Saturday, 14 May 2011

Poverty and regeneration - not "market failure" but "government failure"

You’ve all heard the term – it crops up with monotonous regularity, thrown about by pundits and opinionators across every subject – “market failure”. And it is a sloppy, lazy, unhelpful term that wholly fails to recognise the reality of markets. Let’s look at one example – here’s Julian Dobson talking about regeneration:

Such a sense of direction needs to be underpinned by an ethic of regeneration. Unless we subscribe to a Darwinian view that distressed places and the people within them should be cast adrift, then there is a moral imperative to look after those who have been failed (visibly and obviously) by the markets and let down (sometimes less visibly, but no less miserably) by public policy.

What we see here is an assumption that – “visibly and obviously” – the plight of poor people in poor communities is down to some kind of “market failure”.  That our system – founded as it is in a market economy – leads inevitably to such an outcome. It is from the same play book as the commonly heard contention that poor people are poor because rich people are rich. And it is the argument that leads to the wrong solutions to problems best resolved through the very market people like Julian are quick to criticise.

Over the past 40 years ago we have settled on an approach to regeneration defined exclusively by the view that poor places result from “market failure”. Abel-Smith and Townsend pointed to certain groups – the elderly, young parents and the unemployed – and argued that we could not declare poverty beaten because these people were poor. Government needed to intervene in the communities where these poor people were concentrated – intervention based on the analysis of place was born and we took the word “regeneration” to define that activity. And it hasn’t worked – regulatory failure and misplaced intervention acted to skew local markets even more that had been the case prior to the invention of “regeneration”.

The Joseph Rowntree Trust conducted a substantial piece of research looking at the distribution of poverty from 1968 to the present day – the maps in the report (starting at page 33) show the sorry truth that the poorest places in 1968 are still the poorest places today. Yet we have directed enormous amounts of tax money to resolving the imbalance – sometimes with a focus on buildings, sometimes on skills, from time to time a mention of enterprise slips in, we add in crime, health and much else besides. And the places remain poor.

I worry that we are tiptoeing again towards more place-based, targeted government intervention – skewing markets by giving one place a tax advantage, for example or by subsidising business investment. Or else we hear the vested interests – housing associations calling for more investment in housing, developers calling for relaxation in planning and the release of public land and the “third sector” arguing for ‘social enterprise, co-operatives and such as the way forward. But all of them point the finger at “markets” as the culprit calling for more regulation – stopping the market from operating efficiently. It is here where the failures lie - if low business taxes promote growth, why limit them to selected "enterprise zones"? If fast-track planning allows for real long-tern change, why only in some places? And if locally-led regeneration partnerships help drive change, why so few of them?

Many regenerators – and certainly those from a people-focused background – would agree that the resolution lies within the communities themselves and that, so long as people in Canning Town, Grimethorpe and West Bowling aspire to move elsewhere the impact of any regeneration will not be seen in the place itself. Change – and we’ve seen this in parts of London and in some of the former mining communities on the fringes of Leeds and Sheffield – comes because people make the positive decision to live there, even to the extent of moving there. Yet these changes are too often condemned as “gentrification”, as the breaking down of the spirit of the place.

In the end, the main issue is economic – about that dreaded GDP not about how green we are or whether people are happy in their relative poverty (I can tell you that they aren’t). And that means asking the difficult questions about how public policy has failed – how we got so many bad schools, so many people dependent on welfare hand-outs and how we came to have a world of petty nastiness, intolerance and criminality across our poorer communities.  What I do know is that these problems – the core problems the regeneration seeks to challenge – are not the problems of “market failure” but problems of “government failure”. Sadly, too many seem to believe that dealing with government failure requires more rather than less government.

The opportunity of localism –of Big Society – is an opportunity to sort some of this out away from government intervention. To see new educational ideas championed by schools free from the local council’s heavy hand, to see innovation from charities and voluntary groups in getting people into jobs, to watch as people take control of planning their own communities even to the extent of taking over local facilities and services and to hear as those same people challenge us to work with their ideas rather than impose our own.



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