Monday, 26 September 2011

The Welfare State is a Cruel & Expensive Trap.

I don't have a problem with the state helping out the less fortunate members of society. I also don't have much of a problem with some measure of redistribution, given that so much of one's success or otherwise in life is determined by where you're born. Society, in one form or another does have an obligation to those who for whatever reason aren't successful. A certain measure of redistribution is the price the rich pay to avoid ending up on a Gibbet. But the welfare state in the UK is not structured as a safety net for those who suffer misfortune. Nor is it structured as a ladder to success. Instead, the welfare state seems structured to keep its' beneficiaries and their offspring down in the gutter in perpetuity.

There are two facets to this cruelty.

First there massive disincentive to work, save, form stable families or otherwise behave in a manner likely to lead to gainful membership of society. Claiming any of the (I think) 72 different handouts to which a household might be entitled is complicated and bureaucratic. Accepting the kind of low-paid, insecure work which can act as a stepping stone to something better, will result in lost benefits and the risk of real hardship. It's much easier to stay on the dole than risk the change.

Should they ever get work, many of the poor face up to 95.5% marginal tax rates, when you take into account benefit withdrawal. The assessment of people as "households" rather than individuals has the perverse effect of driving people apart. A household of two gets fewer benefits than a pair of households with one. Thus there is a financial incentive to form separate households. Finally the assessment of access to social housing on need, although seems fair, in fact creates an incentive to catastrophically screw your life up, thereby bumping yourself up the queue. The incentive for young women to have children in order to get a flat, though claimed to be apocryphal, isn't.

Secondly, by removing the habit of work, and herding the long-term benefits claimants into welfare ghettos of social housing much of which is of spectacular ghastliness, removes any psychological wherewith all to do or even seek a better life. This narrow, depressed world-view is passed onto children. Even if we could change the incentives, for many people it may be too late.

Thanks to the welfare ghettos, a large slice of the population - perhaps around 15-20% is perpetually and parasitically condemned to the fringes of society. Despite its large size, these people are hidden from view, "society's" moral obligation to them met thanks to the enormous tax-bill needed to pay it and the rest of us go about our lives in ignorance of the estates and what goes on in them.

The issue is not money. These people are not "poor" because of their income. I know plenty of people with incomes from work lower than that of some people on benefits. It is possible to obtain quite a respectable income benefit-farming. The poverty is instead moral. As Theodore Darymple argues in "life at the bottom", with all needs met, no fear of starvation or homelessness but no hope of anything to make life meaningful, life is lived in a perpetual present.

The enormous & wasteful industry helping those who can't cope is larger than that necessary to help those who genuinely can't due to genetic happenstance or misfortune and injury. Instead, large numbers of people are infantilised by a system which for example pays housing benefit direct to the Landlord, but where help will be abruptly removed six-months after starting work means the habits and skills needed to survive off the state's teat atrophy. If Winston Smith is to be believed, the children who are brought up in this system are taught that no consequences of their actions are ever forthcoming. Changes to the welfare state aren't a magic bullet - but they might start to change the culture.

With a simpler benefits system, fewer civil servants and local Government bureaucrats will be needed to administer it. This resource could be freed up for the tax-paying private sector. In work benefits could then become more generous, increasing the incentive to find and keep employment. Eventually the system could evolve into something nearer to a negative income tax. Meeting the financial obligations to society's more unfortunate members, without depriving them of the means and skills of independent living.

Would it not be better, as the Coalition is attempting in the teeth of opposition, incompetence and obstruction in Whitehall, to pay all benefits direct to individuals and leave them to sort out rent? the standard leftist retort is telling: that people paid their benefits won't sort out rent and food, unless so guided by an employee of the state. Instead they will drink or inject it, or otherwise squander the money before it reaches the landlord. The extent to which that reveals complete contempt for their clients is lost on the left. Of course some will do this at first. The difference under a universal credit or negative income tax system is that the individual will face consequences of his irresponsibility - eviction, which they do not face now. The idea that this will not improve behaviour over time, is absurd.

Instead of a population of infantilised automata, subject to the (left-wing, labour voting, hugely populous) bureaucracy, independent people could be being helped through hopefully temporary set-backs in their lives. Neither hope nor consequences would be denied to the people at the whim of the welfare state. Instead of the bureaucracy, people would be in control of their lives. As a result, the bill, both psychological for those at the bottom, and financial for those of us paying for it, which currently amounts to a quarter of Government managed expenditure, might even get smaller.

Unfortunately, the people who stand to lose out from this policy are not the poor, most of whom desire a life off benefits, but the bureaucrats, social workers and do-gooders who gain employment by controlling, monitoring, assessing and providing the "care and support". These people will fifth tooth and nail to keep their jobs, and they will use their unfortunate clients as rhetorical ammunition to ensure the vast machine which eats the poor and keeps them that way, never shrinks. The only thing a bureaucracy servers, is itself.

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