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.
