Tuesday, 11 January 2011

The dead hand of welfare


The one certain consequence of aid, of any kind of welfare, is poverty. Look at this country, look at the dreadful Dependency State, a financial burden that has crippled us for years and resulted in a form of entrenched, institutionalised socialism, almost impossible to shift, no matter the political complexion of any given government. Billions of pounds have been spent and we are not a step closer to ending poverty.

No, instead we have created welfare-dependency ghettos peopled by a sub-class; places where one’s expectations of a meaningful and fulfilling life are low to non-existent. Instead time passes with cheap alcohol, a haze of cigarette smoke, visits to the doctor, daytime TV and endless ennui, only relieved by an early death; it’s the subterranean world of the Morlock. America look to Britain; look to your socialist future.

I’ve expressed these views before, so there is nothing really new here. But I was inspired to take this path again by an article in the Sunday Telegraph about the work of Dambisa Moyo, a Zambian-born economist who has previously written Dead Aid, a book pointing the extent to which African economies have been crippled by foreign aid programmes, just the reverse of the outcome intended.

Now she has published How the West was Lost: Fifty Years of Economic Folly – And the Stark Choices Ahead. In this she accuses the West of squandering its economic advantages by a series of wrong-headed policies. America, she believes, is in danger of losing all entrepreneurial edge and becoming a “bona fide welfare state” as the century progresses.

Her warning is timely. England and America both built their power and greatness on free enterprise, on a buccaneering economic spirit. In this country a growing lack of self-confidence, a sharp decline in forms of nineteenth century self-belief, resulted last century in a major shift in economic and social priorities. No longer able to do things for ourselves the state had to do them for us, to remove all of the dangers and risks that make work and enterprise worth doing and life worth living.

Our suicide was planned. American freedom and American enterprise, in contrast, are in danger of dying by slow and haphazard degrees. “The US”, Moyo argues, “is on a path to creating the worst and most venal form of welfare state – one born of desperation from many years of flawed economic policies and a society that rapaciously feeds on itself”.

I have to say am both amused and bemused by the irony of some of our present economic and political realities. If one wants to look at our past look to the Indian and Chinese present, countries advancing by the most imaginative forms of investment and enterprise, countries unburdened by huge state expenditure on welfare, by any state welfare, for that matter. What a supreme irony it is that China, a country ruled by communists, has become a perfect example of classical capitalism!

I think it worthwhile to take Moyo’s thesis, advanced in her two books, as an intellectual continuum. In other words, to take the British example, successive governments have treated the country as if it was holding out a Third World begging bowl, with welfare expenditure in the place of foreign aid. This has involved the transfer of productive to unproductive sectors of the economy to nobody’s benefit, especially not the poor. Welfare, in other words, cripples, just as aid cripples.

It’s not all black, though; there is time, Moyo believes, to address these problems, if one is prepared to make difficult choices. The Republican victory in the mid-term elections will go some way to reversing the socialism of the White House, though it has to be seen if the long term drift can be halted.

Here our present coalition government – which was never my ideal – is taking a path of austerity, absolutely necessary in our circumstances, not just a sustained legacy of wasteful welfare spending but a crippling burden of debt bequeathed by a criminally incompetent Labour administration. There is resistance and the will to change may yet be broken, though I believe the consequences will be dire. Our problem is more deeply based than that of America. We have to change not just economic policies but an attitude of mind, an attitude that says the state will always provide. It will not; it cannot.

52 comments:

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  4. Actually, the Eloi were the welfare beneficiaries in Wells' tale; the Morlocks were the industrious workers who took their factories underground to avoid the destruction of war. The Eloi ended up as food for the Morlocks, but that's what you get for devolving into sheeple.

    Panem et circenses - do remember that the corrupt practice of buying votes arises when power elites compete to rule a degenerate form of representative democracy with a permanent underclass, where the reward of victory in the popularity contest called an election allows the winners to control the entire economic output of the nation.

    The true path to avoiding such a state lies not just in abolishing or limiting welfare, but in limiting the power of the state, too. That may also entail limits on sweetheart deals between the government and the wealthy power elite.

    I haven't read Moyo's books, but, by report, she seems to have some interesting ideas - and it is worth noting who else is interested in those notions.

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  5. Adam, it cripples for the reasons I have given. You and I will never agree here. Besides you use such emotive and misplaced terms (venom and pestilence) that there is no basis for a rational argument. Let's just retreat into armed neutrality. :-)

    I'm proud of being English, that's true, though I have never at any time suggested that there is an English 'race.'

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  8. Calvin, that’s an excellent point about the Eloi. I suppose I prefer them because they are prettier.
    :-)

    Yes, spot on about the necessity of limiting the power of the state. Do you know anything of the Putney Army debates during the English Civil War? I think Cromwell and Ireton would look with horror on our present situation, a confirmation of all their fears.

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  9. Adam, race is such an imprecise concept. You described my world as one of 'venom and pestilence', expressions which are emotive and misplaced. No, I have not read that, though I did read his wittering memo to Baroness Thatcher released by the Public Records Office under the thirty years rule!

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  11. Not in my view. He was part of the disease that took this country to it's knees in the 1970s.

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  14. Yes, but he was part of the pattern, one of those who laid down a failing strategy, only disguised for a time by a favourable balance of trade. My reading of the Callaghan government would suggest otherwise.

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  16. The welfare state can not sustain itself, but has become a generational way of life. People in need of assistance should be given a time limit and job training .Should welfare recipiants continue to have children that they can not support they should be sterilized.

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  17. Are you against all welfare? I probably have a broader picture of the British welfare state than you. I grew up on a council estate, and the family next door (husband, wife and two adult children) relied completely on handouts. The problem is that all four adults were probably unemployable, although that was likely to have been a result of all those years on benefits.

    I have a friend who has never worked in his life, apart from the odd temporary placement, which he regards as some kind of penance. It is never a stepping stone to permanent employment. He too is probably now unemployable. And nobody can understand why he's made such a lifestyle choice, although the consensus is that he's simply too lazy to do anything about his situation.

    So, I agree with you to the extent that we have a serious problem with undeserving claimants that needs to be addressed, but I would never abolish welfare payments altogether. Unemployment benefit (sorry, "job seeker's allowance" – more mealy-mouthed PC-speak) always used to be tied to National Insurance contributions, so on that basis it should still be an entitlement.

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  18. @MGON: "How does it cripple?" Well there are several ways it does. Some of them apply only some of the time, one has a partial solution, but all of them together do seem to cripple every single welfare state uniquely:

    1. "Micro-Macro Paradox": In giving things for free (e.g. mosquito nets to Africa) you remove the demand for local business, be it mosquito net makers in African villages, or cheaper alternative lifestyle businesses in the inner city, also known as boarding houses, that can be established and run by locals.

    2. Search costs - My mother, who is on unemployment, spends more time and energy on paperwork for unemployment pay then she does applying for work. Can't blame her, as the paperwork takes 20 hours a week, and if you forget anything, or make any error at all, you cannot collect unemployment pay for two weeks. This also creates a culture of "suck up," never a good thing in business.

    3. Cutoff points - If the government puts a limit of 15 grand on you receiving aid, you will not be overanxious to make 15,001 dollars. I've heard of one case of an unemployed, blind mother of 6 who never found a job because if she did the government would cut her aid, and it costs more then any job she could do to replace those services.

    4. Inertia - By providing an emergency income, you prevent difficult and stressful choices from being made that would benefit both those individual people and the nation as a whole. Search costs also feed in to this by taking away crucial hours of the day from handling the consequences of such difficult choices.

    Example: Detroit, Michigan. Detroit has almost no significant industry anymore, but hundreds of thousands of people remain there with no hope of getting work now or in the future because government has prevented them from making a difficult decision that would stress them in the short run. As a result, they don't see a pay raise or any opportunity to advance themselves, and America continues to support through federal funds schools, power plants, highways, water pumps and other infrastructure completely unnecessary for any economic activity, which hurts the entire country. This is also bad for the envrionment, as it prevents Detroit from returning to a state of nature.

    Note that this particular problem can be partially alleviated by time limits on aid.

    5. High taxes and prices - Poverty lowers the cost of everything by forcing businesses to either cut the bill or lose a customer. That's why 10 years ago you could get a nice apartment in Beijing for 20 USD a month. Of course these days it costs more like 5000 USD for a studio in Beijing... In addition, welfare takes tax money away, which drains the bank accounts of the rich, which would otherwise get lent to create more production so costs could go down and more people could be served. There is no solution for this particular problem - the only one ever tried was rent controls, and that just prevented businesses from serving customers.

    5b. Preventing Employment - That same deadly combination of high costs and high taxes also prevents the expansion of businesses, which prevents the hiring of workers. In addition, the search costs mentioned in (2) mean that fewer workers will apply for any given job, lowering the competitiveness of any given wage.

    6. Bad Neighbors - When you live among people who are dependent on the government, your neighbors start telling you that you can't succeed, you can't get out, smart people are idiots, and energetic people are even stupider, risks can't be taken, and the only way to get ahead is through criminal activity with the local gang. Your children will die by gunshot and knife wound, or be locked up in jail, and you will stay poor. People are social animals, and unfortunately, people on welfare end up living together. That's why the rural poor in America excel but the urban poor just fill our prisons - the small towns are too small for such cultures to develop!

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  19. @Ana: I don't think America would ever get Britain's welfare state. The American people have already made it very clear with the Tea Party that they won't tolerate any such thing. It may have taken this ridiculous health care bill, a little bit of liberal snobbery and a very angry Alaskan to do it, but it seems the American people have actually had an intelligible thought.

    You know Ana, I just realized this, but Rocky and Bullwinkle are the perfect picture of America...

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  22. Anthony, the welfare state, as it is presently constituted cannot sustain itself, that much I would agree with.

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  23. As soon as I read the first paragraph, I knew that good old Adam's ire would be reaching critical mass.

    Having said which, I entirely agree.

    He is very keen on Supermac. I am old enough to recall the days of the 1951 - 1964 government and Macmillan's rapid decline from Supermac to an accident-prone and derided lame duck leader.

    He fell out with Thorneycroft and Enoch Powell in 1958 over government spending. They were right and he was wrong. Thereafter the country was mired in what was called Stop-Go, with a series of crises followed by (electorally managed) periods of unsustainable boom.

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  24. Dennis, it's really a philosophical position for me, which I have a tendency to push to a logical conclusion. I'm not inhuman, though, and I would not wish to see people starve in the streets. It's a question of proportion. There is too much wasteful state involvement. I would prefer to see much more charitable activity here, with major tax breaks for donations. Also there should be a far higher stress on the importance of the family network as a means of help and support, something we have rather lost sight of, many choosing to pass their burdensome elderly into the care of the state and then losing sight of them. Above all, something has to be done about marginal tax rates, whereby people are worse off taking work than living off welfare. I would be interested to know, on the basis of your own experience, how these matters are handled in China?

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  25. Jeremy, if you ever read Moyo's book I would be intersted to know how accurate you think her predictions are. Rocky and Bullwinkle!

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  26. Adam, sorry, I missed your contribution. So no Winter of Discontent, no double-figure inflation, no trade union militancy, no fat union barons dictating terms in Downing Street, no stagflation, no left-wing subversion?

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  29. David, I have a comment to make about Super Mac's memo to the Iron Lady, the one released under the thirty year rule. So, keep watching!

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  31. Adam, left-wing subversion, not stopping short of spying for the Soviets, seems to have been a regular feature of the era of Heath, Wilson and Callaghan.

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  33. No, I do not, but I know that people like Jack Jones were actively working for the KGB.

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  36. @Adam: HAVE YOU EVER BEEN TO A WELFARE COMMUNITY? GO TO THE HOOD, AND THEN SAY THAT NONSENSE! IT DOESN'T CREATE "SHARED HUMANITY," JUST SHARE JEALOUSY, DISTRUST AND RACISM!

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  37. @Adam: Become the 51st state? ;)

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  41. @MGON: I mean a ghetto, a place like Bankhead, Atlanta, GA where a large percentage of the people live on welfare. It's a place of despair insofar as welfare is involved. People have pride and identity in their work, you take that away from them and you take away a lot of the value they have in themselves. Once you do that, and they cannot value others either.

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  42. @MGON, treason: Being an individual means having value and a vision of what things are, it includes not only enterprise but perspective, and perspective includes loyalty where it is due. This said, I would say that the Chagos Islanders can commit treason whenever they want considering as how the British government has treated them.

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  43. Perspective cannot include what you are forced to do, for that is not of you but taken from you, stolen, destroyed and defiled.

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  46. In this country, libraries were started not by the state but wealthy gentlemen who sought to give back to the community, just as Carnegie built his great college. One of the reasons America will never have as big of a welfare state as Britain is because it can't, we have a much more violent, individualistic, swashbuckling culture, filled with exploding cars, machine guns and fantasizing about large takeovers and taking the world by storm. As such, America will suffer far more social angst for the same amount of welfare as England, because people don't tolerate as much here. Americans are powderkegs, they don't take "no" for an answer, and that's part of the reason we don't have an NHS and Obamas attempt to create a much lighter version has encountered fierce resistance. And there's a reason why kids on welfare are more likely to go to prison then college, and it ain't money: they just want to kill someone. It's not about the cash, it's about revenge.

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  48. Welcome back, Gorgeous. The Anastasia-dependent are relieved indeed.

    I've been chopping through the official history of MI5 during the holidays (and I see that "Militant Tendency" and "subversives" appear here by the usual propinquity). There's a lot of juice in the 800+ pages of main text by Christopher Andrew. Have you read this book?

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  49. Check out this killer about the Blair generation: http://www.youtube.com/watch?v=GIQ4su7xWuA

    There is also the Larkin poem (as an example of his private doggerel):

    I'd like to see them starving
    The so-called working class
    Their weekly wages halving
    Their women stewing grass

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  50. Retarius, what a lovely welcome back. Thank you and a very Happy New Year. :-) No, I've not read it but I will check it out on Amazon. I can't stay away from the place!

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