs to act in the best interests of their constituents and of the country as a whole. However tempting it might be to satisfy international or party agendas, their duty is to their constituents and to the UK. Electricity costs are at the heart of all our lives, especially those of modest means, and any MP with his or her eye on the ball should be fighting against any government measure that increases its price.

Why do we seek economic growth?

The excellent Mr Stan left a comment last week questioning why so much store appears to be given to the state of the stock market. If you don't know Mr Stan you really should visit his place, he's on fine form.

He started his comment by expressing concern about the perpetual chase for growth, (be it in GDP, revenue or profits) and posited that it is done to try to improve standing in the stock market. He then questioned why the state of the stock market is treated as the most important indicator of economic importance. I don't often disagree with Mr Stan, but I do on this subject. Let me say why.

Seeking economic growth is not just about trying to get richer. Most of the time it is more concerned with trying not to get poorer. Inflation is always with us, so we have to improve our income just to be able to stand still. Some of us remember annual inflation running at between eight and fifteen percent for year after year and look on current levels as light relief from those times, but even at about five percent (my best estimate of the real cost of living increase suffered by real people today) someone with a disposable income of £10,000 must raise it by £500 next year just to maintain his current standard of living. The business he works for cannot just magic money out of thin air, it needs to receive more if it is to pay more, so it must achieve a growth of revenue just so that its employees can remain as they were.

More than that, people have ideas and want to profit from them if they can. Maybe they write a novel, maybe they invent something entirely new, maybe they see a way to improve an existing product or find a way to make an existing product more efficiently. They might be rich, poor or of average wealth but no one will stop them wanting to put their new idea into practice and to profit from it. That is human nature. Economic growth is an aspect of human nature.

That point is worth a few more words, not least because we are constantly beset by bleating greenies who tell us we should forgo material pleasures and commune with nature. How, I wonder, do they decide on the ideal state of affairs? Were they to be forced to live in an Ethiopian village with insufficient food and water for the population and hardly any access to medical facilities, would they jump with joy or would they say "um, actually we don't mean this sort of communing with nature". The answer is obvious. OK, how about sitting them in a bit of rural India where there is plenty to eat and ample fresh water but the homes are flimsy shacks and the food requires year-round hard labour in the fields? They don't mean that either. Do they mean somewhere like London in the sixteenth entry? An astonishing comfortable paradise compared to the Ethiopian village, but utter squalor compared to Victorian London. Do they mean Victorian London before fresh water and mains drainage were the norm? Perhaps that is approaching what they mean, but there is no sense in putting up with the avoidable problems of that existence when those problems are avoidable.

You can't have the benefits of economic growth without accepting that they are benefits of economic growth. You can't stop the clock and say "everything is tickety-boo" because everything is not tickety-boo. The concept is based on a false premise. The false premise is that we have reached a state of affairs that is good enough. There is a certain degree of logic to it because life for most of us now contains no real threat of starvation, malnutrition, death in winter from hypothermia or death at any time from cholera or dysentery. But that is to look on mere existence, mere subsistence, as a satisfactory state of affairs. Yet the definition of mere subsistence today is radically different from what it as a hundred years ago because economic growth has raised the bar.

The greenies who say we have a more than adequate existence today form that view by looking at things today and comparing them to times past. Why not roll the clock back a hundred years and apply the same argument? Life in the most developed countries was viewed as hugely comfortable because it could only be compared to what had gone before. No doubt there were arguments against seeking further comforts because the current state of affairs was viewed as quite good enough, thank you very much. We look at those times and see them as harsh and, in many ways, squalid. Has economic growth since 1910 been a good thing or a bad thing, has it improved the quality of life or merely added unnecessary luxuries? You can live as they did if you want to, but it's not for me. Even the nastiest sink estates contain homes of greater comfort than those inhabited by most British people a hundred years ago.

Economic growth provides real benefits on both an individual and a collective scale. Further benefits will accrue through future growth. They cannot be measured because we don't know what they are, they don't exist yet, but they will exist. Central heating, motor cars, fridges, washing machines and battery operated boyfriends for lonely ladies started as science fiction. Now they are everyday things that make life better. None of them would exist without a constant striving for economic growth spurred on by the profit motive. The same can, of course, be said of the personal computer, without which you would not be reading my meanderings. You see how important it is and how shallow life would be without it?

I doubt that companies seek growth in order to look good on the stock exchange. The stock exchange is just a measure of what other people see as the value of shares in the listed companies. Companies don't collapse because their share price falls through the floor, their share price falls through the floor because the company is collapsing.

Mr Stan is undoubtedly correct in bemoaning excessive reliance on stock exchange indices as indications of the state of national economies. Not only are too few businesses included for them to give more than a limited picture of the state of affairs but they also cover only large businesses and are skewed by fluctuations in the share price of the very largest companies. They are, however, some evidence of what is going on, particularly because the fate of shares in big companies affects such things as the value of pension funds and the premiums insurance companies have to charge. He described the stock exchange as "a glorified gambling cartel". There is a lot of truth in that but it doesn't stop it being a fair indication of the current state of big business.

Are the Conservatives moving in the right direction?

With the Budget speech now only a couple of days away I sit here on Sunday night full of roast pork and delighted that, at long last, there appears to be a difference of substance developing between the economic policies of our main parties. In particular, the Conservative front bench is now making increasingly loud noises about the need to make severe cuts in government expenditure. They are not yet, however, saying the one thing I long to hear.

The Chancellor and his Shadow have been setting out their stalls in advance of Wednesday's Budget, there is quite a nice summary in a piece on the BBC website (here). After a gap of a few weeks following the refusal of the G20 leaders to endorse Gordon Brown's ludicrous call for yet more non-existent money to be used to "stimulate" economic activity, it appears that the spendthrift government is reverting to type. We will see on Wednesday how Mr Darling chooses to package it. What is already clear, however, is that he will continue to borrow and spend in the belief that government can make the world of business take risks it does not want to take. His shadow, George Osborne, is emphasising the need to reduce government borrowing to prevent it being a albatross around the country's neck for generations to come.

Both my regular readers will know that I am no fan of debt. Debt is self-induced inflation causing things you buy to be more expensive than their sticker price because you have to add the interest payable on that price to get the true amount payable. That is as true for a government as it is for an individual. We appear to be facing the prospect of the government borrowing in the region of £150billion over the coming year; it could be a little less or an awful lot more but it cannot be a lot less. They will not able to rummage down the back of chair and find £150billion to pay it off any time soon, after all it is about a quarter of the total amount they spend each year, so it represents a long-term burden unless something radical is done to address the problem.

What should never be forgotten about government expenditure is that it happens because the government of the day considers it necessary. It should also not be forgotten that governments seek reelection periodically and will, for understandable political reasons, not be prepared to cut areas of expenditure that will lose votes in key constituencies even if they believe the expenditure is not merited in itself. There is nothing corrupt in this, it is part of the price of democracy. Yet, like all political pressures, the existence and nature of the pressure change over time. In the 1960s and early 1970s it was inconceivable that a party arguing for the dismantling of massive nationalised industries could be voted into office, eventually the economic absurdity of those industries was so well-proven that the argument became a vote winner rather than a suicide note.

An interesting benefit of the current slump is that there is increasing interest in examining exactly what government spends money on. No one can be surprised at Mr and Mrs Ordinary asking how this that and the other can be justified now, despite expressing no such concerns when there appeared to be money to burn.

George Osborne is identifying a number of areas of government expenditure which can be eliminated without losing votes, such as the identity card scheme and certain of the more pointless quangoes. These represent a tentative first step in the right direction and there must be a significant chance that they are genuine vote winners. More importantly, they establish a precedent for reducing what government does rather than just looking for ways to allow it to do the same things but a little cheaper. Efficiency savings are sought by every government, including the present one, but they are just tinkering at the edges they do not address any point of principle. Mr Osborne seems to be addressing the point of principle, namely that very range and scope of the State operation needs to be challenged because it is unaffordable.

What he has not yet done is explain this principle in terms. To a degree I can understand his reticence because it involves opening up a debate the British people have shown no stomach for over more than a decade. He is dipping his toe in the water, seeing what reaction his current proposals receive and, of course, seeing what effect there is on the opinion polls. How far he and David Cameron want to go in slimming down the role of the State remains to be seen, they have not set out a clear position yet. Others in their party, such as John Redwood, have set out a clear position on this for many years. As those who follow Mr Redwood's blog will know, he is no fan of big government. In fact he is adamantly opposed to big government and high taxes because he believes they hurt the poorest in the country most through increasing employment costs and, therefore, reducing employment opportunities and by requiring such enormous tax revenues that the many at the bottom of the pile have to be hit hard for the government to have any chance of raising what it claims to need. I have written before about how those at the bottom can only be helped if those in more comfortable positions help them (in particular here and here). What is, I would suggest, obvious is that those at the bottom are not helped by big expensive government.

Current economic conditions provide the best opportunity in my lifetime to undertake a wholesale reform of the size and scope of government. A series of very obvious questions arise: (i) if big government is so successful in controlling the economy how was it not able to avoid the present slump, (ii) if big government is so good at running medical services why do we have greater infection rates in State hospitals than in private ones, (iii) if big government is so good at running schools why do so many children leave school at 16 barely able to read and write and why are universities having to introduce remedial classes for state school freshers but not those coming from the independent schools, (iv) if big government leads to safe societies why are we spied-on by the largest concentration of CCTV cameras of any country in the world, (v) if big government is the answer to relative poverty why has it not decreased as government has increased in size? The list can go on and on.

For more than a decade we have had a steady increase in the power and expense of government. Mr Osborne is starting to address the expense side of things. His job will be made easier if even modest changes to the power of the State are also proposed because the more power the State has the more it costs to wield that power. I believe the mood in the country is now receptive to the idea that the State is too big and too powerful. My hope is that Mr Cameron, Mr Osborne and their colleagues have the courage to tap into that mood.

Nurture the strong, Part II

As I tried to explain yesterday, I believe it is necessary to look after the strong if the weak are to be assisted. I suppose the principle is that you shouldn't kill the goose that lays golden eggs. Underlying my point is the biblical saying about the poor always being with us. Although I dispute use of the words "poor" and "poverty" to describe all but a very small number of people in this country, I will use them here to refer to those for whom providing themselves with housing, food, clothing, heat and water is a financial struggle. We all search for ways to reduce poverty and some idealists get so carried away with their good intentions that they claim to be able to abolish poverty completely. The error in their reasoning is that they leave human nature out of account.

Let's assume we elect a radical government that nationalises all property and distributes it in equal shares to every adult. For a fleeting moment poverty (in the modern sense of inequality) would be abolished because we would all have exactly the same, but only for a moment. Someone will find a pack of cards and start a game of poker, resulting in some ending up richer and some becoming poorer. Someone will turn his money into cans of lager and thence into an even less tasty liquid. While this is happening, someone else will sit at home learning crochet and find himself relatively richer than the losing player and the boozer and relatively poorer than the winning player and the lager seller. Through a combination of differing personal habits, differing skills and differing luck the same inequalities will arise as currently exist. Current levels of financial inequality might never be matched, but inequality is inevitable as is the loss by some people of everything the State so helpfully gave them. As they walk out of the poker room dressed in nothing but a barrel held up by sturdy braces they might curse their bad luck at running into a straight flush when they held four of a kind, but that's the way of life because people take risks and some lose.

I wrote yesterday of how Mrs Thatcher's famous words "there is no such thing as society" have been misconstrued for over twenty years. She was addressing the concept that "society" is a thing with a mind and body of its own and is capable of doing things; her point was that only people can do things. That is not to say there is no such thing as society in all contexts. A cricket club is a society, a village is a society, a country is a society, but each is a society in a different way. The one thing societies have in common is mutual dependence among their members. The best cricketer in a club is of no use unless another ten player turn out to make a full team. Village society consists of numerous acts by which people rely on others and others rely on them - Mrs A does Mr B's washing because Mr B is housebound and can't cope with that work, Mr C gives Miss D a lift to the shops, the whole village gets together for a jumble sale and a fireworks party and so it goes on. The larger the group the more nebulous the links are that make them a society and the more individual smaller societies exist within the large one. Each cricket club is a society, all the clubs which play in a particular league form a further society and all the teams playing in similar leagues around the country are a larger society again. They all have something in common and they all depend on each other to a greater or lesser degree.

Describing a country as a society is rather more difficult, particularly when, as now in the UK, the government creates or exacerbates divisions to set groups against each other. Nonetheless there is an important respect in which it is possible to see the whole of the UK as a society because some things affect the whole of the country. Decisions taken by the UK government obviously come into that category but so do decisions taken in other countries which affect our ability to look after ourselves.

A fine illustration of this is taking place in eastern Europe at the moment. Back in the days of the USSR the discovery of vast reserves of natural gas in Russia led to supplies being piped to numerous of its neighbouring states because they were all under rule from the Kremlin. The dismantling of the Soviet empire into individual sovereign states did not suddenly give those states their own gas reserves, they continued to rely on Russia for supplies. Gas has become an essential fuel in these countries just as it is in the UK. It not only boils a Ukrainian's borshch it also generates some of his electricity and fires his heavy industries. The tap remains stubbornly situated on the Russian side of the border giving the old Imperial power the ability to cripple its neighbour and demand just about any price it likes. The current huffing and puffing will die down before long, at which time Russia will receive a much higher price than before and Ukraine will have suffered massive financial losses. The simple fact is that Russia and Ukraine are not part of the same society these days, unlike when the pipelines were first built and reliance on gas became established. In those days losses in Ukraine were losses for the whole USSR of which Russia was, of course, the largest part. These days Ukrainian losses do not cross the eastern border.

Nations are the largest manageable societies in history. All the wild celebrations when London was selected to host the 2012 Olympics illustrated a bond of nationhood. It was not so much hosting the Olympics that was being celebrated, it was that a contest was won in which we, as a country, were involved. It was all the sweeter for putting one over the French, and all the more bitter for them because London was chosen rather than anywhere else. That the games will cost money we don't have and will not produce one hundredth of the long-term benefits being claimed for them is neither here nor there. We won, and it was "we" because the concept of nationhood is real and binds people in a way that being European or part of a "world community" never will. It is the same historic and cultural bond which caused artificial political constructs of countries like Czechoslovakia, East Germany and the USSR itself to revert to the units with which their people felt comfortable.

Once a society exists, the point I made yesterday applies to that unit - be it a club, a village a county or a country, each of them can only operate through individual people. But that is only part of the picture. That illustrates how things work looking from the bottom upwards. For example, when it comes to plumbing I know very little, I am weak and poor in my knowledge, I have to look up the chain of knowledge and skill to find someone to help me when a pipe bursts. It is to my benefit if his business remains healthy because he will be available when I need his services again. But what about the top-down picture? What determines whether he is in a position to help me? One factor is the forces on him from further up the chain. He needs a supply of copper pipes, joints, solder and a blow torch, he is dependent on his suppliers and they are dependent on the suppliers above them. In some fields it is inevitable that the ultimate link in the chain is an importer who is reliant on finding a supplier overseas.

As Ukraine and other eastern European countries are finding at the moment, being reliant on another country for regular supplies of an essential product is fraught with risk. In principle it is no different from the risk of plumbers running out of copper pipe because no more copper can be imported, but the stakes are very different.

Part of the task of nurturing the strong so that they can help the weak is ensuring that the nation in which they operate is as self-sufficient as possible in the essentials of modern life so that they remain strong. If you import a large proportion of your food or of the fuels you need to live as you are accustomed to living, you are at the mercy of people who feel no bond to you other than the money you pay them. That is not to say we should seek to exist without reference to the rest of the world, of course there are many things we import which we cannot grow or make here. Life will not become difficult if kiwi fruit are in short supply, it's rather different if the scarcity is of wheat, potatoes or dairy products. But we should recognise that some things are far too important to be at the whim of people over whom we, and our government, have no direct influence.

Nurturing the strong is not just about charitable and voluntary acts, nor is it just about individuals acting individually. It is about realising that we all depend on others to help us in all sorts of ways. We cannot all set up our own businesses, most are employees. Although it is to state the obvious, it is worth stating - no one can be an employee without an employer, and no business can employ someone unless it is a going concern. We cannot all do plumbing, electrics, woodwork or car mechanics, most of us rely on others to provide those services when we need them. We cannot all grow the vegetables and fruit we need or keep a cow, two sheep and a pig in a spare bedroom, we rely on others to produce these things for us and make them available in manageable quantities.

Unless we are as self-sufficient as possible in essential goods and act to keep business strong and profitable the people who will suffer most are those who are most dependent on others. And this leads to one of the great ironies of modern politics.

Talk about reducing the size and influence of government, talk about encouraging self-reliance and self-sufficiency, talk about strengthening the nation rather than international bodies and you will be labelled "right wing". Once that label is attached people will be told by the current government and those who support them that you are concerned only for yourself and have no care for those less fortunate. Yet when we look at real life we find it is the strong who help the weak, the profitable who employ the unemployed, the skillful who teach the previously unskilled and the wealthy who fund the truly effective schemes for the poor.

The left offers nothing other than "I'm from the government and I'm here to help". It is not without reason that Ronald Reagan described that phrase as the nine most terrifying words in the English language. Government help usually doesn't help because it takes too much from those who cannot afford it and delivers it too expensively and inefficiently to too few of those who need it.

The politics of the left says a lot about the government helping the poor but government has not done, and can never do, one thousandth of what is actually done. The only sustainable way to help the poor is to provide them with work and to make available goods for them to buy to improve their quality of life and to do so at a price they can afford. Only the strong can provide those things and they can only provide them if the country in which they operate is itself strong. The beliefs that lead to me being labelled "right-wing" are nothing to do with selfishness and a lack of concern for others even less fortunate than me. They are about putting into place the only effective way of reducing poverty and making it less painful for those few who remain poor.

Nurture the strong, Part I

It is not by chance or out of a desire to promote selfishness that safety instructions on aircraft tell us we should put our oxygen masks on first before helping others. The instruction is a simple matter of practicalities, if you can breathe you will find it easier to do what you can to help those in difficulties. One consequence of the instruction, in extreme circumstances, is that delay in putting on your own mask could lead to the death of someone unable to put on their own. But that is very unlikely to happen, overall more good will be done by the strong ensuring their own safety first rather than risking both themselves and the vulnerable by seeking to be unduly altruistic.

As in aircraft, so in life. In order to help those unable to help themselves it is necessary for the able to be keep themselves fit. Sometimes that means physically fit, perhaps more often in the modern world it means financially fit. There is no money to pay benefits unless profits are made from which tax can be raised. Damage healthy businesses and you not only take money out of the pockets of those owning and employed by those businesses you also reduce the tax they pay and, therefore, the resources available for supposedly beneficial government work. This very simple point is beyond the understanding of the political left. Although they never acknowledge it, at the heart of their philosophy is the concept that it is better for everyone to have nothing than for some to have nothing and others to have something. That is what lies behind their pathetic assertions that Thatcherism encouraged selfishness and greed. They smile smugly while quoting those famous words "there is no such thing as society". Anyone who bothers to read the interview Mrs Thatcher gave to Woman's Own magazine in 1987 will see that she made a point with which no rational person could disagree. There is no creature called "Mr Society" with his own bank balance and limitless resources. It takes people to take action to help others in need. "Society" can't dive into a river and save someone from drowning, only a person can do that. "Society" can't pay for medicines, education and operations, only the money earned by people can do so. That is the point she was making - look to what you can do, don't rely on others in the belief some great green blob of goo in the corner with the label "I am society" round its neck will magically spring into action. Do what you can do, look after yourself and that way you have the capacity to look after others either directly through your own works or indirectly by paying tax to pay for services they need.

I never once heard Mrs Thatcher say we should be greedy and selfish. Many times I heard her say we (individually and as a country) should achieve as much as we can for ourselves in order that we are not a burden on others and that we have the resources to help those in difficulties. For those who believe no one succeeds without squashing someone else underfoot, that message is meaningless. They believe I can only become £100 wealthier by taking £100 from someone else, the concept of the creation of new wealth is beyond their imaginations. In the real world we know otherwise.

Of course, the strong will not help the weak if they feel no need to do so. All sorts of factors contribute to that feeling of obligation. Often it is referred to as a moral duty, something that should be done because the common standards of decency we have developed over many generations recognise it as the right thing to do. There is no need for the law to step in and force people to do it if they feel they should do it anyway. Yet we do not feel the need to sacrifice ourselves endlessly for every cause, we have to choose. The more remote or trivial the problem the less strongly that moral duty operates. At the same time we also weigh in the balance what it would cost us in time or money to help and reach a value judgment about whether we care enough about the problem to go to the amount of trouble required to help. If Aids charities working in Africa asked for donations of at least £100 they would almost certainly receive less in total than if they ask for £2 because we won't really miss £2 whereas £100 is a jolly good evening at Madame Fifi's Sauna and Hanky Panky Parlour. Some of us would never give a penny to a charity caring for animals while others would rank such a cause above the relief of human misery. We all have to form our own view and act according to it. Human character being as diverse as it is, the range of views different people hold means there are plenty enough to look after addled donkeys without the need to close soup kitchens.

The one essential prerequisite to being able to help others is possession of the resources to do so. The choice whether to do so simply does not arise if giving assistance is beyond your physical, mental or financial capacity.

Your choice: more equality or less inequality?

One could ask that question about all areas of equality policy, I want to see how it relates to claims that we should aim for more financial equality or, as it usually put, for less financial inequality. As I mentioned in one of my previous witterings, "wealth" can refer to income or it can refer to capital assets, for present purposes I will look at income.

The way the policy is argued for is very interesting to me. If you want to narrow the gap between the richest and the poorest you have a choice between arguing for greater equality of income or for less inequality of income. Those on the left seem to argue against inequality far more then they do for equality. Perhaps this explains why their chosen method of securing their aim is to tax the wealthy. It is implicit in that method that the disposable income of the wealthy will be reduced, but it does not follow for one nanosecond that the poor will necessarily receive a penny. Yet, surely, the moral argument must centre around how to improve the lot of those at the bottom of the pile? Simply removing some cream from the top achieves nothing apart from satisfying a rather pathetic form of blood lust. Once they have skimmed the desired amount of cream they say that they have reduced inequality. Indeed they have, as a purely statistical exercise. And what good has it done? Of itself, I can see none.

Equality policy can only be justified if inequality causes a problem. Therefore the problem should be identified and the cure must be just that, a cure for the problem. What is the problem in one person having an income of £1million and another's being just £3,000? The problem is that £3,000 is not enough to pay for him to live. So the problem is not that the one person receives £1million a year it is that the other only receives £3,000. Any policy aimed at curing this problem must find a way to increase the poor man's income.

If making the rich man poorer would achieve this, all well and good, but I see no evidence that that happens to any appreciable extent or that it would happen to a more meaningful extent if the wealthy man were taxed substantially more than he is at the moment. Instead money is taken from the wealthy, laundered through the great black hole known as HM Revenue & Customs - during which process a lot disappears in administrative costs - and is then deposited in the government's spending fund. The spending fund includes some measures for improving the income of the least well-off through payment of benefits, but none of them does anything other than take a few people who would be below the poverty line and put them above the poverty line, it does not make them appreciably wealthier and nor could it ever do so.

A modest increase in marginal tax rates for the wealthy might increase government income a little, although it will also increase incentives to avoid (legally) and evade (illegally) the additional tax. Even if it does lead to an increase in income, because there are so few at the top and so many at the bottom it cannot do anything substantive to solve the perceived problem.

One then has to build into the equation that those who bleat about inequality are generally in favour of government spending money. They believe, erroneously in my view, that government has magic powers and can improve life for all if only it spends enough money. This causes the spending fund to be under permanent pressure to spend more on this, more on that and more on everything. Putting more cash in the pockets of the low earners is just one item on the list. As revenues increase political pressures to give some to favoured groups come into play. We cannot assume that additional taxes on the wealthy would ever be reserved wholly to pay more to the poorest, but even if that were the case how much would they get?

Paying an extra £1 a week to all those claiming "out of work" benefits and tax credits would cost in excess of £350million a year. In other words, for every £350million in additional revenue from increasing tax on the rich the most that could be achieved for those at the bottom of the pile is an extra £1 a week. Let's say the rich are absolutely hammered for additional tax and an extra £1.5billion is raised from them, assuming no extra administrative costs the poorest people would receive enough to buy a packet of cheap cigarettes.

I do not suggest for one moment that an additional £4 or £5 a week would not be most welcome for those struggling to make ends meet, of course it would because every penny helps. But it only happens once, the same tax rates next year will not allow for a further £4 to be paid but they might allow the increase of £4 to remain in place. All that can be achieved by even the most grandiose attack on inequality of income through tax is a tiny increase in the incomes of those at the bottom. It is such a small amount that it does not get anywhere near curing the problem.

Perhaps this is one reason why the left is so keen to complain about inequality. They know that if they argued for more equality rather than against inequality they would have to explain how it can be achieved through tax and the plain fact is that it cannot. Their current approach requires only that they point out the gap between rich and poor, for them that is enough in itself to justify taxing the rich. It is gesture politics of the pettiest and most ineffective kind, they claim to give the poor hope when the measure they promote cannot possibly deliver anything but a tiny sum. To my mind it is a cruel approach to a difficult and important problem.

Tackling poverty, part three

Poverty is only a potential problem for those in employment, for those without work it is often a stark reality. I suggested yesterday that subsistence benefits should be paid to those who are unemployed but looking for work. My reasoning is that those who are prepared to take any job rather than exist on benefits should not be dissuaded by benefits being too generous. It is a tough stance but one which I believe to be justified because I have great faith in the inherent decency of people including that strand of decency which makes them want to work rather than, let's put it bluntly, scrounge.

One of the strongest justifications for having a national minimum wage is that it guarantees a living wage for those in full time work. I will not pretend that life on the minimum wage is a bed of roses for a couple with children who decide the best interests of their children requires one of them to stay at home, but a full working week will bring in a living wage provided the income tax threshold is increased to a sensible level. But what of those who do not want to work? To what extent is it appropriate to protect them financially from the otherwise inevitable consequences of their idleness? Merely asking the question would label me a fascist in the eyes of the left, but that is no more than a label and I am not interested in being unfair to anyone, my concern is that the system should do everything it can to bring the best out of people and encourage everyone to support themselves if they possibly can. Not only will that reduce the burden of tax on those who work willingly, it will also improve the lot of those who currently live on benefits a little above subsistence level but would do a lot better if they found a job.

I believe two changes to the current system to be necessary. First, permanent dependency on the State by reason of physical or mental incapacity to work should be limited to those who really are incapable of work. Over the last eleven years the government has made it easier to claim incapacity benefit, so much so that something in the region of 2,500,000 people currently claim a benefit which should be available only to those genuinely unable to work. Idleness and fecklessness are not incapacities, they are idleness and fecklessness. Fictitious bad backs are not incapacities, they are bogus excuses. No one knows how many of the 2,500,000 are really unable to work, but we all know that it is good for unemployment statistics if a vast number who are out of work are classified as unwell rather than unemployed. Yet governmental attempts to hide the true level of unemployment do not fool anyone, it is obvious (according to my personal version of common sense) that in a population of some 30 million people of working age it cannot be the case that 8% are incapable of holding down a job. The most dangerous consequence of trying to mask unemployment by calling it incapacity is that the government has an incentive to continue the pretense. For so long as they feel there is political mileage in reducing the headline unemployment rate by attaching a different label to a large number of unemployed people, they have no reason to change the system. In turn that locks the people on incapacity benefit into that state, they receive more than if they were "ordinarily" unemployed and the financial gap between being on benefits and being in work is reduced.

Secondly, those who are able to work should only be allowed to receive benefits of any kind for a limited time. Will this push them into starvation? No, it will push them into work. For quite some time this country has been able to absorb migrant workers for one reason and one reason only, that those who live in this country have been unwilling to do the jobs the migrants have taken. Not unable, unwilling. How many office cleaners, parking attendants, roadsweepers, kitchen porters, hotel chambermaids and dustmen are white and British? In all cases the answer is very few in proportion to their number in the country. That is not because the foreigners who fill those positions have stolen jobs, it is because those sitting on benefits have not applied for the work. This is a systemic problem caused, I believe, by the easy availability of benefits. I do not believe most of those on benefits would think it such a good life if they tasted work and the self-pride it brings, but there is an underclass who have never worked and have no comprehension at all of self-worth.

Recently we saw a fine example of the hopelessness benefit dependency brings. The by-election in Glasgow East highlighted an area in which generation after generation of families never work. They do not need to because they receive housing for free and enough to live on. They are told by those on the political left that they are victims who can never improve their lot because the system does not allow it. I disagree, they are not victims of a wicked capitalist economy, they are victims of those who have told them for decades they have no hope of improvement. By my definition they are not in monetary poverty but they are certainly a lot poorer than they would be if they took the jobs people travel thousands of miles to fill and they are in poverty of expectation.

It will not be an easy task to change the culture on the sink estates of Glasgow East and the other inner city constituencies and there is no painless way of changing that culture. Yet it must be changed if those people are to have a chance of living a life in which they can walk down the road with their heads held high, knowing that they are providing for themselves and their families. It is a harsh method, but imposing a strict time limit on their State benefits is, I suspect, the only way to get them out of their rut and give them an opportunity to live independent lives and enjoy the satisfaction that brings.

I cannot accept that those on the sink estates want to live on the poverty line forever, nor can I accept that they are unwilling to work under any circumstances. What I can accept is that they have been labelled victims for so long that it will take time to persuade them they can cope on their own. The jobs are there, Glasgow East is a short bus ride from vibrant hotels, pubs, restaurants and clubs who need staff, lots of staff. Thousands of jobs currently filled by transient employees from overseas could be filled just as well by locals if only they felt there was a reason to do them. It is time to be cruel to be kind. That would be real social justice.

Tackling poverty, part two

My first suggestion for tackling poverty was to increase the income tax threshold to such a level that no one has to pay until they are not just above the poverty level but substantially above the poverty level. The minimum wage means that all those in full-time employment are necessarily above that level and those who work part-time only need to work about 21 hours a week to be avoid poverty. Today I want to look at the position of the unemployed. What can government do to ensure they are not in poverty? Again I use the definition of financial poverty I gave a few days ago - being unable to pay for housing, heating, water, food and clothes.

There are, of course, some people who are unemployed but not in any financial difficulty because they have savings, but for most this is not the case. Government's role, in my opinion, is two-fold. First a subsistence level of benefits should be paid to ensure they do not starve. Benefit activists moan constantly about the amount paid being too low to allow people to live but I have seen no evidence of anyone starving to death because they have not been paid enough to buy food. They might not be able to buy flat screen televisions, computers, Axminster carpets, foreign holidays and cars but it is not the job of government to take tax from people who struggle to buy such luxuries from their wages in order to allow those not working to receive them.

Government's second role is to interfere in the world of business as little as possible. Whether business can employ everyone in the country is a moot point, what is plain fact is that increasing the administrative costs of the productive sector reduces the number of people that sector employs. Whether it be a requirement to undertake equality audits, an obligation to pay for lengthy maternity and paternity leave, the need to comply with petty health and safety regulations or any of the other hundreds of things business has to do to dance to government's political tune, it all costs money. Increases in the costs of any business must result in (i) reduced profits, (ii) other costs being reduced or (iii) increased prices. They cannot have any other effect because money does not grow on trees and businesses cannot magically create money to pay for overheads imposed by government. In all but the most exceptional circumstances, reduced profits result in a business being less attractive to investors thereby putting at risk expansion and, in many cases, making refinancing of existing debts more expensive. Similarly, increasing prices is something a business will seek to avoid because of the obvious risk to sales. That leaves cutting other costs as the first port of call and shedding non-essential staff is often the only sensible choice to make.

Those who suffer most when businesses have to cut staff to pay for bureaucratic overheads are those whose work can most easily be done by others or dispensed with altogether. That tends to be those of fewest skills, the very people who find it most difficult to find work and who, therefore, are most likely to have no cushion of savings to prevent them falling into poverty. It is no answer for government to say they will pay subsistence benefits, there is no benefit in benefits, those people want to work for a living and would be able to if it were not for government piling unnecessary costs onto business.

Regulation makes it more difficult for the unemployed to find work. My second suggestion for tackling poverty is, therefore, for government interference in business through regulation to be reduced to only that which is essential to protect against the greatest dangers. Most health and safety regulations are completely unnecessary because the risk they seek to eliminate is minimal and the cost of implementing them is vastly disproportionate. Equality and diversity targets serve no purpose at all - any employer who rejects the best candidates on the ground of race, sex, sexual proclivity or age ends up with an inferior workforce and should be left to stew in his own narrow-minded juice. In fact I am unable to think of any red tape which is of net benefit to business. It might result in some nice lists of statistics for government to manipulate as it chooses but it achieves nothing other than to increase costs and put at risk the jobs of the lowest paid.

It was not very long ago that vast numbers of wholly unskilled people were employed in small businesses even though they served little useful purpose, it happened because throughout the country there are small businesses based in villages and small towns and those businesses wanted to be seen to be part of the community. If there was a young person fresh out of school or an older person who had lost his job it was a common occurrence to find a broom and a brown overcoat being made available for them so they could be employed at a low wage to sweep the floors and empty the bins. All it took was a quiet word with a sensible owner who knew it was better to create a job and bear the modest additional cost rather than refuse, it kept the existing workforce happy because they wanted to see poor Johnny in work and it cemented relations with the village. Be in no doubt, that happens still, but not as much as it used to. Margins are trimmed by expensive red tape and the obligation to pay Johnny the statutory minimum wage makes him too expensive for many.

I have attempted to explain why I believe unnecessary regulation hits the unskilled in two ways, they are often the first to be laid-off to cut costs and many of those who would be hired voluntarily become too expensive. The real problem is that these effects do not stand alone, there are already plenty of unskilled people without jobs. Any step taken by government which increases their number makes it all the more difficult for a single one of them to find work and raise themselves above the poverty line by their own efforts.

Tackling poverty, part one

Old jokes often contain interesting messages. Take the joke about a couple who are lost in their car in the middle of nowhere and stop a passing local to ask directions to London, "London, you say? Well, if I wanted to drive to London I wouldn't start from here." The message behind this tale is that you should think carefully about what you do in case it makes your eventual goal more difficult to achieve. This is important when we ask how poverty can be tackled. With prices of food and fuel going up at an alarming rate we will hear a lot about poverty in the months ahead because it is those on limited income who are hit most by increased prices for essentials.

Yesterday I tried to explain why I believe "poverty" is a word best confined to describe the state of those with an income below subsistence level, I also explained (by use of very rough-and-ready figures) that I estimate something like £10,000 a year to be subsistence income for a childless couple and £6,000 a year for a single person, perhaps more in areas where housing is expensive and undoubtedly less in areas with cheap housing. Before asking what can be done about poverty we need to look at why some people have such low incomes. I am not interested in airy-fairy theories, I want to look at real life in the real world.

There will always be those without the skills to earn anything more than a low income and there will always be those who, through indolence or lifestyle choice or bad luck, find themselves with very little money. "Let them eat cake" is a fair approach to take towards those who will not help themselves but I do not believe most of the people in poverty in this country to be in that camp. I believe that the vast majority wish to work in order to support themselves and their families, they do not want to be dependent on the State. Some, of course, have no choice because they suffer from a physical or mental condition which precludes them from earning a living even though they are of normal working age. These people are in a special category which I will return to another time. Others cannot work because of their age, the position of those outside normal working age is also outside the scope of today's thoughts. Today I want to look at the lot of those who are in work but earning very little.

First it is sensible to make clear that for the vast majority in this position their only poverty is financial. A common error on the political left is the belief that those who earn low wages feel resentful towards those who earn more and are unhappy with their lot simply because they do not have much money. That is complete nonsense. Ask the average road sweeper whether he thinks an accountant should earn more than him and his answer will be "yes" because he knows that the accountant could sweep the road but he could not be an accountant. Ask him whether he feels unhappy that he is not an accountant and his answer will be "maybe it would be nice, but I do what I can, I work hard and I support my family ... here's a picture of my little girl at sports day, she won the egg-and-spoon race, she's a lovely girl". Of course he will also say he would like to earn more, but what is most important to him is that he is able to support his family through honest work. Many on the left think his income, social background and employment define him but he knows better, he knows that his values define him.

The road sweeper is employed providing a service and there is a limit to what can sensibly be afforded to pay for that service. So it is also with those in the private sector performing mundane manual tasks. The work requires little skill and adds little value, pay too much for people to do it and you price your goods out of the market. That is why automation in factories has advanced so much over the last thirty years and more. Those without skills who would formerly have been cutting shapes out of sheet metal on a foot-operated press have been replaced by computer guided machines and have had to seek employment elsewhere. Their lack of skills limits the type of work for which they can be hired and necessarily means that anything they do will be low-paid. In turn this means that their poverty is a direct consequence of an inescapable fact of life, that we can only ever be paid what our work is worth.

Government has a part to play in assisting those whose income is below the poverty line and in preventing those above the line from slipping below it when costs of living rise. Government can have both an active and a passive role. The active role involves paying money to those in poverty, the passive role involves not taking money from them. In relation to the unemployed who are seeking work the active role is potentially important but for those in work the passive role is far mightier. To illustrate what I mean I want to look at the threshold for income tax.

For the tax year 2008-2009 the income tax threshold is a touch over £6,000, less than £120 a week. Yesterday I explained how I estimate that figure to be subsistence income for a single person living alone and renting a small room. It is an income level at which saving for the future is impossible, even the need to replace a broken kettle would cause hardship, and yet additional earnings trigger a requirement to pay 20% of the extra money in tax. This is simply obscene. What makes it absurd as well as obscene is that we now have a statutory minimum wage which is meant to represent the fair minimum amount someone should be paid if they are working. It was said to be a recognition of the minimum earnings required to be able to live to modest but acceptable standard and is not, therefore, a definition of a subsistence income. The current minimum wage for someone aged 22 or over is £5.52 per hour, £220.80 for a 40-hour working week, £11,481.60 per year.

So the government tells us that £11,481.60 is the very least anyone should be paid for a full working year, yet on that sum almost £1,100 will be payable in income tax. This might not involve any chicanery because by saying £11,481.60 is the minimum to be paid the government knows it amounts to just over £10,000 after deductions. The absurdity, however, is in setting the tax threshold below the figure the government considers necessary to live a tolerable existence. Reverting to what I said yesterday, it is important to bear in mind what subsistence level income means - it means being able to afford housing, heating, water, food and clothes and having a tiny amount for discretionary spending. To impose tax at 20p in every pound above such a low level of earnings is nonsensical.

The first thing government should do to tackle poverty among the employed is to raise the tax threshold to a much more realistic level. The net income resulting from the statutory minimum wage would be a good start because it would put the threshold at a nice round figure of £10,000. We could make it £10,400 so that it is exactly £200 a week. That is hardly a fortune. Such a change would acknowledge that people in this country should not be dependent on the government to keep them out of poverty if they are able to do so by their own efforts. It would also acknowledge that it is beneficial for those in work to have use of as much of their own money as possible because they can, if they choose, save it, but the government cannot save it for them. You want to be fair to those in employment? You don't start from here, you don't start with a tax threshold so low. If it were not for years of allowing the threshold to lag the problem would not have arisen.

So, that is my first suggestion. It is not a new idea but it is fair. It will also reflect the values of those in low paid employment who take great pride in being able to pay their way. One problem with charging income tax at the margins of subsistence earnings is that it tilts the balance of power towards the government. "We will allow you a bare subsistence income but after that you must pay us one fifth because we have plans" is the current position. I want the narrative to go from the taxpayer to the government, not vice versa; I want to hear "I now earn enough to support myself in a modest lifestyle, I will now allow you to have one fifth but don't waste it." My further musings on poverty will be made against that background.

Financial poverty, a definition

It makes me cringe to hear poverty defined by reference to a given percentage of average national income because there is no principle to it. The average and percentage used are just random choices and can be selected to suit political preconceptions. If we are to find a principle by which to define poverty we have to ask what poverty means in practice and extrapolate a principle from that. Logically there is a prior step, which is to decide whether we mean relative or absolute poverty and I have no doubt that we can only ever talk of relative poverty because it would be to abuse language to define someone with a weekly income of £50 in Britain as not being in poverty simply because such an income would provide very nicely for all their needs if they lived in a mud hut in deepest Africa.

So, what is involved in being in poverty? I suggest that it means being unable to pay for the essentials of life: housing, heating, water, food and clothes. Housing is the most complex of these needs because it is not enough to have four walls and a roof, you also need furniture, cooking and eating equipment and all the other bare essentials which make it possible to keep yourself alive. Generally speaking heating, water, food and clothes do not vary enormously in price throughout the country but housing costs do and being able to share some of the costs of living with others also affects the amount required for someone to be able to maintain a basic life.

One can find all sorts of measures for these costs and I want to take some general figures for the purposes of this essay. Rather than relying on massaged statistics produced by government or academics I thought I would find out for myself by asking people I know who do not have a lot of money; I asked two of the chaps who deliver pizzas for a local shop, one of them lives by himself and the other lives with his girlfriend, they are both in their early twenties and have no family or property in the UK.

Taking the single man first, he pays £55 a week to rent a small room in a local house, water and electricity are included but heating is by a metered gas fire costing him about £10 a week for about six months of the year. He has some meals provided free of charge by the pizza company and spends about £25 a week on food, Leaving aside special items, his clothing comes from low-priced chain stores and costs him about £200 a year. His annual expenditure just to keep himself housed and alive is around £4,600.

The man who lives with his girlfriend also rents a room and for this he pays £110 a week including heating, lighting and water. He and his girlfriend spend about £40 a week on food, his clothing costs are the same as the single man and his girlfriend's clothing costs about £450 a year. Their combined expenditure to stay alive is just under £8,500.

Renting basic accommodation like this in many other parts of the country would cost a lot less, they both live close to their work in Islington, North London, which is an expensive area. There is nothing scientific about these figures, they are just a snapshot, but they suggest that something like £6,000 for a single person and £10,000 for a couple is a subsistence level of income in modern Britain. This will allow a meagre social life to be financed together with a television and telephone. To my mind, these are appropriate figures to take as the poverty line. By coincidence income tax bites on earnings just above £6,000 for the current tax year. It goes without saying that children will increase the subsistence costs of a couple and that we have to add on something to get a figure that matches their circumstances.

Those earning a little more than these figures are not, on the hypothesis I am advancing, in poverty although they are certainly on low incomes. I believe "poverty" should be reserved for those whose income is not sufficient to allow them to pay for housing, heating, water, food and clothing. In other words it should be measured by subsistence costs not by the random application of a mathematical formula.

Once we see poverty in these terms we can distinguish clearly between those in poverty and those who are merely poor. As costs of subsistence rise so the poverty line figure rises and some who were previously poor and taken into poverty. Recent steep rises in electricity and gas prices will almost certainly require landlords to charge a higher rent to lodgers and the enormous rise in food prices over the last year have also increased the poverty threshold. The rough figures I have given might be £500 or £1,000 short of the mark in a few months time.

The importance of defining poverty by subsistence costs is that it gives a fixed point of reference which does not do damage to language (after all, defining poverty as not being able to afford a subscription to Sky and a flat screen television would be absurd). "Poverty" is a strong and highly emotive word, it describes an extreme situation and to use it for anything else is to undermine the seriousness of that situation. Someone who cannot afford to live the most basic existence is in a terrible position and deserves to have their plight recognised for what it is. By setting the bar too low you risk undermining the seriousness of the situation faced by those below subsistence income.

The measure used in this country by government and by so-called anti-poverty campaigners is 60% of median national income. I believe median income to be around £23,000 at the moment, so 60% is just under £14,000. For a couple with two children living in central London that is probably not far off subsistence but for those in areas of the country where housing rents can be £300 or £400 a month lower than for a similar modest property in London it is absurd to say they are in poverty because they have several thousand pounds more spending power than the Londoners. And why take 60%, why not 50%? After all £50% has been the conventional figure in many countries for decades. The truth is that £14,000 is no more an accurate poverty line than £13,000 or £15,000 or even £10,000. These are just random figures which might or might not represent the difference between the poor and those in poverty in each village, town and city.

I believe it to be important to define poverty accurately because different policy considerations come into play depending on whether the subjects of them are in poverty or merely poor. To raise people from below to above the subsistence line is far more important than to lift those already above the line a little bit further above the line. Over the next few days (or weeks if I get distracted or run out of ideas) I want to talk about some of the policy issues which affect the poor and those in poverty and I will do so against the definition I have sought to explain today.

What is poverty?

With food and fuel prices rising by huge amounts we will hear much over the coming months about poverty and it will all concentrate on money. It is quite right that money should feature high on the poverty agenda because most definitions of poverty look at nothing else. My intention is to address the monetary side of poverty in a series of ramblings over the next few weeks, but today I want to challenge the concept that a lack of money is an adequate definition of poverty.

Lack of money is a common theme in politicians' rantings whenever problems arise in the inner cities. Many examples can be given: teenagers terrorise a council housing estate, the child of a teenage mother starves to death, children are found to be eating burgers and chips as their main meal seven days a week and so it goes on. Often, the first thing that is said is to blame lack of money. If that really is to blame, an increase in income for the people concerned would prevent the problems being repeated. I doubt very much that that is the case. I can explain why by looking at the particular examples I have given.

When a gang of teenagers terrorises an estate you can be sure of one thing. There are far more teenagers living on the estate who do not join the rampage. When a child dies in horrible circumstances you can be sure that many more children of teenage mothers are being cared for very well. For every child eating burgers and chips every day you can be sure there will be many eating sensible balanced meals. The well-behaved teenagers will not have parents markedly wealthier than the parents of the hooligans, the teenage mothers of living children will not be markedly wealthier than the mother of the dead child, the parents of the children on balanced diets will not be markedly wealthier than the parents of those fed burgers and chips. It is not money that differentiates between those who behave well and those who behave badly, it is values.

That is not to say that values are absolute things, they can be affected by all sorts of external influences. Peer pressure can persuade a teenager to join in with the terrorising gang even though he would never dream of threatening anyone if acting alone. A bad example can temporarily override a strongly held opinion that something is wrong. Money can also play a part, as in the case of many poor people who steal goods from shops when they would not do so if they could afford to buy them. Of course that raises the question why they chose to steal when others would just go without and the answer is simple, the values of those who steal are less powerful than the values of those who go without. It must not be overlooked, however, that financial poverty is only a cause of theft when the theft is necessary to be able to provide the basics of life (housing, heating, food, clothes) which, in my view, is never the case in this country.

I do not suggest for one moment that life is easy for those on low incomes. They have little if any opportunity for discretionary spending, the vast majority of their money has to go on housing, heating, food and clothes. I can understand why someone in that position who has become accustomed over many years to having two packets of cigarettes a week will buy smuggled smokes at £3.50 rather than paying £5.80 for exactly the same product in the shops, the difference of £2.30 a packet is significant to them. What I cannot understand, and do not accept, is that a lack of money causes people to behave in a way that is harmful to others. Such behaviour is a consequence of the people concerned not having good values.

There is another non-monetary aspect to poverty. So far I have discussed only poverty of values. Values are taught by our parents, our schools and others who have had a significant effect on our lives. Those influences generally apply in our early years and they provide us with the individual moral standards we carry into adulthood. When in adulthood, most people have children and they hope their children will learn the values they learned. They also hope their children will receive a good education to give the opportunities they had to build a career or start a business or have a steady job. Sadly we seem to have reached a position in this country in which education is viewed by government as a means for social engineering and a statistical resource rather than a means for developing minds and teaching skills. Unless schools allow each pupil to develop to the best of his or her ability they fail in their central purpose.

These days the curriculum is crammed with touchy-feely eco-multicultural nonsense. Children are taught that Nelson Mandela is more important than Isaac Newton, Al Gore more important than Winston Churchill, rights more important than duties and equality more important than quality. There are so many tests and league tables that it is more important to get the marginal fail up to a marginal pass than it is to teach the bottom few to read or the top few to excel. One of the greatest successes of schools in the fifties and sixties was to get those from modest backgrounds into the best universities and the most challenging professions. Means tested grants were given to the best students so that their nascent talents could flourish. Naturally some withered, but that will always be the case, those who flourished were able to pursue careers their parents could only have dreamt of, but not now. There is genuine poverty of opportunity because state schools have to follow political diktats.

Lack of money is the third type of poverty, third in my list and third in importance. If you have no values it does not matter how much money you have you will harm others throughout your life. Poverty of opportunity condemns future generations to under-achievement and, necessarily, condemns the country to fail to benefit from their talents. Monetary poverty is not a barrier to high values and should not be a barrier to good education. I will return to various aspects and effects of monetary poverty in future musings, today I have endeavoured to explain why I believe that poverty of values and poverty of opportunity are more detrimental than monetary poverty.

The Purple Plague and the art of hypocrisy

There are few things more likely to raise both a laugh and a sigh of dismay in FatBigot Towers than a pious pronouncement from the upper echelons of the Church of England.

To be fair to the befrocked buffoons they have been admirably consistent in their inconsistency since the day the Church was formed.There is nothing surprising about this because the whole organisation is a bit of a nonsense. It was invented by the tyrannical Henry the Eighth when the then pope would not let him divorce his first wife (Henry's wife that is, not the pope's, wives of popes are a whole different ball park of hypocrisy). For more than 400 years it has claimed to be part of the Church of Rome despite the Catholics, who might be thought the correct people to judge such a claim, not accepting it for one second. Since the time it began the Church has accumulated vast wealth in both land and other property whilst claiming to serve a god rather than itself. That is not a very auspicious background for any organisation, for an organisation which lectures us on what to do with our money it is the worst possible start.

Today we witnessed an almost comic spectacle, the leaders of the Church of England marched in central London to complain about the West not doing enough to eliminate world poverty. The protest revolved around a declaration made in 2000 by the United Nations to half extreme poverty by the year 2015. In reality this is all about Africa. The call from the Bishops today was for the West to spend more money. That was it. Like Gordon Brown, throwing money at a problem is all they have to suggest. I suggest they turn their attention elsewhere. Let me explain where and why.

There are three problems. The first is corruption. Corruption if rife at all levels of officialdom in many African countries. At the lower levels it is no different from much of eastern Europe where those given a little power use it to secure "commissions" in order for the wheels of administration to flow smoothly. Lots of little commissions add up to a lot of cash but, to be frank, little can be done about it. Perhaps more serious is corruption at the highest levels of government. Senior ministers cream-off enormous sums to overseas bank accounts to provide for themselves and their families for the future. Some of this type of corruption is overt through the creation of sumptuous estates for the senior ministers to live in while in office. They defend it by saying it is good for the standing of the country that its leaders can receive foreign dignitaries in style. The standing of the country is enhanced by the leaders living in fine palaces, rather like the Archbishops in the Church of England.

The second problem is the level of population growth. A village with a certain amount of land it can farm is limited by what can be done with the land. The quality of soil and atmospheric conditions in much of Africa are not conducive to efficient agriculture or animal husbandry, if the starving people are to be fed from their own land the productivity of that land must be improved. Much has been achieved in this respect through irrigation projects, the use of fertilisers and new crops which get the best out of the poor soil. Such projects must continue but there is no need for the Bishops to get excited about this because those projects are continuing and their continuation will provide benefits for generations to come. But poor conditions for growing food are still poor conditions for growing food, doubling a very poor crop leaves you with a poor crop. Unless the demands on the land are under control even a doubling of production does little to alleviate the problem. It is for this reason that population control is vital and population control can only be addressed by a change of culture in the country concerned, the idea that it can be imposed by the West is simply absurd.

The third problem is that many African countries are engaged in expensive military actions (both wars between nations and civil wars). These absorb vast sums of money which could otherwise be used to pay for the projects currently funded by western aid. The Bishops suggest meekly that thought might be given to eliminating this aspect of spending but they do not demand it. They only demand things from the West. If the Church wishes to be taken seriously it must take a stand on this issue.

In order for the Church of England to take a truly moral stance it should call for aid to be dependent on proof that corruption is limited, population is limited and military action is limited. Let them choose their own limits by all means, but do not let them call on the ordinary taxpayers of this country to fork out more while their organisation holds billions of pounds of assets and not a single vicarage will be sacrificed in today's cause.

These people really are the Purple Plague.

The rich are getting richer. So what?

The point I wish to discuss today is whether a growing gap between the richest and poorest in the UK is a problem.

There are two measures of wealth, first by reference to the value of assets and secondly by reference to annual income. Obviously the two overlap considerably because those with very high annual incomes often turn some of their income into permanent assets such as houses, fine furniture, works of art and financial investments. Successful entrepreneurs have substantial capital assets as a result of having substantial incomes, they enjoy both types of wealth. But the source of substantial assets is not always substantial income (something seen most clearly in the case of those who have inherited the family castle but cannot afford to maintain it) and some with large incomes do not have much capital because they invest their income at the roulette table or on the pleasures of the flesh.

What difference does it make to Fred Poor that his next door neighbour and good friend, Mr Jack Impecunious, wins a million pounds on the national lottery and changes his name to Mr Jack Rich? The answer, of course, is that it makes no difference at all. Fred still has the same income he had before, Jack's new wealth does not take anything from him nor does it prevent him receiving wealth he would otherwise have received. I must, of course, qualify these comments by saying that Jack's win might well benefit Fred through his desire to share his good fortune with his friends, but that is not guaranteed.

The position is the same if it is not Fred's neighbour but Sir Richard Branson who wins £1million. Overall the gap between rich and poor has increased because there is an extra million quid at the top end, but it makes absolutely no difference at all to anyone other than the recipient.

What difference does it make to Fred Poor if his neighbour (or Sir Richard) earns an extra £1million rather than winning it on the lottery? The answer, again, is: absolutely none.

Let us test the hypothesis by approaching it from the other end. What difference does it make to Fred Poor if his neighbour or Sir Richard Branson does not win or earn £1million? The answer is the same. Fred's capital and income are entirely unaffected by someone else becoming richer or not becoming richer.

We can then look at it from a different angle and ask what difference reducing the wealth-gap makes to Fred Poor. There are, fairly obviously, two ways of decreasing the gap, either you increase wealth at the bottom or you decrease it at the top, in practice the latter is necessary in order to find the funds to allow the former to happen. To test this we can take a simple example and ask what difference would result from Sir Richard Branson facing a one-off tax of £1billion. It does not take a genius to work out that it would reduce Sir Richard's wealth by £1billion and that the amount in the Treasury's coffers would increase by £1billion. If that were to be distributed evenly among all the people in the UK it is less than £20 each. If distributed among the poorest 10% it is less than £200 each. And it can happen only once for that sum of £1billion. Once it has been extracted from Sir Richard it cannot be extracted again.

Of course there could be such a one-off tax levied against a lot of rich people to make a dramatic difference to the total amount of wealth at the top, but it would still result in just a one-off payment to the poor. Or would it? The more that is taken off the top the more people below them will expect to share in the bounty. If the lump sum for the poorest 10% reaches £500 those in the 11-15% bracket will say "where's my bit?" and if £1,000 the next 5% might demand a share and then the 21%-25% bracket feels excluded and kicks-up a fuss. Then those on average salaries will complain that they are paying more tax than the poor but are not receiving any benefit from the windfall. The bigger the pot the thinner it will have to be spread to prevent a sense of unfairness developing. One thing that is an absolute certainty is that no one will become rich by hammering the rich with a one-off tax. It is certainly the case that the very poorest could receive a much needed small one-off payment but I fail to see how that will make any real difference to anything.

There is a further dimension to this argument which is what is likely to happen after the one-off redistribution has occurred. Receiving a lump-sum of, say, £5,000 will not increase Fred Poor's wages. He could invest it at 6% and receive £300 a year which will make him marginally less poor but marginally less poor is all he would be. Sir Richard Branson would be down £1billion but would still be earning a lot of money (subject, of course, to the continued success of his businesses) and in all likelihood will build his wealth back up to the same level as before in a few years. And then the complaints about the wealth-gap will be exactly as they were before the one-off tax was levied.

At this stage it is worth taking one step back in the argument. In the illustration I have used the starting point of redressing the balance is to take £1billion from Sir Richard Branson by way of tax. In a developed society it can only be taken by tax not by any other method. I have assumed that the money will then be paid to the poor in the UK because that is necessary to maximise the reduction in the gap between rich and poor. Both the collection and payment of the money will not happen by magic, they will be administered by the government. The whole scheme would require the government to be trusted not to use the windfall of £1billion for any other purpose. Maybe they can be trusted, maybe they cannot, but governments of both parties have long and ignoble histories of using windfalls to fill gaps in the Treasury's books. At very least we could expect them to deduct a percentage for the costs of administration which would result in the poor receiving less in total than was extracted from the rich.

I am not ignoring the argument that the rich could face high levels of income tax but I discount that as a solution because history shows rates of income tax above about 40% to result in reduced receipts.

Complaints about the gap between rich and poor increasing are just empty bleatings because the increased wealth of the richest does not cost the poorest a single penny. They complain that the gap is getting bigger, I respond with the most valuable question in history: "so what"?