In a new initiative, the European Commission boldly promises to eliminate poverty in the EU by 2050.
Not reduce it, not mitigate it. Eliminate it.
Brussels is good at designing great, big plans with impressive ambitions and seductive outlooks on the future. Their delivery record on those plans is far less impressive, and it is not going to be improved by their concoction: the EU Anti-Poverty Strategy rolled out by European Commission executive vice-president Roxana Minzatu on May 6.
In a summary, EU Business explains:
The first-ever EU anti-poverty strategy includes a Commission plan to help end poverty in the EU by 2050; a proposal for a Council Recommendation on fighting housing exclusion; and two communications: one on breaking the cycle of child poverty, and one on reinforcing the strategy for the rights of persons with disabilities up to 2030.
There you have it: in less than 25 years, nobody will be poor in the European Union anymore.
When politicians announce plans and make promises of this magnitude, I am reminded of the lyrics in British singer Jimmy Nail’s Running Man:
Promise of a world so fine
A picture postcard pepperdine
And all you have to do is sign
Upon that dotted line
What makes this ending-poverty project so problematic is precisely that: it is a pie-in-the-sky idea that the European Commission by definition will not be able to deliver on. The reasons for their failure before the project even gets started are so obvious that even the Eurocrats in Brussels cannot plead ignorance on this one.
Sadly, political over-promising is not exactly a rarity, especially not on the European scene. The EU project itself is a monument to hyperbolic political rhetoric. What was sold to us back in the 1990s as the bulwark of economic and individual freedom has become an economically fragmented continent, perilously held together by an increasingly over-reaching Eurocratic apparatus.
The euro was supposed to be a bastion of monetary conservatism, fiscal restraint, and price stability—good luck finding anyone who lived through the Great Recession and the last few years of runaway inflation who still believes that the euro project is working as intended.
A promise to end poverty may seem humble in comparison to the construction of the EU and the currency union, but it is no less unrealistic in terms of overstretched ambition. The difference here is that while the EU and euro projects could have worked out as intended, the ending-poverty promise is dead on arrival.
One reason for this is that the promise is surrounded by a careless attitude to facts and problem analysis. This is painfully obvious in their anti-poverty strategy, which does not exactly inspire confidence that we are dealing with professionally minded individuals:
The EU has already committed to a 2030 target of reducing the number of people at risk of poverty or social exclusion by at least 15 million … by 2025, the EU had recorded a decrease of 3.5 million compared to 2019
It would be great if the number of poor were falling. It would also eliminate the need for this anti-poverty initiative.
There is just one problem. The poverty numbers are not falling. According to Eurostat, in the 27 members of the European Union
I don’t know what arithmetic they use in Brussels, but according to the one I learned in school, this is not a 3.5-million reduction—it is an increase by 510,000 people.
Perhaps the arithmetic difference has to do with the definition of poverty? Does the European Commission operate with a different definition than what Eurostat has?
This is a valid question, the answer to which is negative: everyone within the EU sphere uses the same definition. It is a deeply problematic definition, but it is the same one nevertheless.
It is not easy to figure out how the European Commission defines poverty. To begin with, they carefully avoid providing any definition in their publications; we have to turn to Eurostat for help. But this creates a new problem: instead of reporting statistics on poverty, Eurostat consistently uses the term with an “at risk” prefix.
The closest we get to any genuine set of data on poverty proper is a data folder that Eurostat calls “Monetary Poverty.” As promising as that sounds, though, its content is exclusively focused on “at-risk-of-poverty” statistics.
A search of the Eurostat glossary website brings a modicum of clarity. However, that turns out to be useful as we try to understand the potential for success for the EU Commission’s project to end poverty:
The at-risk-of-poverty rate is the share of people with an equivalised disposable income (after social transfer) below the at-risk-of-poverty threshold
Being at risk of poverty and being poor is not the same thing. Eurostat does not move beyond the ‘at risk’ definition of poverty, but they do provide a workable definition of the ‘at risk’ version of the concept. They provide a statistical threshold
at 60 % of the national median equivalised disposable income after social transfers.
And then they add:
This indicator does not measure wealth or poverty, but low income in comparison to other residents in that country
Oh yes, it does, and the biggest reason is that neither Eurostat nor the EU Commission provides a pure definition of poverty. This is as close as we get—but that is not necessarily a problem. It is, namely, the definition of poverty that derails the Commission’s ambitions to end poverty in 24 years. Or at any particular point in time.
Since poverty is defined as relative, i.e., measured as a fraction of another variable, the only statistically rigorous way to eliminate it is to eliminate, or at least reduce, that fraction. In plain English: to ensure that there is not a single poor person in the European Union by 2050, the Commission has to make sure that no person makes 60% or less of median disposable income.
How would they do this? They have three methods at their disposal; here they are in order of increasing absurdity.
First, they could get everyone employed—but not just at any job. Those jobs would have to guarantee median disposable income. The only way this is possible is by hiring all the poor people in government jobs, something that I have no doubt the EU Commission would be ready to do if the EU had its own, direct right to levy taxes.
Since this method would cost absurd amounts of money and add untold burdens to public budget deficits across the EU, it is probably dead on legislative arrival. But the Commission could still try the jobs method by getting all the poor into new jobs in the private sector.
There is just this vexing issue with job creation. The numbers speak against the Commission: with more than 92 million poor and the job market only adding 750,000-800,000 jobs per year, it would take 117.5 years to get every poor European onto a job.
That puts us at the year 2143, not 2050, as the EU Commission was hoping.
The second anti-poverty method means handing out welfare benefits to all the poor and then counting those benefits as income. If someone earns (to take a random number) €600 per week and the median income is €1,000 per week, all the Commission has to do is give him €400 per week in cash.
Judging from the anti-poverty campaign documents that the Commission has released so far, this is their preferred route. It is going to require major hikes in welfare state spending at a time when Europe’s governments are struggling with paying for both their current welfare states and the biggest military expansion in almost a century, but why should the Commission worry about such ephemeral aspects of their bold ambitions?
Nevertheless, in the event that lawmakers say no to even more deficit spending, the Commission has a third method at its disposal. It could simply outlaw income differences. Much like banning undesirable speech, the elite Eurocrats in Brussels could decree that starting in 2050, everyone in the European Union (obviously including themselves) will make median disposable income. No more, no less.
If socialism seems unpalatable, then perhaps a better question to ask is this: what if we, instead of fighting income differences, spend our efforts on helping the European economy grow? That way, everyone benefits. By the principle that it is better to be low-income in a capitalist economy than a socialist dungeon, the poor would find their standard of living benefit significantly—even if they still only make 60% of median income.
