If poverty comes to be defined relatively for all purposes of public policy — households with less than 60 per cent of the median income, says the government — then poverty and inequality become the same thing.



This is a common claim. But it is plain wrong, not as a matter of opinion, but as a matter of fact.My table should explain. It shows incomes for nine people in three societies, with the same aggregate income. Take society A. Median income here is 50. If we define poverty as the number of people with incomes below 60% of the median (30), then four people live in poverty. Inequality, as measured by the Gini coefficient , is 30.7%; there are, of course, other measures of inequality, but let’s keep things simple.Now, imagine this changes to society B. Here, the rich are richer and the poor are poorer. Inequality is greater - a Gini coefficient of 41.8%. But no-one lives in poverty. This is because median incomes have fallen, so the poverty line has dropped to 18 (60% of 30), and everyone is above this.You can think of this society as being more of a “winner take all” economy; the rich do really well, at the expense of those on lower incomes.Or imagine society C. This is the same as A, except that the very poorest are poorer, whilst the less poor are better off. Inequality is greater, but fewer live below the poverty line - though those that do are poorer.You can get to this society from society A if (say) the government provides in-work support, paid for by a lump-sum tax on everyone, but two people lose their jobs.These examples suffice to show that poverty and inequality are not the same things. Society B has less poverty than A, but more inequality. So does society C. And C has more poverty and less inequality than B.Of course, in practice, poverty and inequality often rise and fall together. But it ain’t necessarily so.This much should be obvious to anyone who sits down and thinks. Which Charles Moore obviously hasn’t.Now, there’s nothing wrong with not thinking about issues; I don’t think about most things. What is wrong, however, is drawing a wage for spouting unthinking gibber, and expecting people to take you seriously.