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Wednesday, 11 June 2008

Poor performance


I made a comment regarding Basic Income.


What the Govt, and opposition, are experiencing is the failure of a system that tries to target help to the right people. The constant adjusting, tampering, creation of specific benefits for specific things and means testing of benefits means that thousands of traps are created and are constantly on the move.

The poorest in our society cannot help themselves - that is the EVIL of the Welfare State. The traps in the system create circumstances where low-paid work is not a rational option for a an unemployed person - what they gain in income is all lost in benefit withdrawl. Benefit withdrawal rates in excess of 85% are common in the system. If short term work is taken (and much low paid work is short-term), the re-starting of benefits has such a lag that the cashflow problems cause eviction or starvation.

As the success of Eastern European migrants shows, there are plenty of low paid jobs in the UK, suitable for our unemployed people. But a job at £5/hr may look good to a Pole, but to a person in the benefits system it is a job at 75p/hr, and that is before transport is considered, and the risk of re-starting benefits if the job finishes.

This system of keeping the poor down is the cause of social breakdown in deprived areas. It is why kids don't care about school (why work at school, when you are convinced there is no job for you to do that pays) It is why petty crime and benefit fraud are rampant (they are the only ways to increase income.) It is why single parenthood is a career choice - couples are penalised by the design of the system.

The only talk from politicians about the benefits system is tinkering and tampering: may help the odd person here, harm the odd person there, tinkering at the edges, fiddling while Rome burns.

We need a new system, that lets the poor work themselves out of poverty. One such scheme is Basic Income, coupled to a flat tax, as described by Herbert Simon, Friedrich Hayek, James Meade, Robert Solow, Charles Murray and Milton Friedman.

No longer would the state be preferring that a child grows up in a one-parent home; no longer would the poor turn down a short-term job, because they know that the benefit start-up process creates crippling cash-flow problems when the work finishes.

If I heard politicians talking like that, I'd be interested. I want to help my fellow man, I don't begrudge the 50% of my income that goes in taxes, but I am furious that it is either pissed away on expenses, consultants and wars, or is given to the poor with so many strings attached, that it makes a prison for them.

4 comments:

  1. Thanks for your comment on my blog.

    Can you expand on what you don't understand?

    Apologies in advance for my low English skills, I code all day and find it hard to switch back to English.

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  2. The worst thing about benefit systems is that they are Failure Rewards.

    When you subsidise failure, you get more of it.

    The unemployed get rewarded by [punishing|taxing|fining] those who do work.

    No one should be punished for things that have only positive external benefits (work)

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  3. Thanks Citizenone.
    I didn't really follow the process of setting your house price to minimise the tax paid on it, while setting a price high enough to deter your house being forcibly bought from you. I guess I have difficulty imagining how that will work, I'm not sure where or how an equilibrium will be established. Not your English, just me needing to think for a while about a new idea I haven't heard of before, that is not immediately obvious.

    Cheers,
    Mark

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