Winner of the New Statesman SPERI Prize in Political Economy 2016

Tuesday, 9 December 2014

Small states, economics and food banks

I often know I have hit a raw nerve with one of my posts when I get responses of the ‘surely an economics professor at Oxford should know’ type. As an example, here is Tim Worstall responding to this post, where I suggested that statements from small state people that the cuts that have already been made have been achieved at little cost seemed to fly in the face of evidence. I used welfare cuts and the increasing use of food banks as an example.

In fact I was quite careful about the point I wanted to make. I did not claim that the fact that half of those using food banks said they did so because of problems with benefit payments proved that welfare reform had not worked. All I needed to show was that assertions by small state people that the cuts had been achieved at little cost seemed to ignore this obvious evidence which appeared to suggest otherwise.

Tim Worstall says that evidence should be ignored, as anyone with any knowledge of economics would know. Food banks offer free food. The demand for a free good is potentially limitless. So lots of people taking advantage of free food proves nothing. He says “it’s odd for an economist (even a macroeconomist) to miss this”. Worstall is not alone in discovering the reason for the popularity of food banks in elementary economics. Here is Lord Freud, Work and Pensions minister, making the same point.

Now this idea raises a little puzzle. Why exactly are the people running these food banks spending time and effort obtaining food from supermarkets and members of the public only to give it away free to people who do not really need it? That is not a question Mr Worstall asks, but not to worry, economist Paul Ormerod is on hand to provide the answer. “Some of those who set up food banks are undoubtedly sincere, and think their efforts are needed. But an opportunity exists for others to show conspicuously their concern for the poor, and at the same time demonstrate opposition to austerity.”

Well perhaps it is because I’m an economist (even a macroeconomist) that I would never make such silly economic arguments. How many times has Mr Worstall been down to the food bank to get his free food? It costs nothing after all, so it would be pointless for him not to at least see what they had on offer. Actually for most food banks you cannot just turn up - you have to be referred by another charity or by a local job centre. But still, if it’s free, why doesn’t he get himself referred by some obliging charity? I’m sure he wouldn’t mind pretending to be hungry - after all he is suggesting lots of other people do just that.

The less important reason why most people do not go to such efforts to get free food is that it is not free - you have to spend time and effort to get it, and that is a cost. For most people this cost far outweighs any benefit. In fact it is quite possible that the only group where the cost does not outweigh the benefit is those who would go hungry otherwise. The more important reason is that most people are quite ashamed to get food from a food bank, or to pretend they are hungry when they are not just to get a few bags of free food. Economists are allowed to take account of such feelings, even if sometimes they fail to do so. That is why the Financial Times says:

“Multiple case studies show people only turn to a charity for food if they have no alternative. Such visits are often described as a humiliating experience undertaken as a last resort. It is neither a lifestyle choice nor a wheeze to save a few pounds on tins of soup.”

Once you understand this, there is no need for Paul Ormerod’s rather contrived explanation of why people run food banks. They run them because it helps people who would go hungry otherwise. [1]

You might think that these arguments are so poor that they are hardly worth addressing. But I think they are indicative, and there is a danger that they end up giving economics a bad name. Anyone can misuse economic ideas, and small state people like Tim Worstall are no exception. Yet ironically by pretending that the rapid growth in UK food banks over the last decade is not a problem, they only reinforce the conclusions of my earlier post. Small state people are in danger of living in an imaginary world, while in reality the policies they support do serious harm.        


[1] While his idea might be applicable to millionaires at American style charity events, as an explanation for those working in food banks it seems both unlikely and insulting. 

66 comments:

  1. The strongest argument in favour of universal benefits is the take-up rate, which is far greater than either means-tested benefits or charity. Poverty continues to have a considerable stigma attached to it. That is why Worstall's argument does not hold water. It is a matter of pride for most people that they are able to "manage" without help.

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    1. It is undoubtedly a cause of pride to people such as yourself, but I grew up in one of the poorer areas of London, and the prevailing ethic there was that only a "mug" doesn't grab anything that is being offered.

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    2. jon, that's a very old debate, but a good one:

      “HIGGINS. Have you no morals, man?
      DOOLITTLE [unabashed] Cant afford them, Governor. Neither could you if you was as poor as me.”
      ― George Bernard Shaw, Pygmalion

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    3. Both are proably true, but to what extent - you'd need to do some proper surveys to find out.

      I'm no fan of anecdotal evidence, but my cleaner, who has two other jobs, said exactly what Frances did only last week.

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    4. My anecdotal evidence supports Frances too.

      I hope the others were not suggesting that poor people have lower standard of ethic than the others.

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  2. 'Shoe leather costs' was the phrase the lecturers in my undergraduate days would use. For Tim Worstall, the added value of the free food isn't even worth the trivial amount it would cost him in wear and tear to his shoes to walk to the food bank. The question Tim Worstall needs to ask himself is why, given the supposed availability of free food, he would rather go to Waitrose and pay through the nose for it. Well, Tim?

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  3. How come there are more food banks today?

    In the past if you were hard up with money troubles you could allow your council house rent to run up into arrears and spend what money you had on food. Chances are they wouldn't evict you any time soon. Can't do that now you're more likely in private rented housing where you will be out on your ear double quick.


    You could delay paying your gas and leccy bills and spend the money on food. The nationalised utilities weren't that quick to chase down the debt. Can't do that now youre on a pre-pay meter gotta pay up front for heat and light.

    You could sell your car to buy food and still get around on cheap public transport. Can't do that now seen a bus lately? seen the ticket price?

    The last big outgoing youve got is food.


    Neoliberalism = Foodbanks

    No textbooks or big papers required

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  4. I expect Tim Worstall's backs up his claims regarding the rise in food banks with a wide range of evidence?
    No? OK, surey then he addresses the research findings regarding food bank usage gathered by Trussell Trust, the largest food bank provider in the UK, who found that "83% of food banks reported that benefits sanctions - when payments are temporarily stopped - had resulted in more people being referred for emergency food".

    Or similarly, from another recent study: "Collectively, Benefit Issues, Unemployment and Debt account for 86% of the reasons why people need to use our service – as these three reasons so often follow each other when someone loses their job"
    http://mkfoodbank.org.uk/about/stats-food-bank-facts-figures/

    Perhaps he clearly explains using evidence why the recent all-party report on food banks is completely wrong to warn that "Britain is stalked by hunger caused by low pay, growing inequality, a harsh benefits sanctions regime and social breakdown." ? http://www.theguardian.com/uk-news/2014/dec/08/tories-avert-rift-church-food-bank-report

    Oh wait...that would be engaging in an evidence based debate....

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  5. "Oh wait...that would be engaging in an evidence based debate...."

    You are at cross purposes. Worstall does not accept evidence. The market decides, and is right. No human, certainly not the state, can ever know anything, certainly not by looking at evidence.

    I am neither supporting or denying this - just pointing out that you are dealing with someone who does not accept that evidence matters.

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    1. I agree totally, hence my sarcastic but likely quite accurate final comment alluding to the idea that he is "someone who does not accept that evidence matters".

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  6. “You might think that these arguments are so poor that they are hardly worth addressing.”

    Poor as a “cold box” foodbank client.

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  7. My wife as a CAB manager worked with churches to establish foodbank in a East of England market town because there was a need - real people needing food. To me the point is that Osborne sees the state as a residual both in public finance and as service provider. As did Thatcher and maybe Gladstone? The judgement for him (if heaven forbid he has another chance after May) is when to stop, as I think it was for Thatcher. He can always borrow more?

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  8. Well done for entirely ignoring the point that I did make. Which is something that an economist, even a macroeconomist, should be able to grasp.

    The increase in the amount of something can indeed be because of a rise in demand for it. It's also possible for there to be an increase in the supply of something independent of changes in demand for it. This is a concept that is familiar?

    Technological change perhaps? As in, people looked at what the US has been doing for decades over food banks and thought, well, that would be a good thing to do here in Good Old Blighty?

    That is indeed a reasonable description of at least some of what is going on. And that's what I said, that it's part of it.

    "I expect Tim Worstall's backs up his claims regarding the rise in food banks with a wide range of evidence?
    No? OK, surey then he addresses the research findings regarding food bank usage gathered by Trussell Trust, the largest food bank provider in the UK, who found that "83% of food banks reported that benefits sanctions - when payments are temporarily stopped - had resulted in more people being referred for emergency food". "

    Yes, I have made that point. At about the same time as I pointed out that Welby's (and Frank Field etc) call to effectively nationalise the food banks would be a very bad idea. For it would be handing control of the solution to the problem over to the very people who are causing the problem by stopping benefits.

    As to why I haven't pitched up at a UK food bank that's because I've not lived in the country for 25 years. And they didn't exist back then when I did. I live in Portugal and I'm in the fortunate position of being able to donate to my local food bank, make deposits not withdrawals.

    Finally: "Yet ironically by pretending that the rapid growth in UK food banks over the last decade is not a problem,"

    I don't think it's a problem, no. I think it's absolutely bloody marvelous in fact. There has always been this unalleviated hunger, there has always been that wasted food.Yes, it's true, the past has also had cases of people being screwed over when benefits are cut or stopped, I've even known a few of them and helped them out. Now we've got a more organised system to do that. Far from this being a problem the idea that people will voluntarily associate in order to alleviate the condition of their fellows strikes me as being a welcome sign of human good nature.

    And finally finally, I've never said anything at all about how people getting food from food banks "don't need it". Please don't tar me with that brush.

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    1. ... pretending that the rapid growth in UK food banks over the last decade is not a problem,"

      I don't think it's a problem, no. I think it's absolutely bloody marvelous in fact.


      Tim don't be daft. That's like responding to a claim the rise of TB admissions in hospitals is a problem by saying actually hospitals are great. Nobody is saying the foodbanks are the problem, the problem is what's causing an increase in demand for them.

      I know you think people are ignoring changes on the supply side too, and that's a fair point as far as it goes, but it does not go as far as refuting the idea of increased demand.

      So why not respond to the question: do you think attempts to cut the welfare bill and do things stop benefit payments to encourage effort etc. are a problem?

      [and don't respond by saying you think incompetence in administering benefits is a problem, that's not what I am asking]

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    2. "Yes, I have made that point. At about the same time as I pointed out that Welby's (and Frank Field etc) call to effectively nationalise the food banks would be a very bad idea. For it would be handing control of the solution to the problem over to the very people who are causing the problem by stopping benefits."

      OK so you appear to agree entirely with SWL that the reduction of benefits (as a part of austerity) has come at a cost -- increasing people's hunger such that they are forced to use food banks. If you agree with him it's hard to understand why you wrote your original article

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    3. Impressive writhing and wriggling, not to mention the smattering of desperate ad hominem’s, but as Sam (above) notes your reply barely resembles the (mostly farcical) points raised in your original Forbes article.
      Your main point concerning food banks was clearly that their increased supply is the main cause of the rise in demand:
      “And they are, after all, free, and humans like both food and free things. The knowledge of how to *cadge food* from suppliers and the supermarkets, the interest in doing so, has been rising.
      Cadge??
      Only as a secondary point you indeed note “It’s possible that the expansion of food banks has been driven by an increase in demand, yes” – somehow turning this point into the main point of your reply, mingled with desperate ad hominem’s suggesting that SWL hadn’t thought of this!
      *”But that ain’t the way to bet: an increase in supply is”.*
      Contrast this blind, misguided assumption with the actual evidence from various sources, including those who volunteer at food banks, the recipients of food themselves, those who administer and organise food banks, plus the findings of the cross-party group of MPs investigating this matter, which all contradict and clearly disprove your evidence-free assertion that the expansion of food banks has been driven primarily by an increase in supply.
      Yet with regard to the Trussel findings you reply “Yes, I have made that point…” .
      Nowhere in your Forbes article – the very article linked and being addressed by this blog – do you make this point.
      If you want to claim the primary driver of the expansion of food-bank usage by people in the UK is due to the growth in supply of food banks themselves, please provide evidence to back up this assertion. This in turn would also have to disprove the findings of various studies which all show that falling incomes, debt burden and benefit reductions are the principal drivers which have caused people in desperation to have to be *referred* to food banks for food – not to “cadge” food - as you so eloquently but above all insultingly put it.
      The question is, can you do this? If you are correct in your assertions, it should not be too difficult a task.

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    4. Hmm.. food banks are being created not because there is the need for it, but because some people apparently don't have anything better to do and saw the concept in the USA?
      The idea of food bank 'deposits' is a little perverse. After all, food decays. It's a bad investment, there is a high rate of depreciation. So why does Mr. Worstall donate to it, especially if he suggests that there might not be the necessary demand for it?

      This attitude towards food banks is very old, by the way. At least, 140 years old. Rezneck (1950) portrayed economic distress and welfare after the Panic of 1873 in America. The sentiments back then were the same. "The Nation, indeed, denouced the universal spread of the "free soup" appetite;" (p. 500). And food banks were, oh!, such a wonderful innovation."Business at the soup house continues lively, and every day proves more and more the necessity of the institution." (p. 499).

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    5. I quote from Mr. Worstall's piece: "But this [growth of food banks] is at least in part (I would argue almost entirely but I will not take as being serious anyone who says that this is not true at least in part) because the supply has increased massively." If you want to refute SW-L's point, you need to show something like the people using food banks today are less needy than the people using food banks from x years ago. I guess I could add you would have learned to reason better if you had studied PPE at Oxford, but that would be both trite and snide.

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    6. "debt burden and benefit reductions are the principal drivers which have caused people in desperation to have to be *referred* to food banks for food – not to “cadge” food - as you so eloquently but above all insultingly put it."

      Cadge, as should be blindingly obvious, is used in the context of people going to supermarkets and food manufacturers in order to "cadge" the food to stock the banks. Not, as you're claiming, that the hungry people receiving the food are cadging.

      Re supply rather than demand. From the Trussell Trust's own description of itself:

      "Whilst fundraising for Bulgaria in Salisbury in 2000, Paddy received a call from a desperate mother in Salisbury saying “my children are going to bed hungry tonight – what are YOU going to do about it”. Paddy investigated local indices of deprivation and ‘hidden hunger’ in the UK. The shocking results showed that significant numbers of local people faced short term hunger as a result of a sudden crisis. Paddy started Salisbury foodbank in his garden shed and garage, providing three days of emergency food to local people in crisis. In 2004 the UK foodbank network was launched teaching churches and communities nationwide how to start their own foodbank."

      At the very least there was some unmet demand all the way back in 2000. And, wholly admirably, the Trussell Trust started out with two food banks in 2004, there were 100 in the network in 2011 and however many hundreds there are now. So, yes, I do indeed still say that this is, at least in part, about an increase in supply independent of any change in demand. Over the past 15 years or so people have seen that there is a problem devised a solution and rolled it out.

      "Yet with regard to the Trussel findings you reply “Yes, I have made that point…” .
      Nowhere in your Forbes article – the very article linked and being addressed by this blog – do you make this point. "


      Quite true. I make it in a *different* Forbes post of 3 days ago.

      http://www.forbes.com/sites/timworstall/2014/12/07/the-archbishop-of-canterburys-bizarre-idea-to-nationalise-the-food-banks/

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    7. "Nobody is saying the foodbanks are the problem,"

      Try reading Zoe in The Guardian today. She out and out states it: that charity feeding people is morally wrong.

      "So why not respond to the question: do you think attempts to cut the welfare bill and do things stop benefit payments to encourage effort etc. are a problem?"

      Sure: at least "cause problems" rather than "being a problem". Nowt ever doesn't cause a problem or two. As you well know I've been arguing for an unconditional basic income for years. On very much this sort of basis. Anything conditional from the State is bound to get screwed up quite apart from the incentives problems.

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    8. I should have written that's not what SWL meant by " ..by pretending that the rapid growth in UK food banks over the last decade is not a problem"

      so you don't think that the squeeze on the welfare state under current government is a particular problem

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    9. Well done. You've almost come full circle on your original argument!
      Which was of course that the increased supply of food banks is the main driver of the rise in food bank usage, with demand for food playing a bit part role.
      Now you write "this is, at least in part, about an increase in supply independent of any change in demand"
      So please clarify which is the main driver? The demand side - as studies and evidence has shown, or the supply of food banks, as you originally claimed but now seem to be back-tracking on at a rate of knots?
      Furthermore, the description you used above of the origins of the rise in food banks is entirely suggestive of being demand driven, with (AGAIN) no evidence for it being supply driven. The supply has risen in order to meet the demand as growing numbers of people find themselves in a similar situation to that mother in Salisbury.
      Evidence please Tim, evidence. Show us using evidence that the vast majority of people are not going to foodbanks because they have an urgent and desperate demand for food given their dire finances. Show us they go mainly because foodbanks exist, and there is free food on offer, and that they have no real demand-side need.
      Perhaps most incoherently, in your other article indeed you do acknowledge poor governance causing benefit cuts/delays - which as the Trussel Trust notes is a main driver of the demand for food bank usage. Yet in both articles you very much emphasise the supply-side, whilst relegating this demand-side to a bit part - thus contradicting the Trussel's evidence!
      Do you disagree with the Trussel findings that this demand-side element rooted in people's poor finances is not the primary driver of the growth in food bank usage? Or is it still mainly supply-side? If the latter, again, please provide evidence to support, and explain using evidence why so many studies which identify the rise in foodbank provision and usage being demand-led are wrong.
      Ps. You realise people simply cannot turn up to these food banks as and when they like don't you? They have to go to some effort and show that they are in dire need in order to be referred to the food bank. This alone blows your assertions out of the water,becasue without the 'dire need', people cannot turn up to collect food, so all of those new foodbanks opening would have lots of food going to waste, and would soon close down. On the other hand, if there are lots more people in dire need, then the food banks get busier, and more food banks are set up - to meet the demand!

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    10. "so you don't think that the squeeze on the welfare state under current government is a particular problem"

      I'm absolutely certain that it causes certain problems to certain people. Whether is is "a particular problem" depends on the balance of those problems as against the benefits (whatever they may be) that the same actions produce.

      I certainly wouldn't have tried to reduce the welfare bill in the way that the Coalition have done it. My preferred solution would be that UBI which would probably increase the bill in fat. But would solve so many other problems that it would be worth it.

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    11. Dear Mr Worstall,

      I, myself am one of these "cadging" foodbank users you write about. While I may not be on your intellectual level sir may I present you with a few facts from somebody on the front lines:

      The reason the usage of foodbanks are on the increase is not because "they are, after all, free, and humans like both food and free things" it's because we have a benefits system that is so sluggish and out of control that people are forced to resort to food banks in order to SURVIVE.

      I do believe that the greatest human instinct is for survival. and far from wanting to resort to crime people are forced to turn to charities like the Trussel Trust in order to feed their families. People don't feel good about this. Not at all. In fact most people in the same situation as me feel ashamed. They feel ashamed that, because of these horrific austerity measures they have to resort to the kindness of others to provide for their families. And that, sir, is both soul-destroying and heart-breaking.

      We live in an age of so many wonderful innovations that it beggars belief that there are so many starving familes in a country that claims to be a "world leader".

      I would suggest that, instead of bickering like the politicians who are supposed to lead and protect our country do, great minds like you and Mr Wren Lewis sit down and work with humanity to help solve these horrible problems. Then maybe, just maybe, we can have a society that encourages and nurtures instead of crippling and dictating.

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    12. Very well said. I sympathise with your plight and hope things only get better for you. Given the clarity and coherence of your writing, you also needn't worry about not being on Tim Worstall's 'intellectual level'. He'd need to look up using the Hubble telescope just to see you.

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    13. To the extent that I can identify a coherent argument from Mr Worstall it is that there is indeed a need (whether new or long-standing), but it is very properly being met by charity. The objection to this view is that rescuing people from hunger in a rich country, such as the UK, is the responsibility of government. This then is a moral argument, not an economic one.

      Of course, if this is what Mr Worstall means, then he cannot also say that the increased supply created the need. Nor can he accuse Simon of economic illiteracy. The view I have outlined her means, instead, that the increased supply responded to the evident need. This is, for reasons Simon noted so well in his initial post, vastly more plausible than the opposite view that the supply created the appearance of need.

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    14. To the extent that food banks are meeting a need that already existed, it is not possible to blame the increase in their numbers on coalition policies. And as I said below, the fact that the people who use food banks are in a very difficult situation doesn't really prove anything either: people were in similar situations before, but food banks didn't exist so they had to do something else (go hungry, perhaps). I think that's the point TW is trying to make, and I don't think it's possible to prove or disprove it.

      I see the whole argument as something of a sideshow anyway. We don't need the increase in the number of foodbanks to prove increased hardship among people whose benefits have been reduced or removed. It seems clear that the demand for food banks must be increasing in these circumstances, so who cares if they are meeting this new demand or demand that might have existed anyway? They're still scandalous.

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    15. Martin Wolf:
      I think I said in rather a more long-winded way basically the same thing as you, though I think you're doing well to find a coherent argument in Tim Worstall's inconsistent and entirely unfounded claims of a mostly supply driven rise in food bank usage! I certainly don't deny him the right to hold such a view, but as I repeatedly requested, where is the evidence to support it, and how does he explain the range of evidence over the last few years which all indicate quite conclusively a demand driven rise in the number of food banks?
      Idealogues and evidence appear to have the same sort of relationship as vampires and garlic.

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    16. “Idealogues and evidence appear to have the same sort of relationship as vampires and garlic.”

      Or 'rational' crackpots and evidence: they acknowledge the evidence but they are unmoved by it because of the strength of their ideologically motivated beliefs.

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  9. I was thinking linguistically about the idea of a 'small state'. The adjective 'small' seems to have the comparative within it, that they want a 'smaller' state than the current one, but ultimately this 'small' state is really about their search for the superlative 'smallest' state.

    I wonder what that smallest state looks like in their minds; whether they have a shared vision of its components; whether they think of the mid-Victorian UK state?

    It's a curious project indeed, one which seems to have nothing at all to do with economics.

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    1. As Paul Krugman noted a while back, small state people view any cut as a triumph in itself. This is fair enough if you really think that, as you have noted, the goal is to achieve the 'smallest' state. The problem is that they invariably think that anyone who questions their policy must logically want the 'biggest' state. If you would like to see more welfare and higher taxes to pay for it, you must want everything to be welfare and 100% taxes, you communist! It makes discussion tricky.

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  10. Welfare is still welfare whether it is paid for out of taxes or voluntary donations. The problem is poverty and the best solution for ending poverty. Foodbanks are a red herring in this argument.

    A state that is spending 40% of national income but receiving only 30% in taxes has a problem. Serious people can disagree about the priorities: increasing the 40% to 50% and going to a 20% deficit (S W-L), increasing national income (everyone), or increasing taxes (Ed Balls).

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    1. It's a counterpoint to the argument that cutting benefits has not had a significant cost (Osborne: "the world has not fallen in"). You say "the problem is poverty" and then say that evidence of more poverty (increasing use of food banks) is a red herring. Surely it's directly relevant.

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    2. This comment has been removed by the author.

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    3. In 2014-15, the state is taking 35.5 per cent in revenue and spending 40.5 per cent. Let's get the numbers right.

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    4. Thank you for the correction, I was stuck in 2010. I need to correct my assumption about Ed Balls today. He doesn't want to increase taxes but cut spending to eliminate the deficit.

      Re: demand vs supply on food banks, is it really such a problem if government welfare cutbacks result in a shift in the demand curve for food from food banks? The supply curve for free food seems flat, so perhaps overall welfare has risen as targeting improved and less welfare is wasted?

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    5. "is it really such a problem if government welfare cutbacks result in a shift in the demand curve for food from food banks?"

      I don't see how you can conclude anything from this except more people are becoming too poor to buy enough food to feed themselves. It's unacceptable for this to be happening in one of the world's richest countries

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    6. Being "given" money to buy food or being given the food, what's the difference? Either way it's charity. And the second way is more sure of hitting the target. That's why America has food stamps. It's not very edifying but reality often hurts. To talk of welfare cutbacks is a bit of a joke when you see the surging sums spent on incapacity benefit, disabilty living allowance, housing benefit and personal tax credit, plus the real biggie, state pensions.

      To pay for all this, largely, non-meaningfully contributed, welfare we must have strong GDP growth. But we won't get that until we have better monetary policy and not monetary asphyxation, as now. We should adopt NGDP Forecast Targeting. It's no solution staying trapped in a world of rigid Inflation Targeting and/or fiscal policy offset by monetary policy.

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    7. If the government says: "Screw the poor, vulnerable and disabled, we'll let them go hungry, but it's fine because charities will feed them" -- this is fine to you? No difference?

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    8. If, as you said, the problem is "poverty and the best solution for ending poverty", how do you pivot speedily away from that and talk only about the deficit?

      The problem isn't the deficit. We can and should sacrifice on having a bigger deficit if that is the best solution for ending poverty.

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    9. The real issue here is that food banks make the issue of poverty difficult to ignore, when all the austerians would really rather be talking about how the deficit can be used to justify more spending cuts.

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    10. If the outcome is the same, that voluntary charities do the job that government doesn't do, what exactly is the problem?

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    11. Good point. The government could probably save a lot of money by cutting back drastically on the police and fire services as well. Yes it would put many people in danger but charities are unlikely to stand by -- I'm sure they would step in to help. Maybe we could remove most of the funding for schools as well, communities would undoubtedly pull together to educate their children. Think how quickly we could eliminate the deficit! Thanks charities!

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    12. Sure. There is plenty of waste within the police service e.g war on drugs. In terms of schools, it is probably better they remain in the public sector.
      Why do you care what the deficit is anyway?

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  11. "A state that is spending 40% of national income but receiving only 30% in taxes has a problem."

    The size of that problem depends heavily on interest rates, inflation, and growth.

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  12. "the description you used above of the origins of the rise in food banks is entirely suggestive of being demand driven, with (AGAIN) no evidence for it being supply driven. The supply has risen in order to meet the demand as growing numbers of people find themselves in a similar situation to that mother in Salisbury."

    The situation TW describes is one in which the demand was there all along, and the number of food banks grew because supply rose to meet it: a supply-driven increase. If this is the case, then the people who would have used food banks were no doubt in as difficult a situation as the people who now do use food banks: the option was simply not open to them. So the fact that current users of food banks are in a very difficult situation does not in itself prove the contention that their growth is entirely demand-led.

    I don't agree with TW but his contention that the growth in food banks is at least partly meeting a previously existing but unmet demand strikes me as quite persuasive, and I don't think the evidence you and TWL have cited disproves it.

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    Replies
    1. "demand was there all along, and the number of food banks grew because supply rose to meet it (demand)" You have described a demand-driven increase, not "a supply-driven increase".
      TW contends there was some demand and the rise in food banks is mostly due to people wanting free things, such that if you supply it, demand will follow...ie. supply driven. This is not true for the food banks, as the evidence shows, though there may be a very small % of people who do manage to 'cadge' free food simply because food banks now exists. The evidence overwhelmingly shows as the number of people falling into financial difficulties has risen, their need and thus demand for food from food banks increased, driving the increase in the number of them being supplied in the UK.

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    2. Just to be clear, my argument is not and never has been that the growth in food banks is in no part supply driven. My argument is that the increasing use of food banks by those not receiving benefits suggests problems with the government's welfare reforms. Those arguing otherwise have to demonstrate that this increasing use is NEARLY ALL supply driven, and not just PARTLY supply driven. I have not seen a single piece of evidence, or any good a priori argument, to support that claim.

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    3. You have described a demand-driven increase

      The increase is (supposedly - I don't actually believe this is what's happening) occurring because supply is increasing while demand remains constant. If that's what you call a demand-driven increase then we are just using the term differently.

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    4. the increasing use of food banks by those not receiving benefits suggests problems with the government's welfare reforms

      Yes, I agree with that it suggests this. But it doesn't prove it in itself. The pertinent evidence is in the numbers of people who are experiencing hardship because they have lost benefits as a direct result of government policy. We know that there are lots of people in this position, so it stretches credulity to suggest that these people are not driving the demand for food banks. But the logic is that way round, and not the other way (increased numbers of food banks demonstrates increased hardship from coalition policies).

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    5. SWL: And it is this paucity of evidence for a mostly supply driven rise in food bank usage that I have a repeatedly asked TW for, which he should furnish us with unless he is content to hold completely unfounded views - or live in the 'imaginary world' you described previously.

      Anon: You're right not believe that demand remain constant, given the evidence of stagnant and falling incomes, welfare cuts etc over recent years, the rising numbers of 'working poor' etc

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  13. Why does anybody pay attention to Worstall at all--or even Forbes? They were pretty bad when I ended by subscription in 1997, and from the occasional glance, they are even worse. Worstall is pretty much the norm there. (Yes, I guess the answer is that folks who take economics seriously need to push back against those with a platform to spout nonsense. But still, such a waste of energy...)

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  14. Only an economist would think that needing more food banks is a good thing. People just love taking charity:

    http://www.newsfromme.com/2014/05/08/at-the-market-very-late/

    Either that or economists are the kind of people who think nothing or robbing the poor box.

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  15. "Just to be clear, my argument is not and never has been that the growth in food banks is in no part supply driven."

    Excellent, so you agree with my original contention then. The rise in usage is in part supply driven.

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    Replies
    1. Now you are being overtly silly. The statement "The rise in usage is in part supply driven" is completely empty without specifying what you mean by 'in part'. For you to dispute my original post you needed it to be 'in large part': as you wrote:

      "But this is at least in part (I would argue almost entirely but I will not take as being serious anyone who says that this is not true at least in part) because the supply has increased massively."

      and

      "It’s possible that the expansion of food banks has been driven by an increase in demand, yes. But that ain’t the way to bet: an increase in supply is."

      Your only argument in favour of this original proposition was that food in food banks was free. My post showed why that argument was bad economics, because getting food from food banks is costly for the individual. I don't think trying to deny what you originally wrote will fool anyone.

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    2. Hi.
      The supply effect being discussed does not rely on it being free, anything less than the cheapest alternative combined with an increase in supply would qualify to cause the phenomenon.

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    3. Simon, in case you haven't seen it before, this is called the Two-Step of Terrific Triviality

      http://crookedtimber.org/2007/04/11/when-i-hear-the-word-culture-aw-hell-with-it/

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    4. Luis - Thanks! I knew I had read this somewhere, but couldn't remember where. A closely related trick was in the Osborne and Ganesh quotes in my 'imaginary people' post. One said that the cuts had not led to the 'world falling in', the other to 'returning to medieval times'. Both statements are, at least for the majority, obviously true because they are so extreme, but they are meant to convey something much less extreme

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    5. "Excellent, so you agree with my original contention then. The rise in usage is in part supply driven."
      Except that was not really your original contention - which was that the rise in usage was mainly supply driven, and only partly demand driven. ie. the opposite of what you are saying now.
      Shameless.
      PS. we're still waiting for the evidence for your original contention. Come on, you must have...how could someone express such a firm belief in black and white and put their name to it without checking the evidence thoroughly?
      ...And we're back to my very first comment of 2 days ago which appropriately finished with "Oh wait...that would be engaging in an evidence based debate...."

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  16. If Mediamacro is ever to start reporting what is important, and not just that which is salacious, people like Nick Robinson at the BBC need to stop harping on about the deficit, as he does in an article about Milliband's speech today. Oh, and the BBC seems to have removed the email addresses of their blogging correspondents, as well as the ability to make comments. I wonder if this is so that the right wing message the BBC is now encouraged to embrace can be pushed to the public by BBC diktat? The BBC is a sad reflection of what it used to be, as is, it seems, political commentary as well as economic.

    Thank goodness for this blog where sense rules!

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  17. In a market economy, with the market at the equilibrium point where demand equals supply, there will always be those on the lower end of the demand curve, that is, below the supply curve, who cannot afford the goods on the market. Where the market is food, there will always be those who cannot afford the food, and would go hungry. Thus, in a market economy, there will always be a need for soup kitchens.

    As the ratio of the price of food to income goes up, that need increases.

    Small state people must justify the essential cruelty of their policy, by holding those they have priced out of the market, the poor, in contempt. Thus they hold the victims of their heartless policy in contempt, so they can feel good about themselves.

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  18. Oh, yes. I work at a food bank and soup kitchen. At the beginning of each month, when people are still flush with their benefits, business is slow, mostly just those who have no benefits at all. As each month progresses, as their money runs out, progressively more people come to the food bank and eat at the kitchen. We've wondered why they don't take advantage of the food bank at the beginning of the month, and save their money. Apparently, even the poor would rather buy their food, and depend on charity only when they have to.

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