The problem isn’t poverty, it’s inequality

In this week’s In Common, Craig explores why Scotland’s failure to eradicate child poverty is not a failure of ambition, but of a political and economic system that treats inequality as inevitable.

When John Swinney started his second term as leader of the SNP in 2024, he came in with precisely one policy – to eradicate child poverty. You can read my response to that pledge in the article I published in this In Common column on the 8th of May 2024 but the short version was that I asked the question that every politician dreads to be asked. “How?”

Scotland has made some strides towards reducing child poverty and poverty more generally. The Scottish Child Payment genuinely is having a substantial impact – albeit at the cost of vast amounts of resource being pulled away from other policies, including other poverty reduction policies. Calls to increase the payment to £40/week were not adopted in this week’s budget (perhaps influenced Swinney’s personal conviction that increasing the payment would encourage women to stop working – a claim that, via an FOI request, we discovered that the Government had zero evidence to back up).

The result of setting such a high target (even if it’s one we all agree with) and then not doing enough to meet it is that the target will be missed. There are already warnings that the Government is even going to miss the lower but legally binding target of reducing child poverty to less than 10% by 2030 (rates are currently above 20%). This presents a real dilemma for the Government as there should be actual, tangible consequences for the government and its Ministers should they fail to meet that legally binding target (as we’ve often said of ‘rights-based’ legislation – rights as ideals as laudable but who goes to jail if your rights are broken?).

Unfortunately, I predict that rather than pull out even more stops to meet those child poverty targets, the Scottish Government will do as they did when they were faced with the imminent prospect of failing to meet legally binding climate targets. They will simply de-legislate the consequences of failure and then miss the targets without penalty.

This is just one area of poverty but it is emblematic of why the approaches taken on this kind of thing are simply not going to work. The problem isn’t the poverty. Poverty is a symptom of the problem. Covering up the symptom by throwing small pots of money into the deep holes will not fix the problem. The problem is inequality.

“The problem isn’t the poverty. Poverty is a symptom of the problem.”

Our capitalist society demands inequality as a function of its operation. Without someone poorer and more vulnerable underneath you in the hierarchy of wealth and without the threat of your poverty getting worse, you cannot be compelled to accept lower wages and conditions than you might otherwise. Without someone poorer, the rich cannot judge themselves as superior as measured by their obvious “success” (no matter whether or not their wealth was earned by them or merely appropriated by them).

Meanwhile, as economists from Smith to Marx to Piketty have all noted, the key to making wealth is to have it in the first place. Once you have your first million or so, you’ve already “won” capitalism to the point of never having to work again (If you put £1mn into a bank account with 5% interest, you’ll earn £50,000 a year without having to lift a finger) but it also allows you to, for instance, buy property without a mortgage and rent it out – becoming a landlord is an extremely reliable way of transferring the wealth of those too poor to buy a house into your own pocket while also benefitting from the increase in the price of that house if and when you ever sell it to someone just rich enough to buy it from you. From there, turning your first million into many millions or even billions more is relatively trivial.

Scotland’s progressive tax system goes some way to redistributing wealth and income against this trend but it only goes partway and only works in retrospect. And inequality is so high that it’s difficult to conceive of how wealthy the super-rich really are but also how few of them there are to tax. As a case in point, one of the reactions I saw to this week’s Budget was to decry the tax on private jet flights as attacking the ability of Scottish families to go on holiday. I don’t know about you but I can’t imagine that there are that many Scottish families who both own a private jet and would suffer greatly if they had to use some other means to go on holiday.

To really tackle inequality and to really eradicate poverty, we need to think about pre-distribution as well. Rather than simply allowing the top 10% or the top 1% to accumulate what they like and then tax some of it back we should be radically reforming society so that it’s harder to become rich off the back of someone else’s labour and much easier to live decently without wealth. This means more public services (including public housing so that homes are made to live in rather than to profit from) and more services like sharing libraries that allow us to access collective wealth and to enjoy the ability to use that wealth without having to personally own it. When accumulation of personal wealth stops being the guiding force in our life and instead we become guided by our mutual access to collective wealth – to the common weal – then we can finally achieve that goal of eradicating poverty.