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Supposedly public education is necessary. Here is a breakdown of all european government spending

https://tradingeconomics.com/european-union/government-spending-to-gdp

https://www.economicshelp.org/blog/142/economics/what-does-the-government-spend-its-money-on/

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EU GDP per capita is $38k and 46% is government. Poverty rate is 17% and poverty line is $12k. So poverty is 12/38 = 32% of average income and 32%*17% = 5% of GDP is needed. This is 5%/46% = 11% of government spending.

Eliminating education and healthcare would free up 11%+18%= 29% of spending and eliminate poverty.

Could the EU countries on average eliminate poverty?

closed as primarily opinion-based by bytebuster, Glorfindel, JJJ, Bregalad, Drunk Cynic Dec 19 '18 at 13:34

Many good questions generate some degree of opinion based on expert experience, but answers to this question will tend to be almost entirely based on opinions, rather than facts, references, or specific expertise. If this question can be reworded to fit the rules in the help center, please edit the question.

  • 5
    Define poverty :-) Unless you enforce an absolute communism (including on the Party leaders, which isn't likely to happen), some people will always have less than others, and thus will be "poor" by the standards of their society. Even if compared to other parts of the world, or to historical norms, they are ridiculously wealthy. – jamesqf Dec 19 '18 at 3:05
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For some reports, poverty is defined in absolute terms, e.g. "less than $2 per day."

For other reports, poverty is defined in relative terms, often 40%, 50%, or 60% of the median income.

Both definitions make sense in the right context. A common remark is that the poor in an industrialized nation still enjoy better health care than a medieval king. On the other hand, a child will feel socially deprieved if most of the other children at school can afford to see the latest blockbuster movie, and that child simply cannot afford it.

For that reason, many researchers use relative poverty as the relevant metric. To eliminate that, one would have to limit the income of the middle classes and transfer it to the lower classes. (A few high earners won't affect the median.) That can be done, but the middle classes tend to complain.

Also, at some times and places, public education was one of the most effective programs against poverty. Lack of education perpetuates poverty across generations.

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I'm assuming here that your proposal would be to eliminate government spending on education and use the freed funds to pay some form of fixed income or benefits to people currently in poverty.

That being the case in anything other than the very short term you'd actually end up making poverty worse. All that money has to come from somewhere - and generally that means taxation. In order to generate positive tax revenues you need to have people obtaining money from sources other than the government. Income taxes are a staple way of doing this.

Now if you eliminate spending on education you're going to end up with large swathes of the population who are uneducated and therefore as a rule of thumb are going to be unable to earn as much money, so your tax revenues are going to drop, meaning you have less money available to spend on those benefits. When you factor in that some of those uneducated people aren't going to be earning enough to keep them out of the "poverty" classification you're going to then have an even bigger benefits bill at the same time as shrinking tax revenues. Pretty soon you'll end up with no way to pay for this support and when that happens you've got an even larger portion of the population then before who are going to be in poverty without it.

Whereas increasing education actually reduces poverty and it is even seen by some as it's lack being the root cause of the problem.

  • On the up-side the reduction in healthcare should have a knock on effect on pension provisions, more people will die of ill-health, disease & accidents : shorter life expediencies should lead to considerably less need for later pension provisions, a sort of incidental non-mandated accidental euthanasia for the old side effect that means a larger slice of the population will be within the normally productive working age range. – Pelinore Dec 21 '18 at 9:41
  • ^ I'm sure that's not what the OP intended, but on the other hand .. maybe it was. – Pelinore Dec 21 '18 at 9:45
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A few things about your numbers...

GDP per capita is not average income. Median net income in the EU was about $18 650 in 2017.

The EU measures poverty on a relative basis (see o.m.'s answer). Specifically it defines it as 60% of the median income. So around $11k (close to your figure).

A poverty rate on this basis is about 17% as you say. Specifically, this means that about 17% live on less that 60% of the median income.

As a consequence of the above, your calculations don't really make much sense as poverty does not include GDP in its measurement.

However, one could work out roughly what's needed. Assume that the mean poverty income is $8k. There are ~750mm people in the EU and the GDP is about $18.8tn. On that basis it would cost ~7% of GDP to move everyone below the poverty line up to the median income.

Would this eliminate poverty? Technically yes as there would now not be anyone below the poverty line and you're not moving the median income appreciably.

Would this be desirable? Highly questionable.

Firstly, any significant dent in the health or education of the workforce would also dent GDP so the relative percentage needed would increase.

Secondly, it becomes uneconomic to earn less than the median salary. You're better off earning poverty wages (or nothing) and get the government top up. So it wouldn't be 17% you'd need to find the money for but a much larger percentage.

Thirdly, there are much easier ways. The traditional left wing way is to substantially increase taxation for the middle classes. This depresses the median net income so the poverty level reduces. You then have a lot less people to find money for to reduce poverty levels. Obviously, it doesn't actually make anyone's life better but it looks like it does.

  • "The traditional left wing way is to substantially increase taxation for the middle classes. This depresses the median net income so the poverty level reduces" The cool thing is how that tax money just disappears when the government gets it, rather than being paid out as welfare or salaries, which would, of course, help people but hurt your argument. – David Rice Dec 19 '18 at 19:25
  • @DavidRice it’s used to bribe potential voters in the same way that right wing parties bribe their voters with tax cuts. Not sure how that affects my argument though. The last thing most left wing parties want to do is solve poverty. It’d be electoral suicide. – Alex Dec 19 '18 at 21:01
  • and those "bribes" don't help alleviate poverty, right? Because shifting money from "people who have more than poverty-level wealth" to "people who have poverty-level wealth and less" definitely has no impact, it's just a bribe to vote, it's not actual, you know, economics. – David Rice Dec 19 '18 at 21:48

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