welfare state

Over at "Letters from a Tory", the question has been posed, how would libertarians have protected BabyP. It is something I thought about quite a lot when the story first broke and I've written a long response to LFAT in the comments there. But I thought it was worth posting in its own right:

I go further, in theory at least, than even LFAT's definition of libertarianism (as one who believes the state should enforce the law). I am more of an anarchist. Though people often misunderstand that as meaning absolutely no controls on what people do and no institutions to enforce them. That is wrong; anarchists would say that in doing away with government other structures, such as a “private law society ”, would emerge that are more consenual and explicitly contract and economic incentive driven. Also anarchism rests on the core belief in self-ownership and that everyone has the right to do as they please insofar as it does not affect another’s ability to do the same.

I did think quite long and hard about how the BabyP case ought to affect that perspective. The first thing I found is that there are at least another couple of dozen incidents of the death of a child (half under one and most by parents themselves) in “child cruelty” type incidents (rather than accident or bizarre whole family suicide type incidents I assume) every year in Britain. In other words, BabyP is not the unique case that the (quite justified) moral outrage it has generated seems to suggest. Maybe it’s mostly because Haringay is seen as having “form” on this issue after Climbie. It's a "good story" that "social services gets it wrong again". Not such a good story that at least another two dozen are going on every year around the country and nobody seems to care!

But the message is that whatever various social services and child protection agencies do know they “fail” a lot more than they’re telling us. My suspicion is that this is down to most other cases being completely under the radar of the state protection apparatus until it’s too late (and if so - what use are those state agencies if they are unable to prevent the most egregious abuse because they cannot see it coming?). Determined sadists are often quite good at covering their tracks. Just look at both Fritzl in Austria and our own version in Sheffield the other week. We can be shocked and say someone must have noticed that level of abuse even with the most determined concealing by the perps, but no. It happens and nobody managed to stop it or even recognize it.

Also, even in an anarchist worldview, the care of a child is something that is a joint trust between parents and the rest of society - society would have ended up paying for the effects of his tortured life, as Martin Narey (deliberately) controversially said, if he had grown up to become a “feral yob”. Indeed, as Guido says in the comments on LAFT's post, our welfare and benefits systems include some level of perverse incentive for people to have children who probably shouldn’t; or at least shouldn’t at a point in their lives when they can barely support themselves.

At the moment then we “contract out” to effectively disinterested parties (the state - who get paid in reality whatever the outcome and only get into any bother at all in the most egregious and publicly visible cases of failure) to carry out a function more properly suited to much more local, neighbourhood, and more importantly family, scrutiny. Where, in a “market anarchist” worldview, ought such oversight to lie? Can we imagine on whom there would be an economic incentive to ensure as far as is possible the safety of someone else’s child?

As others have mentioned, institutions such as the RSPCA (though I think they have been ceded too much power often) and the RNLI, already carry out an effective job in their respective fields. Something like the NSPCC would emerge as the champion of the most vulnerable in the last resort and would in a private law society be likely to take action to defend the “self-ownership” and freedom from aggression and coercion of a child, even against its parents (if it became apparent). Should a hospital say even allow a child born to someone who has not the means or willingness to make proper provision for bringing up a child (which could probably be evidenced from their pre-natal attitude or lack of attempt to make provision) to be taken home in the first place without much more scrutiny as to how good care they’re going to get?

Remember too, that we believe that in the absence of state-capitalism and the grossly distorted playing field that creates through privilege and patronage to the detriment of the poorest, even those poorest would be better equipped economically to make provision through friendly societies and such like for health care and so on. So I’m not suggesting that the poor should not be allowed to take their babies home. Just that in such an environment it would probably be more noticeable, not less, as to which parents had even made an honest attempt to make provision or establish a support network of family first, community second and paid for assistance third, and perhaps the economic incentive might fall on the delivering hospital at least to ensure that such prima facie support was available. They could then even at that early stage alert an organization such as NSPCC or find themselves on the receiving end of a negligence claim if anything bad happened.

Finally (I think), in such a more human scale society, I suggest it would be easier, not harder, for friends and neighbours to intervene earlier. It is in most of their economic interests often too not to be supporting or fostering in their midst the sort of home circumstances in which these sort of psychotic evil doers can function with impunity. Would the mother’s partner’s sadistic friend really only have been a problem for the child? Would not neighbours and other family members have an interest in ensuring they were driven from their midst? At the moment everyone is too tied up in making ends meet in an unfair world perhaps to care too much what happens next door until it spills over more obviously into their lives.

In summary, I’m not sure I can see how in an anarchist, private law type society, it could be any worse than relying on the economically disincentivised civil servants to whom we contract out our social and neighbourly awareness “duties”. And the altogether more humane, less oppressed society that ought to result from such freedoms may well be able to intervene earlier and more consensually in order to protect their own interests as well as those of the child.

One of the most common points of disagreement between, let's call them "state-interventionists" and "non-interventionists", is the claim that "non-interventionism" would leave the poorest in society on the scrap heap with no welfare, no support. That the much vaunted idea of "non-interventionists" that "private charity" or "voluntary co-operation" would take the place of state welfare is just an impossible pipe dream. So determinedly do "state-interventionists" believe their own claims that they frequently castigate "non-interventionists" as heartless uncaring selfish individualists who would rather see others die than pay taxes. One quote from a Lib Dem Voice "discussion" just today will give you the general idea:

"Well none of them [Libertarians] are serious, because it an incoherent philosophy....send the kids back down the mines, it’s only a lifestyle choice."

And to an extent, I used to believe that propaganda. As a geo-libertarian of course I do have an answer of sorts - the basic income derived from land user fees (which would on their own create an almost unimaginably more equitable society in any case) would cover the basics of life for everyone, and give everyone an incentive to top it up with as much or as little work as they can manage.

But a recent discussion on a "non-interventionist" mailing list I've been frequenting recently has challenged the basic assumption of this debate for me. Would people really not contribute voluntarily to the upkeep of others if you don't have a government apparatus threatening them with the confiscation of their property and ultimately the loss of their freedom unless they pay their taxes?

It is a strange proposition. Governments for at least the last sixty years have been supporters at some level or another of some form of state welfare. They may argue about how much is appropriate but the fact is, people have overwhelmingly voted for a state that takes money from you in order to give some of what's yours to someone deemed "less fortunate". We even have a cliche about the inevitability of death, and taxes.

We have tens, maybe hundreds of thousands of people who do voluntarily give up their time to care for another. Most people are someone's relative, someone's friend, someone's colleague. And whilst I recognize that some do not have such support networks and would still require some form of collective support, most people do not want to see their friends and relatives on skid row or worse.

One has to wonder whether the interventionist route actually makes things worse. And in how many ways. When we look at our pay packets do we not think often that we've given quite enough for the support of others through our taxes thank you very much. National Insurance and Income Tax between them effectively make the worker near forty per cent worse off. I know what I would do with an extra forty per cent each month. It would pay the interest bill on the piece of land we have just acquired for our first Community Land Trust for a start.

Other taxes and protectionist policies keep the prices we pay for basics artificially high and create incentives for companies to produce cash cows rather than exciting developments. I'll bet if we didn't guarantee one pharmaceutical company a contract for however many millions of doses of Metformin diabetes pills every year a dozen others would have put the effort in to find a cure, not a chronic treatment regime.

The attempt to do welfare as a "universal" system, with the same rules for everyone, means a bloated bureaucracy enforcing inflexible regulations. If welfare were, say, to be dealt with at the parish level, and the barriers to job creation caused by taxes eradicated, I'll bet you more people would be found some work, appropriate to their abilities, even if it didn't give them everything they need and then people would feel much better about helping them out with the rest - because they were trying to help themselves as best they could. We have no way of measuring that at a national level really.

We have a Professor here at Brookes, a chap called Steven King. His area is the History of Welfare mostly in the 18th and 19th centuries - probably the period which received wisdom says was the harshest environment if you were poor or hapless. But I was fascinated by a lecture he gave a couple of years ago on being elevated to the professoriate (you are elevated to that aren't you?). Apparently when parishes were responsible for pensions, those who actually got a pension - those whom their own peers and neighbours if you like knew had simply tried and been unable to support themselves (in common parlance I guess the "deserving poor") would get on average 75% of the average working wage for their area. For others there were varying levels of support down to a pretty basic safety net that was intended to be subsistence rather than comfortable for those they felt were "swinging the lead".

And then there's the problem of administrative costs. If I had an extra 40% in my pay packet and was going to give it away, I'd know that the people or organizations I was giving it to would get all of my donation. I'll bet for the 40% the state apparatus take off me in taxes, probably half actually gets to someone who needs it, to direct service delivery, if that.

So, given all those disadvantages of, and the singular advantage that people actually vote for, this tax based welfare system at some level or another, is it not just possible that by doing away with all that coercion, all that centralization, all that unproductive bureaucracy, the people who get to keep what they earn would be quite proud to "do the right thing" by their neighbours and communities? If they vote at the ballot box to have money taken off them by the state for things they obviously believe are necessary, would they suddenly feel they were not necessary or that they should not contribute towards those same things without the threats of the state?  Isn't that a totally illogical position?  You'd vote for it but not do it if the people you vote for didn't force you to do it?

And so, at the very least, would it not be at least a courtesy to accept that Libertarianism is an optimistic creed; that it is positive about humanity's innate ability and even need to help each other. You may call that a naive optimism. But I'd rather be a glass half full freedom lover than the glass half empty authoritarian approach that says humanity will not help itself unless it is forced to do so by the agents of a state apparatus that may, just may, cause more problems than it actually solves. Libertarian is not a "devil may care/beggar thy neighbour" philosophy but one that places the utmost faith in people, as individuals, to know and do what is right.

And as to whether it is a "coherent philosophy" or not, I submit that "non-interventionism" is the only truly coherent philosophy in the game. For once you admit the state can do one thing better than we can through voluntary co-operation, you inevitably end up in endless arguments between factions about just how much the state can do better, and the ultimate end of that arms race is totalitarianism - that the state can do everything better than voluntary co-operation. Which is manifestly not true.

Nick Clegg, upon his election as Lib Dem leader, said that he wanted to break what he called the "cosy consensus" between Labour and the Tories that has impoverished Britain's political discourse. With Labour now nicking policies on welfare from the Tories, and both vying to be "tough on the work-shy", now is surely the time to offer a radical alternative.

It is not just their approach to benefits that is backwards in vision, but the whole assumption that "full employment" is the thing we should be aiming for. Such a policy actually highlights even more starkly the difference between being independently wealthy on the one hand and having to work for the basics of life on the other. In an era in which more and more of our tasks can be automated or even exported we should be aiming more to live off the financial assets that past productivity has created.

Liberals have, for a century, harboured the secrets of changing all that. Shamefully, over the past quarter of a century we have dropped every one of those secrets from our policy platform, presumably so we could compete in that "cosy consensus". We are only just on the cusp of really rediscovering the oldest of these...

Three key policies in particular would end this cycle of dependency once and for all. A bold claim for sure, but why not? We have gone through sixty years of the welfare state and are still arguing about the outcomes of welfare, health, housing and education, just as Beveridge was trying to address in his report.

The Single Tax - the one policy we are slowly re-engaging with. Though we seem to be stuck on the idea that LVT is simply an alternative tax, we need to get beyond that and understand that it goes to the very core of our relationship with the planet. Land, economic land that is, "everything in the material universe not created by the application of labour and capital" (so basically the things of nature that we all have to share between the 6bn of us born here), is the third factor of production. David Ricardo pointed out nearly two hundred years ago now that land, especially where it is a monopoly, such as with a physical location or site in the built environment or, say, a section of EM Spectrum that can only be used by one wireless operator at a time, tends to absorb the surplus value created by the labour and capital expended around it that makes it a popular location. Ground rent is created where there is more than one potential occupier that could make good, productive use of a site. It creates a massive transfer of wealth from those who don't own a popular site to those who do, through no effort on the part of the owner of that site.

As a non-land example, the UK government has auctioned off the part of the EM spectrum that carries the new WiMax wireless network signals to a single enterprise, Freedom4 for the whole of the UK. They now hold a monopoly on something that is a gift of nature that anyone else wanting to develop WiMAX networks have to use. They can therefore charge more or less what they like for licenses to others to use that part of the spectrum whilst doing precisely nothing to develop the services that would run on it.

Creating so called "free land" by capturing the value of these natural assets for the common wealth rather than having to tax economically beneficial processes like work and trade is absolutely essential to achieve equity. And the best time to do it would be the bottom of a property cycle. Hint. Hint!!

Citizen's Income - this is the real challenge to the "cosy consensus" that has emerged in the past few days on welfare. It was, I believe, Lib Dem policy up until around 1991. At the top of the recent property cycle there would have been enough land tax (on residential locations alone, setting aside what might be available through commercial, industrial, central business disrict or agricultural locations, airspace, EM spectrum or other forms of economic land) available to pay a citizen's income of about £100 per week per adult and a proportion of that for children depending on age. Further reforms, for example on seignorage - the extraordinary "profit" that creating money as debt gives to the banks that is rightfully part of the common wealth (since the money they "create" is denominated in our national currency) - would enable us to pay for the current health or education budgets if we wanted to, or to add around another £1,000 to the adult Citizen's Income.

People seem to have a problem with the idea of giving everyone an unconditional and non-withdrawable payment like a Citizen's Income because, they say, it will entrench the work-shy in their bad habits, maybe even create more of them. But let's face it, if Joseph Rowntree's lot reckons you need £13,400 to live a basic but comfortable life in the UK, less than half that is hardly going to be comfortable. And it's not meant to be comfortable. It is meant to be hard enough to persuade anyone who wants anything more than the basics of life to do something to earn some additional money. Minimum wage would be scrapped so people would be free to choose to accept a job for whatever they like - just to be able to top up their citizen's income to whatever level they want, but crucially, it would not be withdrawn when people start earning, so there is every incentive for all that nearly ten per cent of the population trapped on various benefit systems to work, even if only a little.

Yes, in the light of campaigns by the tabloids against "benefits scroungers" and the "something for nothing culture" it will be a difficult alternative to sell, but we should be prepared to do it. Think of it the other way around - if we all contribute to the value of locations by our activities around them, why should the dividend from that only go to those who can't work, say? Why not to all of us. It creates a cushion to fall back on in hard times and the ability, even if only for a short while, to be more choosy about the work we accept. No longer do we have to accept the lowest job just to survive. Instead of only the very wealthy gaining financial independence by privatising the collection of land rents, everyone gains a measure of financial security from the common wealth we all contribute to creating.

You could then say that any additional "benefits" must be provided locally, through locally raised taxes and much more accountably than at present. The "parish rate" would have to be used to provide say a basic education for those who were not earning anything more than their Citizen's Income and A&E type health services. But remember, much of the illness in society is because of the sort of poverty that both the Single Tax and the Citizen's Income would eradicate. And not having to pay several taxes on incomes - employers' and employees' NI, income and capital gains taxes - would enable more people to save more of their incomes in productive financial assets for their old age reducing the reliance on a crumbling state pensions system. And, apart from say the armed forces, the troughs at Westminster could be emptied and everyone sent home (and James Purnell would have to find a real job, or discover how life is on the dole perhaps!)

Ownership for All - this third plank of Liberal "redistributive" policy came to the fore in the middle decades of the twentieth century, this is crucial to creating more financial independence for more people. I'm not talking about the sort of free for all sale of state companies as in the eighties, which became in effect a gambling opportunity for anyone who had a few quid stashed away - "Let's have a flutter on Sid" type thing. This is about creating structures in which the workers can share in the success of their employers by becoming part owners. Much more like, say, John Lewis, or, in the seventies, the National Freight Corporation. And things have moved on even since then. New corporate forms such as limited liability partnerships enable different types of partners entitled to different proportions of the profit, not just the providers of the capital.

Again, with the Citizen's Income behind them enabling people to turn down work that does not offer optimum returns to the worker, more and more employers would have to offer the sort of package of benefits that enables ordinary workers to build up a financial stake for the future. These financial assets are fairer than putting all your capital assets in the single basket of one's home, which is not really "net wealth" in any case. More liberal than both socialist style "common ownership" and ownership solely by the capitalist, such partnerships would generate real wealth that can produce an income when you no longer want to work for whatever reason.

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These three measures are, I believe, essential to a truly economic liberal platform. They share, equitably, the common wealth created by us all, and distribute more fairly the ownership of financial assets between those who provide capital and those who provide labour to an enterprise. They would reduce the cost of the basics of life by removing tariffs, subsidies and the private collection of rents and so instantly make people better off. They would leave a vanishingly small number of people genuinely unable to fend for themselves and the "parish rate" system would enable localities to support them while the work-shy would have a hard time surviving only on their Citizen's Income and those who are currently trapped on benefits have every incentive to take up even small amounts of work to top up their Citizen's Income.

It is time for such a revolution, for the Liberal Democrats and for the country. You don't have to be the first country on the planet to do this, but whoever does will instantly become the most liberal and economically just country on the planet and a magnet for international trade seeking to avoid damaging tariffs. We have gone sixty, a hundred, even, if herbert Spencer is to be believed a hundred and fifty years tinkering with redistributive policies involving moving incomes that people have worked to achieve around and still have not achieved the "greater good". The recent press coverage of the Welfare Green Paper shows that the politics of envy and "deserving and undeserving" are still alive and well. It is time to try these different strategies instead of "more of the same" attempts to be tough on the undefined undeserving.

And the biggest prize of all - it would enable us to get rid of vast swathes of bureaucracy and get those state employees into real productive work generating real additional wealth for the country instead of pushing other peoples' around the corridors of Whitehall.

The Report of the Inter-Departmental Committee on Social Insurance and Allied Services was published on 2nd December, 1942, in the depths of World War II. The committee, under its chair, the liberal economist Sir William Beveridge, had been established by the wartime government to plan ahead for the challenges of reconstruction of the national fabric after the war.

The report identified what it called the "Five giants on the road to reconstruction: Want, Disease, Ignorance, Squalor and Idleness". Each was to be enjoined in battle by a major plank of the post-war welfare state - social security, the NHS, expanded state education, the nationwide house building schemes that would produce "homes fit for heros" and Keynesian style economic stimulus programs to maintain high employment respectively. That National Health Service Act of 1946 brought into existence, sixty years ago last week on 5th July 1948, what has become Europe's largest employer, the NHS.

The Beveridge Report indeed made much of its wartime heritage. The war was a turning point in history that deserved revolutionary measures afterwards to ensure peaceful and equitable reconstruction. The battle ahead was couched in terms of a "war on want" (and the others of the "Five Giants"). But as my former university chancellor (as of Friday), news anchor Jon Snow, often says, you cannot win a "war on a noun".

So how has the NHS, and the other key planks of the welfare state mentioned, fared in this "war"? It seems obvious that we have not, sixty years on, beaten any of those giants:

Want: we have a society in which the least well off are dependent on the state. If you believe such things matter, and I do, still a fifth of children grow up in relative poverty and the gap between the wealthiest and poorest is larger than ever. Not only that, but as as with "idleness" many are actually trapped in that dependency, facing the highest penalties if they actually manage to find themselves work that might remove them from that dependency in the form of punitive benefits withdrawals rates. None of the myriad benefits in the system are sufficient on their own to sustain life (particularly the pension, now in its hundredth year), so people are often on multiple benefit regimes.

Disease: whilst quite obviously the range of ailments that are now routinely cured or treated is a huge step on from 1948, there is still a six month waiting list for almost any kind of surgery, hundreds of people denied drugs even their own NHS doctors believe may help them, and the whole headless structure is running around trying to meet centrally set targets, which are fundamentally opposed to the founding principles of the NHS - that it should be responsive to particular local needs. In parts of Glasgow East constituency male life expectancy is lower than in some developing countries for example, which, whether it is an improvement on the state of play in 1948 or not is a pretty terrible indictment.

Ignorance: the state education system has become more comprehensive and more centralized. Students are of course now paying for tuition fees in tertiary education, and we see a constant stream of stories from universities and business leaders saying that many people leaving school are functionally illiterate. The most well off are still using private education and the least well off, as Nick Clegg has constantly complained about, seem condemned to inner city sink schools often with little aspiration planted in their heads.

Squalor: this one was primarily about housing. Sure, we had a post-war building boom but now that's looking quite hollow. In fifty years, the UK's housing has become smaller; the only developed nation on the planet where that is the case - elsewhere increased affluence has seen larger, more comfortable homes. If you are stuck on a sink estate, you probably have as much chance as in 1948 of escaping it. Even the right to buy has often failed to give people who were persuaded that buying their fifties built prefabricated type semi (such as the Orlits design currently being demolished all over Oxford) a meaningful asset. And we are in a situation where those who aspire to ownership currently have little hope of being able to afford it.

...and finally Idleness: it is very difficult for work to help the poorest when getting a job can mean lots of hassles with your various benefits and a punitive regime of clawing back those benefits such that you are often effectively earning very little indeed for all the effort of getting a job in the first place and going out to work once you have. And actually I would argue that we want more "idleness". I realize that in the report "idleness" is something either down to the laziness of the individual, or more likely a state enforced on one by lack of work opportunities in the economy. However as we get closer to the ideal of having many menial jobs and tasks done for us by machines, the idea that the only way of gaining purchasing power with which to participate in the complicated world economy is through work should be rethought in any case. It is nothing to crow about that people still have to remain wage slaves in order to achieve some measure of financial security.

So, on a purely cursory glance, these five "wars" are not going well sixty years on. Some battles have been won, and clearly some things are better in so many ways than it would have been at the end of World War II. But some of the problems are as intractable as ever, others are almost victims of their own successes; for example some of the problems of the NHS of course stem from them now being able to treat far more problems than previously and so creating more demand for itself. But I'd go one step further, and say that the weapons deployed in these various wars have in fact entrenched dependency, reduced choice, stifled innovation and competition. Not only that, but they are hugely expensive, now between them consuming not far off half of all our national income and may be suffering from the law of diminishing returns.

It is time we realized that the approach is itself wrong. That, as Einstein said, "We can't solve problems by using the same kind of thinking we used when we created them".

...so, what can we do ...?