Differentiate between relative and absolute poverty to fight inequality

Associate Professor Teo You Yenn describes the desire for decent jobs, better housing and other conditions as "basic needs" (Let's talk about meeting needs, not just equality of opportunity; May 30). These needs are absolute not relative.

Whether 10 per cent or all of the population have these needs unmet doesn't change the fact that our Government should strive to provide better jobs, better housing and better lives for the people.

Inequality does not change this.

When Singapore was young and undeveloped, there was less inequality, as many people were equally poor - in fact, it was probably even more urgent for the Government to make sure that basic needs were met, because more people could not meet them.

Just because inequality has worsened does not make these priorities any more or less important.

It is important to distinguish between absolute poverty and relative poverty when thinking about inequality because it affects the sort of policies we implement.

If we believe that absolute poverty should be ameliorated, policies should gear towards some redistribution to ensure that those at the bottom of society get a minimum standard of living.

The challenge for all societies is to define what that minimum standard is and how much to redistribute. These disagreements are the reason for divisions in political ideologies and parties.

Relative poverty, or inequality, is a lot more complicated.

One could, for the sake of a thought experiment, imagine a nation of millionaires where everyone's basic needs are met, but a predominance of billionaires causes income inequality to be very high.

In such a scenario, it would be absurd to argue for a redistribution of income to equalise outcomes.

However, it does not mean that all is well in such a state.

Inequality causes division and stratification in society.

In this instance, the right policy will not be redistribution per se, but rather, to reduce stratification.

For example, building better houses per se in such an imagined nation will not be as urgent as ensuring that people of all income levels reside in close proximity with one another, and are forced to interact.

The priority will not be to equalise outcomes, but to ensure that society remains cohesive.

It is, thus, imperative for us to think clearly about inequality and not mistake relative poverty for absolute poverty.

Mixing up the two will result in inappropriate policy responses that solve neither problem.

Calvin Cheng Ern Lee

A version of this article appeared in the print edition of The Straits Times on June 06, 2018, with the headline 'Differentiate between relative and absolute poverty to fight inequality'. Print Edition | Subscribe