I attended a talk by Professor Larry Mead at the Institute of Economic Affairs the night before last. He gave his talk in a scholarly, methodical way – quite different from the more openly partisan talk given by Ron Haskins last week. But the message was mostly the same. The big fact is that welfare rolls fell by 60 per cent in America following the 1996 reform package. It was an awesome result. Of course, people like Professor Mead knew very well that such a thing would be attacked as cruel and bad. But one of the impressive things about the American Right is that it arms itself with plenty of facts to counter such assertions:
He gave Federal Poverty Rates for whites, blacks and Hispanics in 1994, 2000 and 2003 respectively:
Whites: 14.5%, 11.3% and 12.5%
Blacks: 30.6% 22.5% and 24.4%
Hispanics: 30.7%, 21.5% and 22.5%
He ascribes the recent uptick in poverty rates to the reduction in US growth since 2000. Even allowing for this, it is very clear that there has been a major reduction in poverty among those who are most prone to it.
Incidentally, the official American government’s definition of poverty is very different from that in Britain. In Britain, ‘poverty’ is defined as people who are much poorer than average. In America, the government defined poverty in 1964 as a particular level of income. That level of income is adjusted each year for inflation. This provides, in my view, a far more useful definition. Under this measure, so-called poverty does not rise because the top one percent gets richer. That is what happens under the British system (see postscript in The Welfare State We’re In , “Why do people talk more about ‘poverty’ now there is less of it?”
What is the difference between Larry Mead and Charles Murray, author of the seminal work, Losing Ground? Professor Mead said that Charles Murray believed that people responded to incentives whereas he thought people did not always make proper calculations about where their advantages lay. He thought people, especially the least able 5%, wanted to be told what to do. That was what the welfare reform programme had done. It had declared, “We expect you to work. If you want the right to benefits, we expect you to work, even if you are a lone parent and even if you have a disability.” (These are not his words but my interpretation.)
However in my view, the same measures could also be seen as a rearrangement of incentives. Only getting benefits if you work looks like a pretty strong incentive to get moving.
Unless I misheard him, Larry Mead said he was staying with David Willetts. An interesting connection. David Willetts has also told me in the past that he knows Charles Murray personally. David Willetts is certainly well versed in welfare reform. But his public pronouncements have fallen well short of the radical reforms that took place in America and was generally endorsed by both these men. Will the Conservative Party ever stand up for radical welfare benefits reform?
One of Larry Mead’s book that I must get is Government Matters: Welfare Reform in Wisconsin. It available from Amazon here or you could try Abebooks.com or click onto any of the Amazon links in the left hand column and then search for ‘Welfare Reform in Wisconsin’.