The article makes a good point when it notes that the $87 billion spent on welfare does not all go to the poor. A lot of it is spent on people of middle and upper income levels. Family Tax benefit is a notable middle class form of welfare. Peter Saunders surely understands this because he has argued the same point previously.

However measures such as the Gini coefficient also have a similar problem. If the upper middle class get a bigger slice of the national pie at the expence of the lower middle class then the coefficient may rise even if the poor get richer.

Maybe we should ignore such relative measures and just look at how the poor are doing.

My guess is that the poor are doing it tough. That the poor have always done it tough. But that its better to be poor in Australia rather than in a socialist, high taxing, redistribution oriented nation like Ethiopia.

A measure that may find support on both sides of the debate is to increase the tax free threshold. That would increase work incentives and benefits for the poorest. Its the only way to make the tax sytem more progressive without increasing the overall tax burden.

An interesting article on generational wealth within different countries is at
http://www.canada.com/edmonton/edmontonjournal/news/story.html?id=859a24a2-3184-49cf-a95f-b193529cde55

“Among rich countries studied, Corak said, Canada ranked with Denmark, Norway and Finland at the top of the pack in terms of intergenerational mobility. The U.S., the United Kingdom and France are the least mobile.

Corak, who began his work on intergenerational mobility in the mid-1990s, looked at the incomes of adults in their 30s versus the incomes their fathers made. The bottom line, he said, is that one-fifth of the income advantage is inherited across generations in Canada. In the U.S. and the U.K., almost one-half is inherited. Corak also cites U.S. research showing that almost one-half of children born to low-income parents become low-income adults, which means they fall in the bottom 25 per cent of income distribution. In the U.K, the tally is 40 per cent.”

Now assuming that there are similar amounts of government spending and welfare per head of population in each country, then how this money is spent becomes an important factor in eliminating generational poverty. In the case of Canada, there is the belief that government money has been well spent when it has been spent on the children of poor families.

How much welfare goes towards improving the future prospects of poorer children in Australia is not known, but the federal government has talked about Family Impact studies being carried out. Hopefully those Family Impact studies (if they ever see the light of day) will be used to identify the best way of spending welfare money. If the Canadian study is accurate, then in the longer term money should best be spent on improving the prospects of the children of poorer families.

There are a number of things that we inherit from our parents that I think are likely to influence personal wealth:-

1. Tolerance towards risk.
2. Work ethic.
3. Emotional managment.
4. Integrity.
5. Self confidence.

I don't know how government spending can be used to boost these for the poorly parented. However I would be interested in ideas

Terje
Before further discussion on welfare, the following from a US article would be relevant

“Put it this way: Suppose that you actually liked a caste society, and you were seeking ways to use your control of the government to further entrench the advantages of the haves against the have-nots. What would you do?

One thing you would definitely do is get rid of the estate tax, so that large fortunes can be passed on to the next generation. More broadly, you would seek to reduce tax rates both on corporate profits and on unearned income such as dividends and capital gains, so that those with large accumulated or inherited wealth could more easily accumulate even more. You'd also try to create tax shelters mainly useful for the rich. And more broadly still, you'd try to reduce tax rates on people with high incomes, shifting the burden to the payroll tax and other revenue sources that bear most heavily on people with lower incomes.

Meanwhile, on the spending side, you'd cut back on healthcare for the poor, on the quality of public education and on state aid for higher education. This would make it more difficult for people with low incomes to climb out of their difficulties and acquire the education essential to upward mobility in the modern economy.

And just to close off as many routes to upward mobility as possible, you'd do everything possible to break the power of unions, and you'd privatize government functions so that well-paid civil servants could be replaced with poorly paid private employees” http://www.thenation.com/doc.mhtml?i=20040105&s=krugman

The above seems very familiar in Australia, but if our government was serious about removing poverty, then it becomes an issue of how welfare money should be spent, and the argument is that it should be directed towards the children of poorer families as much as possible. Ensuring ready access to quality education for those children would be a high priority, (particularly in a globalised environment), but overall it becomes an exercise in investing in human capital, not just keeping people alive.

Sorry but the article you cite is by Krugman. I know that we should not shoot the messenger but that guy really depresses me. He is morally and intellectually bankrupt. I really, really, really, really lack respect for his opinion. Maybe somebody else can read it and offer you a response

So Terje, you really think poor parenting is the root cause of poverty?