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Dismantle the Welfare State

September 13, 2012

I believe there is a case for dismantling Britain’s welfare state. First and foremost, it sends perverse economic and social signals that exacerbate the problems it purports to mitigate. This is the golden rule of government action – whatever problem the government targets will get a lot worse, e.g. Labour’s totemic policy was “Education, education, education” and consequently Britain zoomed down the OECD’s PISA rankings.

A system that allows people to take more out than they put in is a Ponzi scheme that collapses when people start leaving faster than new joiners arrive. That’s where we are with Britain’s welfare state. Permitting countless numbers of people to draw down benefits, without having contributed anything, has encouraged a sub-culture of worklessness. Certain areas in Britain are into their third and fourth generations of living off the productivity of others. I was once told by a woman that her family had three generations of unemployed miners at home, because Thatcher closed the mine twenty years earlier. The youngest was in his mid-twenties and he had a family to support…

The free market sends us the clearest economic signals, and to the extent that governments and corporations interfere with those signals, the signals can become ineffective or even perverse. The welfare state has been sending perverse economic signals for over 50 years and our national balance sheet is in dire straits because of it. According to the Budget 2012 (HM Treasury) all of the taxes (except inflation) the Treasury extorts from us (£592 billion) are insufficient to cover government expenditure of £683 billion. The difference, £91 billion is the budget deficit and will be magicked into existence by government borrowing (for as long as the debt markets are open).

National insurance deductions, the fund for unemployment insurance, amounts to £106 billion, whereas unemployment welfare amounts to £240 billion – a deficit of £134 billion. Income tax amounts to £155 billion, which covers the deficit and leaves £21 billion to spend on housing and the environment, which is coincidentally, £21 billion.

Clearly, the situation is unsustainable medium-term and we can either deal with it now or postpone the inevitable and it will deal with us.

Unemployment insurance should be a private choice – how much to buy and where. Given the long-term nature of the contract, what happens if the fund goes bust due to misfeasance or bad decision-making? There may be charitable organisations to which one can apply for relief. However, when all the members of a scheme know that there is no governmental back-stop they will be motivated to take a close interest in who the scheme’s trustees are and what the investment performance is. This active participation in one’s own affairs is superior to the current situation where everyone assumes the government will handle everything – which it can’t – and has led to our overdependence on the welfare state.

What about the young who don’t earn enough to put anything aside as unemployment insurance? Well, they already contribute through government deductions, so they could divert a like amount into private insurance. But for the first few years of employment, when one has no responsibilities and a change of career is possible and profitable, insurance may be superfluous. A better use of the money might be as a deposit for a first home, since the tax system favours home ownership greatly.

What about youths who can’t find work, like the grandsons of miners with no mine to go to? They will have to be supported by their parents until such time as they find alternative employment. At least we can be sure that the fathers of daughters in former mining districts will not be so blasé about their daughters’ sexual mores if the result of any ill-advised dalliances with unemployed miners are going to be a burden on their income. The idea that a baby qualifies anyone to be housed at public expense is ridiculous and only a fifty year war on this great social taboo succeeded in overturning it. “Don’t blame single mothers…I was raised by a single mum…My dad left when I was six months…” Yet, like all breaches of the natural law, the consequences have rebounded on society ten-fold. There is a sizeable population of adults in Britain who grew up without a father’s care, and for each succeeding generation that does it, the malign effects are multiplied.

Do I want to go back to the days when illegitimacy was a social stigma? Yes.

What about parents who throw an impregnated daughter out of the house? Looking after them used to be the role of religious institutions, for those prepared to accept the institutional life. And for those who “can’t stand being told what to do”, then they can be as free as the birds and live out of doors with them. Or make such other private arrangements as they are able. The employed should be under no obligation to fund the alternative lifestyles of bohemians. We need all our resources to provide for our own families.

What would be the end result of private unemployment insurance? A woman would be careful about her choice of sexual partner(s), perhaps insisting on a contract for long-term support and fidelity first, knowing that her parents would be obliged to pay for any mistakes. Parents would make sure their daughters knew the real facts of life about the likely fate of any woman who made rash choices of sexual partner. What about men? While women carry the children, men will always take a chance, but proper policing of daughters by fathers may cause them to pause if the prospect of a shotgun wedding becomes the socially expected outcome again.

Would there be total compliance? No, we would remain as concupiscent as ever, but the heavy penalties associated with reckless sexual behaviour would reduce the burden on taxpayers very quickly and the long-term liabilities of the welfare state would drop to a manageable size.

Am I imposing my morality on anyone else? No, boys and girls would remain as free as  they are now to copulate as they see fit. All I am proposing is that each bear the consequences of their actions. Since society doesn’t participate in the delight, it is only fair that those who do pay the full cost of their entertainment.

Isn’t this eugenics by another name? No, because it is in compliance with the natural law. There is no coercion to cease on those who indulge in sexual athletics, but they will be obliged to pay the costs. Neither will society at large be coerced into paying the financial costs and societal costs of other people’s jollies. To borrow a phrase from the environmentalists, “the polluters pay”.

What’s the alternative? Financial and social collapse. Everyone knows it’s happening, but discussion of the problem is streng verboten in the mainstream media and in polite circles. It is raised only when it’s impossible to ignore, e.g. riots of August 2011, and then deflected by platitudes like, “tiny minority…youth clubs…government must act…” According to the jobs website monster.co.uk the UK average salary for someone in work with 1-4 years’ experience is £22,998, from which they lose £6,967 or 30.3% in income tax, national insurance and employers’ national insurance. For someone with 10-19 years’ experience earning the average of £36,631 the government takes £13,211 or 36.1% in tax. Employees earning £100,000 or £150,000 or £200,000 lose 48%, 52.8% and 56% respectively in deductions. There appears to be no upper limit on how much tax we are obliged to pay to fund a welfare system that increases in appetite with feeding. There is a level at which taxes become an immoral burden on workers, but the government doesn’t know when to stop.

I don’t propose ending the system overnight, because people have only responded to the government’s signals, but unless we change the economic imperatives of the welfare state so that people are obliged to take responsibility for their actions Britain will be unliveable for the civilised, and the meek won’t stand an earthly.

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From → Chapter 1

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