From a socialist point of view, such statistics suggest that policies
attempting equity between individuals in the UK (and similar
economies such as those of the EU and the USA) will have to abandon
the market mechanism altogether and distribute benefits direct
without regard to ability to pay. It is in this context, also, that some
radical socialist critiques of piecemeal welfare reforms become
intelligible. Such massive inequalities are felt to be incompatible with
equal rights for all in a democratic society.
A liberal approach might be to adopt some form of means testing,
or redistribute income on a large scale, perhaps through a ‘negative
income tax’ scheme instead of social security and means-tested
benefits. In such a scheme a minimum standard of living is guaranteed
to all, with a minimum of stigmatising special treatment for the poor,
by paying out income through the same machinery which collects
taxes on the basis of one declaration of income and circumstances for
everyone. Solutions are sought which preserve the individual freedom
associated with market mechanisms, whilst treating all citizens by
consistent rules.
From a conservative point of view, an uneven distribution of
capital may merely be seen as enabling worthwhile investments to be
made and as the result of rewards of previous risk taking and effort.
Providing the income of the bottom 20 per cent of the population is
judged to be above an adequate ‘safety net’ level, the existence of
unequal incomes is not seen as a problem for social and economic
policy.
It is often thought that the ‘welfare state’, both through pro-
gressive taxation and the redistributive effect of its ‘universal’ social
services, has radically affected the distribution of income and wealth
(especially the former after tax and benefits). A considerable academic
POLICIES 235Table 8.2 World population below international poverty line (2001)Population (%) Millions
All developing countries 21.1 1,089
South Asia 31.3 431
Sub-Saharan Africa 46.4 313
China 16.6 212
Source: World Bank estimate based on population living on below $1.00 per day in Global
Economic Prospects(2005, Table 1.5)