Further to this, the Devil’s Kitchen highlights a bold welfare proposal.
Every newborn child should have a ‘personal welfare’ fund opened, into which the government should pay, say, £5,000 each year until the child reaches 18. The fund should be private, like a pension fund, and thus invested, not a state operated fund financed from present tax receipts. The fund would accumulate £90k in static terms and should provide well over £100k after investment returns on maturity… This fund should be the only handout from the state, ever, to citizens. No more child benefit, no more unemployment benefit, housing benefit, tax credits, etc. The fund can be used [by] the individual as they see fit…
The advantages of such a system are many. Easy to administer, no perverse incentives/disincentives caused by benefits, promote personal responsibility, equal start for every individual, eliminate poverty trap, and it’s fair and reasonable. Even though at 18 you are effectively being handed £100k of ‘free’ money, it is now yours to spend as you wish. If you are ill or unemployed would you spend it so freely compared to current benefits when you know you will receive them month after month? When it becomes your own money you become more careful how you spend it. The fund would give people a lift up, whether to buy a house, start a business, go to university, start a family, etc.
The key to the concept is that beyond the initial payment there is no other help from the state. It would help pay for the expense of children, but not distort decisions by paying benefits per child, for example. It would totally remove distortions inherent in a ‘real time’ benefit system (week to week, month to month, year to year).
To which, the Devil adds,
[Nationmaster] gives the total population as 60,609,153 and the percentage of those aged 0–14 as 17.5%. This gives us 10,606,602 (to the nearest whole person). Next, the total number of those aged 15–19 is 3,992,998. This gives us a rough total of 14,599,600 (to the nearest whole person). Therefore, 14,599,600 x 5,000 = £72,998,000,000 or £72.998 billion.So, how does that compare to current welfare spending? Well, I worked this out some time ago, from the government’s own statistics [PDF]. The most massive single item is, indeed, social security benefits at £134,463,000,000 for 2006/07 and £140,900,000,000 projected for 2007/08. When you add up all of the different sections, however, the total figure for benefits is somewhere just north of £200 billion. So, Vindico’s idea does actually compare pretty favourably in terms of government spending. Plus, of course, it has all of the other benefits that he listed.
Economists among us may have clearer views than mine, but a few initial thoughts occur. Perhaps the most obvious practical problem is one of transition. The advantages of a scheme like that above would be deferred by, say, a generation or so and would become clear only gradually – while (presumably) running in parallel with the existing welfare system. This may well be prohibitively expensive. Those employed by the state to run the existing benefits system would no doubt have issues of their own, and a generation of 18-year-olds with a sudden £100,000 windfall could have serious effects on, for instance, the property market. (To say nothing of sales of alcohol and scratch cards.) There are also issues of political expedience – of whether one generation of voters would be happy with a change of this kind benefiting the next.
Still, it’s a provocative idea.
Forgive the cold-hearted, American perspective here, but if I may ask: Why must it be funded by taxes? What’s wrong with expecting that parents will be parents, and not babysitters? Why aren’t they opening accounts for their kids? Or how about this, not quite so cold-hearted suggestion: How about giving tax breaks to parents who do set up accounts for their children, provided they follow certain guidelines, and the parents don’t dip into them?
I think a yearly citizen’s basic income has a number of advantages over this idea – the main one being that less of your future depends on how you think at 18.
At that age I would’ve spent the money on travelling, whereas now, only seven years on, my priorities are quite different. Most 18 year olds would spend the money on cars, clothes and binges – eager to keep up with their mates and maintain social status. By the time they learn what they really want from life and how the money can help them get there, it could already be too late.
I suppose another key issue raised by the above is whether the electorate would find palatable a system that actually gives people the freedom to be ruinously stupid. If huge numbers of 18-year-olds use up their one-off lifejacket in a fit of hedonism, would people be prepared to watch them face the consequences later in life?
Whatever the benefits and shortcomings of the above, I posted it in the hope of stirring ideas about the current system’s cost, its inefficiencies and its perverse incentives. I’m sure there’s something to be said about its moral connotations, too.
I like Geonomics and it’s idea of a citizens dividend, and also getting rid of all transfer taxation.
Basically Geonomics is a property tax (paying for the right to exclude others from your physical or intellectual assets) paid directly to each citizen rather than directed by beurocrats. Geonomics squeezes out rent seeking and creates genuine growth in an economy.
Every citizen in the country would get dividend that would allow them to rent a median house. As there are no taxes on earnings there would be no punishment for working and no overhead/punishment for employing anyone and so employment would rise.
Changing the property tax rate would also be much more effective than interest rates for controlling inflation.
WRT Education each parent would be loaned the cost of educating their children. The interest would be deducted from their citizens dividend.
WRT Health. Each citizen would get a payment that would cover the cost of catastrophic insurance for their age and sex. This means that people that do not look after their health pay more, instead of being subsidised by those that do look after their health like the NHS. Mandatory pre-birth health insurance would replace disability benefit (this would also help with funding PIGD) and disincentivise inbreeding.
WRT Crime. Criminals would not receive a citizens dividend and the costs of imprisonment would come out of their dividend on release.
I much prefer the idea of a CBI to the current benefits system – It’d be cheaper to run (lowering taxes), less bureaucratic and would probably leave me better off than I am now. All that’s needed is enough money for people to live without threat of starvation and afford basic accommodation (and maybe enough for basic travel expenses – to aid mobility when looking for work) and then you just leave them to it.
The likes of Tim Worstall have also advocated switching from an income to a consumption tax – so life is easier for those buying bread and baby food than those buying fast cars and home entertainment systems.
http://timworstall.typepad.com/timworstall/2004/06/consumption_tax.html
Veering slightly off topic, I do hope someone saw last night’s “Wife Swap” on Channel 4. Wife of self-made millionaire trades places with a freegan Jesus Christian to live in a leaky camper wagon and forage from supermarket bins. Hilarity ensued, and some poignancy, too. I scarcely need to point out that our freegan duo, Susan and Roland Gianstefani, were a couple of sanctimonious middle class pseuds. Both of whom were comically evasive when asked about the morality of their freeloading on a system paid for by the same bourgeois taxpayers they so pointedly disdained.
What struck me most was the couple’s assertion – repeated several times – that the ills of the developing world would somehow be improved by the British population adopting an anti-consumerist freegan lifestyle – i.e. opting out of work, spending nothing and foraging from bins. The Gianstefanis never managed to justify this rather fundamental point of their philosophy, though they did make woolly noises about “everything being related.” But it seems to me that the opposite is the case. Were huge numbers to follow the Gianstefanis’ example and stop buying things, exporters in those same developing countries would not, I think, be overjoyed. In fact, buying *more* would seem desirable – even if it were immediately thrown away.
David
Perhaps you were watching the live action version of this http://en.wikipedia.org/wiki/The_Modern_Parents ?
Heh. ‘Twas not dissimilar.
Brushing aside my hitherto secret appetite for trash TV, the programme did raise a serious point. The Gianstefanis’ unrealism and dishonesty were particularly acute, but their befuddlement was based on much the same worldview shared by any number of Greens and lefties. My overall impression was that they weren’t concerned with what might actually do some good – hence their obstinate stupidity, disregard for evidence and general self-absorption. What did seem to matter, though, was trying to emulate, albeit superficially, the sorrows of the people they claimed to care about. They wanted to seem concerned in the most conspicuous, yet ineffective, way.
I think the term is “Car Crash T.V.”. You know it’s bad but can’t help but take a “little peek”.
Well, I did catch a few minutes of this.
http://www.channel4.com/entertainment/tv/microsites/V/vanitylair/
I was tutting loudly while I watched, honest.
A revelation too far IMHO.
I did catch ten minutes of Wife Swap.
I’ve seen episodes of Wife Swap before and from those, it is obvious that the two couples are chosen to fit opposite sides of a given narrative. Far from being reality TV we get a heavily edited TV show designed to tell that predetermined story. One episode was supposedly canned because the white racist couple got on with the decent black couple. From the point of view of conflict being entertaining, that’s not so bad but what irritates me is that the makers are sometimes blatant in choosing which couple are the good guys.
For me the interest lies more in the episodes where the intended narrative breaks down. I remember one (US version) where the couples were a cosmopolitan (New York?) couple and a gun wielding southern family who flew the Confederate flag outside their home. However, the program escaped the narrative to show the southern family was extended and close. Once you took away the symbols, the southern family was actually a lot more human. That impressed me because, even I, started watching assuming that the southerners would live down to their reputation.
The show last night looked to me to be one of the more predictable. I got the distinct impression from that 10 minute segment that the film makers were sympathetic to the eco couple. I caught the millionaire wife moaning about the lack of food and facilities in the caravan following by a heavily cut segment showing the eco wife saying something like “but I just think the world would be better off without money” followed by the millionaire saying both to her and off camera, that she was freeloading. I got the sense that the millionaire was about to make some interesting points before the sequence was cut. I didn’t realise they were Christian from the segment I saw; I had assumed they were discretionary “travellers/peace camp/scabby dog on string owners”.
Was I right to switch off. Do you recommend we catch the show?
I hesitate to recommend viewing “Wife Swap”, except perhaps with one eyebrow raised, but this episode confounded my expectations. I’d assumed that the millionaire couple would be pitched as the more obvious “boo-hiss” figures, but they emerged as by far the more sympathetic duo. Certainly, they were more honest about their motives and their moral grumbles were credible, if prosaic, as opposed to pretentious and delusional.
But if anyone asks, I caught the show by accident.
“But if anyone asks, I caught the show by accident.”
Well speaking personally I long ago realised that I was last in line to control the remote control, which makes my use of that excuse more credible. However I reserve it for “America’s Next Top Model”.
I think it’s best we never speak of that again.