The Welfare Issues
What Are The Welfare Issues?
Most people, whatever their politics, would agree that the current system of welfare benefits operated in the UK and the USA is not having the effects we would wish. Some people are receiving benefits they should not, and some people are not receiving benefits they should.
Most people are not happy to see people who could be contributing to society just milking the system. That there are families who have lived on benefits for several generations is deeply worrying. Added to this is that we are steadily building an underclass who have no useful skills or experience. And if "the Devil finds work for idle hands" is true that might explain why many criminals are also drawing unemployment benefit or other welfare. And once they have criminal convictions recorded they become even more unemployable.
There is every reason why young workers should defer having children until they can afford to bring them up. The young unemployed have every incentive to have children relatively early because the children generate additional income. There is no disincentive. The feckless are breeding, and are financially supported by those of us who work.
After tax, national insurance, childcare, travel costs and work expenses many people would be better off on welfare. Or they are working for buttons. And for people genuinely trying to get off welfare into work there is a long period where the additional costs added to the reduction in benefits can lead to effective tax rates of over 100%. The benefits structure means that taking temporary work or part time work is often financially unwise because of the difficulty and delay before being accepted back on benefit.
The Classic Liberals
The classic liberal position of laissez faire would say that the state should not pay benefits at all. People would then choose between idleness and starvation on the one hand and working to support themselves on the other. The assumption is made that the idle would find work. A reduction in the tax burden alongside the abolition of benefits would mean that working people would have more money to spend, generating jobs for those who wish to work. And the small army of benefits clerks and inspectors would also be thrown onto the job market, giving a further reduction in the tax bill.
There is never a right time to make this radical step. Inevitably there will be a period of dislocation during which time some willing workers will starve. But say the classic liberals this period will be short because people who need to work will find a way. In the short term they may fall on their friends and relations, but those friends and relations have just had a significant tax cut and they know who is "deserving" and who is not.
And yes there will be people who cannot pay their rent. They will have to share accommodation so that between them they can pay the rent. There will be much more crowding in many houses and apartments, and eventually rents will drop because of market forces. The luxury many publicly subsidised families currently enjoy of having more rooms than there are people will have to be given up.
An equilibrium of wage rates, rents, and other prices will occur. Much current spending on luxuries will be cut, although once people again have disposable incomes they will begin to spend on luxuries. And they will keep more of what they earn because the tax rates are lower.
The Classic Socialist
I come at this problem from a classic socialist perspective. Engels said
"From each according to his abilities; To each according to his need".
I will mention in passing a recent estimate that tax evaded (illegally not paid) each year in Britain would be enough to fund the British National Health system, which currently runs at about 7% of GDP. And I note that the top 1% of tax payers pay a smaller proportion of their income in tax than they did 20 years ago. There are issues other than Welfare to discuss!
Sticking with Welfare no socialist can approve of people who do not contribute according to their abilities. We need to look at why they are not contributing. With some I agree it is sheer fecklessness. That fecklessness is often generations deep, with entire families who have no experience of lawful paid work since Britain abolished military conscription in 1963.
Poor education, criminal records, drug and alcohol use, difficult social situations and sheer hopelessness are also major contributors. Lack of spiritual emotional and financial resources play their part. Habits of idleness are not easy to break.
When I was a court clerk for a brief period in the 1980s I met many young men who needed the discipline of having to be in work at 8 am. If they had had that requirement they would not have been getting into trouble through drink on a weekday night.
It is not beyond the wit of man to compile a list of works that need doing in each locality. This will include helping at schools as additional classroom assistants. There many adult illiterates. There are elderly and disabled people who need home helps and meals on wheels. We need more childminders. There are areas of ground that need gardeners and there are public areas that need cleaning up. In areas of high unemployment there is a legacy of neglected buildings and derelict land. And there are rural areas where mountain paths need repair, stone walls need rebuilding, and undergrowth needs cutting back. We need more para-police.
People should be given the requirement to work, because without that requirement they have no incentive to work or to improve themselves so they can do better paid work. The work for many will be low skilled because they are currently without significant skills. Attached to the work must be the opportunity to have education and training. It may be appropriate to do this by day release, block release or distance learning.
Being in work gives the opportunity to gain experience, to build self confidence and interpersonal skills, and earn a good reference. Sitting at home staring at the walls does nothing useful.
There are groups who traditionally have difficulty being available for work. Parents have difficulty, but we will have a pool of people who can provide local child care including after school and vacation time support. And children do get sick so some leave for child sickness must be built in together with an incentive not to abuse it.
Disabled people are often desperate to work, but need work situations and colleagues who can cope with the problems presented by their disability. In the UK there was a history under the Thatcher Government of people being accepted as "disabled" or having "invalidity" as a way to mask true unemployment. Now there is an emphasis on "ability" rather than "disability" - what can you do rather than what can't you do. Alas it is so obviously budget driven that everyone knows it is not genuinely about helping disabled people into work. And the loss of benefits and the lengthy appeals process has not helped. Our recession makes it even harder for people to find work.
What Is Equilibrium?
There is no guarantee that the labour market needs all our currently unemployed people. We have exported a lot of jobs to China and India. Technology has eliminated a lot of manual and semi-skilled work. Our unemployment is often in locations where the traditional industries have died or have greatly reduced their labour needs.
"Mobility of labour" is a wonderful phrase, but if there are no jobs anywhere what do you do? And if you are poor how exactly do you relocate? You need the job and you need the accommodation close by as otherwise your transport costs bite into your earnings. Many people see graduates working as shop assistants and decide that education is not worth the time and the expense. They do not see the same graduates three years later because frequently these graduates have begun careers - but they still see graduates doing those jobs.
It is a wonderful society that can afford to have a million people doing nothing - Britain has just topped 1 million unemployed again. But any rational person would say that the labour of a million people has value and that value is currently being lost to our society. Those who work are now told their retirement ages have been deferred, and those who habitually do not work are not affected.
These are not easy problems but it is possible to create a society where it is worth working and not working is not an option. Let us do it.
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