I have just been to a talk given by Charles Murray, the American intellectual who has been so influential in the matter of state welfare and the damage it has done. He spoke about his idea for reform - an idea described fully in his book In Our Hands.
His idea, briefly, is this: that the government should give every person US$10,000 a year in place of all welfare benefits, retirement payments and healthcare. Of this, US$3,000 would have to be used to buy health insurance.
I hope he will forgive me if I misreport some of his remarks. I do not have shorthand.
He said he was not primarily concerned that the welfare state costs too much "though it does", nor that it tends to make things worse "though it does" but that it "drains" the life out of people - particularly the spiritual life and sense of meaning.
He believed that people derive a sense of meaning in their lives in one or more of the following four ways: vocation, community, family and faith. For these things to retain their meaning, it was vital that government should leave them alone.
He offered his sense of how Europeans defined the purpose of life these days. He felt they think that the idea is to have a pleasant time until you die. He felt that they no longer believe that life has a special or transcendental meaning. Their priorities seem to be holidays and shorter working hours. The idea that work can have meaning in their lives has faded. Their belief in marriage, too, has dwindled. They even are no longer so ready to put their children's interests above their own. There has been a secularisation of society. People now think they are a combination of chemicals which, after a while, would "de-activate".
This may be a caricature of how Europeans think but it is not so very far from how a lot of Britons think. His view is influenced, I think by the fact that he is a believer - and believers in God are probably more widespread and fervent in America than in Britain. It is his religion that perhaps makes him more shocked by some of the behaviour in Britain than non-religious people are.
In fact, I would suggest that America's continuing belief in God helped to get through the welfare reform of 1997. Many simply thought that it was wrong, for instance, that there should be special government payments for those having children outside marriage. It was against God's law. (American religion is, perhaps, different from what remains of British religion in that, here in Britain, the church has given up on morality and tends to take a socialist approach, calling for more big government).
He said that if his plan were introduced, behaviour would be affected. There would be 'feedback loops'. I think he implied that a girl would be less inclined to get pregnant out of wedlock if she knew she would get no extra money from the government. She would also be able to get money from the father because his regular money from the government would be paid to a known bank account and money could be taken from it. This would, Murray suggested, affect his behaviour, too. He would be more cautious about making women pregnant.
The idea of 'feedback loops', such as described above, is crucial to understanding how the welfare state has undermined behaviour. The welfare state has, in many ways, taken away the feedbacks which a society without state welfare used to supply.
Among these, Murray emphasised, is stigma. He said "stigma is wonderful" and "it is extremely powerful" and he suggested it was rarely a bad thing except in novels.
My take on Charles Murray's proposal is this:
I am struck first of all by how he admitted that this was a compromise. He said he was making an offer to the Left. They would be allowed to keep big spending - since his plan would continue big state spending. But it would be in a different form that would curtail many of the bad effects of state welfare.
Many times I have been asked, when giving talks about my book, "so what is the answer?" I have always felt it is impossible to give a satisfactory answer. The ideal solution - minimal state welfare - would probably not be politically acceptable in a democracy. But reforms that would be politically acceptable would probably not be radical enough to make a 'good society'.
What Murray has done is come up with an admitted compromise. But I wonder whether even this compromise would hold. I can imagine some hard luck stories that would be played out at length on TV and radio and would cry out for action by the government. Gradually, the whole thing might fall apart. I fear that in a democracy there is a tendency for people to look to government to sort out every problem. I fear that even in America, the will to say: "let the chips fall where they may - the net good to society will still overwhelmingly come from a low welfare state society" is not likely to be strong enough in the face of such stories.
I have come to fear that all advanced societies are becoming more and more welfare state dependent and that people in these countries are gradually being changed more and more by these welfare states. The welfare state gives you money if you have children out of wedlock, it gives you money if you don't work, if gives you money if you are well but you pretend to be ill and it declines money it would have given you if you have saved. I agree with Charles Murray that the worst effect of the welfare state is on the character of the people it affects (mostly the less well off). I would love to see major reform but I fear that over the long term, reform will not last and that the damage done to society will continue.
If this happens around the advanced world, we are really talking about a whole civilisation in decline. Is this too gloomy? I hope so.
Posted by James Bartholomew • Indexed in Behaviour & Crime • Parenting • Reform
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On the contrary, the CBI could work extremely well if implemented properly since it would removes disincentives to "good" behaviour and incentives to "Bad". Consider, 60m people, c £5000 each, = 25% of GDP. Fix it as a proportion of GDP and you balance your budget and share the proceeds of growth. All payments are thus not means tested and if you raise the tax threshold to £10000 (ie 2* CBI) yuo remove ability of politicians to play with that. In effect people can work and take home equivalent of £15k net before paying tax. 10% NI for both employers and employees would not act as a disincentive to employ (and could perhaps buy the health insurance) All children to get CBI in terms of school voucher, so no incentive to have lots of children and every incentive for schools to produce what parents want not what state bureaucrats want. For pensioners £5000 is equivalent to the "best" state pension so no one will get less and there is no disincentive to save - it will also grow with nominal GDP and people can choose to work as long as they like. Fathers could have half their CBI paid to the mother of their children. Subsequent mothers get half the rest and so on. A disincentive to multiple fathers and subsequent mothers and no need for CSA. CBI goes to British Citizens, making it worth something an in effect a subsidy to british workers in low paid jobs, especially since much of the higher income CBI will be recycled into the service sector employment. Micro incentives could be put in place.....club together and employ a music tutor. COme to that would it not be a nicer society if musicians, poets etc had some basic income and didn't have to become accountants? I digress, implemented fully and with little room for lobbying and meddling a CBI could be at the heart of a 21st Century welfare state.
Posted by: MARK T at April 27, 2007 04:21 PM
Murray's new scheme reminds me of Milton Friedman's negative income tax plan.
Richard
Posted by: Richard Garner at April 27, 2007 11:35 PM
One of the biggest flaws with CBI is the issue of fraud and the incentive to scramble to these shores to get a piece. To avoid fraud you would need pretty robust identity, probably a DNA database, if truth be told.
BTW, NI, housing benefit etc should be inside CBI, IMHO, but the payment of a state approved minimum healthcare package (from a choice of private providers) would be compulsory. The private players would compete on price, but regulated not to cut below a certain level of provision.
Posted by: Roger Thornhill at April 28, 2007 04:47 PM
Fraud would indeed be an issue, but then it is already. And if only granted to British Citizens then there would need to be a rigourous definition and application process. A break period i.e no fast track would act as a large disincentive for wefare tourists as there would be no other means of "support"
Posted by: MARK T at April 30, 2007 09:34 AM
MARK T - I see your point regarding replacing Child benefits. Regarding fraud, the difference with current systems is that the CBI would apply to every single citizen, and would require that the bureaucracy keep tabs on them all, including the homeless; people with multiple houses; those living temporarily abroad, and so on. The current system only has to cater for those desperate enough to fill out the forms to get the benefit.
The point I was originally aiming at is that, judging by the various dossers I had the displeasure of growing up with, large numbers of people would still do their utmost to do nothing but sit around taking drugs all day. Many of them would doubtless be self declared musicians and poets, but don't expect outpourings of inspiring art from the CBI supported classes.
Posted by: Rob Spear at May 1, 2007 04:26 AM
Rob, point taken, the real advantage of a CBI is that it isn't means tested and thus the only "check" has to be citizenship. Payment can/should be largely direct into bank accounts (including the citizen's bank being suggested for existing payments)This removes a vast amount of the bureacracy associated with the welfare state which is not an insgnificant part of its cost. (The administators would of course be the big losers and the biggest lobbyists against a CBI) It's not really about the scrotes, rather about removing the incentives for otherwise good people to do bad things. Fix the starting rate of tax at 2x CBI and people will go out to work, even if it is part time. Retirement is no longer compulsory, nor are savers penalised. Employing British citizens is effectively subsidised since they can accept less and still get the same "take home" which would do much to remove the black economy and "re-legitimise" large sections of society who have been put beyond the law by the current system. At the same time as stopping "good" people doing "bad" things, we encourage "bad" people to do "good" things, i.e the evil capitalists who foot the bill for this lot will allocate their CBI in ways that they (rather than the govt)see fit, so 95% of government "inspectors" need to retrain as something useful in the service sector. What? well they will have to work out what real people (rather than ministers) want.
Posted by: MARK T at May 8, 2007 02:22 PM
The Liberal Democratic Party in Australia has come to similar conclusions.
We are proposing a 30/30 policy at the upcoming Federal elections.
Essentially, all citizens receive the first $30k of earnings tax free. Thereafter there is a 30% flat tax.
For those who earn less than $30k, they receive a payment according to the formula $30k minus earnings * 30%.
Hence if you have no earnings, you receive a payment of $30-0*30% or $9k.
The policy is here.
Posted by: pommygranate at May 23, 2007 12:17 PM
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Even if Murray's compromise was politically stable, and was more economically efficient than the current system, it would still be handing out free money, and would surely still result in the decadence you have documented. I don't see the Citizens Basic Income as much of a fix for anything, to tell the truth.
Posted by: Rob Spear at April 27, 2007 04:59 AM