Simon Duffy

Thoughts, Bemusements & Arguments

Month: December 2011

Fair Incomes and Welfare Reform

One of the simplest ways of understanding what is wrong with the current welfare system and why current efforts to reform it will continue to fail is to consider this question:

Do we want to ensure that nobody has to endure absolute poverty?

There may be a few extremists who will say no to this – they are happy to see their fellow citizens die in poverty, but their views should be discounted. Almost everybody from Right to Left actually agrees that we do not want to live in a society where anyone would be left without support.

So does that mean we have a guaranteed minimum income?

Well we do, and we don’t.

Our current benefit system – for all its craziness, complexity and poor design – does attempt to provide a minimum income – through the Income Support system. We will (almost) always get something if the system’s rules say that we are entitled, but these rules are designed so that this are right is conditional upon our poverty. This is how poverty traps work:

You can get x, but only if you are poor enough.

The current welfare system is an incoherent compromise and it reflects a point of indecision in the body politic. We don’t want poverty; but we don’t want to guarantee the end of poverty. We feel uneasy: Can we afford it? Do we trust each others to make the necessary contributions? Do we trust ourselves not to abuse the system? And so we continue with a crazy system that gives millions a pitiful income and at the price of robbing them of the natural incentives to contribute, earn, save and grow their own families. In a way we are all caught in a collective poverty trap – unwilling to trust each other, unable to move forward together – we guarantee social insecurity, fear and the waste of human talent.

But we can spring the poverty trap by moving away from conditional rights and towards universal rights. If instead of making a minimum income conditional upon poverty we make it unconditional – universal.

It is as if each citizen were to say to each other:

Let us each pay a fair amount in taxes, and guarantee to each other a fair minimum income; using this we can each of us build our own life and make the best use of our own talents.

In practice we could make this shift by (a) merging tax and benefits into one system and (b) creating a guaranteed minimum income for all which then acts as the threshold at which we begin to pay taxes.

I describe these ideas in more detail in a joint policy paper with The Centre for Welfare Reform and the University of Birmingham:

Fair Income Policy Paper

I am not the first to make these arguments. In fact societies have, from ancient times, constantly attempted to achieve the right balance between income security and personal freedom. The system of Jubilees, part of the Jewish tradition of social justice, had exactly this function. No one could be cast into the slavery of poverty for ever – there was always the potential for redemption and the chance to build afresh because land that was lost through differences in trade, luck or talent would be returned to the family every fifty years.

The current UK government has at least realised that the current benefit system does penalise the poor through high taxes (dressed up as benefit reduction rates) but unfortunately it is unwilling to take the next logical step and to create a universal system of income security. Instead it is attempting to devise a complex new tax regime for those on the edge of the benefit system – which will leave some people better off and some people worse off. Given that we already live in the third most unequal developed society it seems that increased poverty for some is a price we should not be willing to pay.

Ultimately there are only two ways to reduce poverty traps either (1) to push some people deeper into poverty or (2) to lift everyone out of poverty together. The government has quietly set about the first strategy. Surely it’s time to consider the second approach – the only sane and moral solution.

From Pooling to Differentiation

If I were constructing a Utopia, which God forbid, I should describe a higher civilisation in which every human being had a hundred names; in which each had a particular name known only to a particular friend; in which there were more and not less ceremonies differentiating the various kinds of love and friendship and in which the suitor had to go through ten names before he got to Glory. That would be a Utopia really worth constructing; for it would be a real question of construction. Most of the Utopias represent only a dull sort of destruction; the sort of destruction we call simplification. It would really be something like fun to invent a ritual; but since the neglect of religion, no man has really had the courage to invent a ritual. It would be a great lark to draw up a code of law, decorating Tom, Dick and Harry with their Seven Secret Names. But these things will not come until the modern world has realised that its cure lies in distribution and even in differentiation; and not in mixing up everything together in one great mess. Comradeship has become a sort of Combine; bearing the same relation to true friendship that a Trust has to a true trade. Nobody seems to have any notion of improving anything except by pouring it into something else; as if a man were to pour the tea into the coffee or the sherry into the port. The one idea in all human things, from friendship to finance, is to pool everything. It is a very stagnant pool.

G K Chesterton from On Calling Names

Chesterton is the great advocate for the road to social justice less travelled. He believed that the path of the Fabians, the communists and the social democrats towards social justice was the same path taken by the great capitalists: to destroy diversity and so to achieve a greater centralisation of power and control in their own hands.

One hundred years later Chesterton’s path remains untravelled. But could we not rethink social justice? Could we seek fairness, while still respecting tradition, complexity and diversity? Could we build, without destroying?

People with learning difficulties have already shown us the way. People who have been excluded, victimised and disempowered, do not want revenge or some meaningless token of ‘equality’. They want to be included, to live in freedom, to be safe and to make their own contribution, in their own way. People want citizenship and world that enables them to find their own honoured place within it.

The Problem of Giving

We do not quite forgive the giver. The hands that feeds us is in some danger of being bitten. 

Ralph Waldo Emerson on Gifts

The problem of giving is profound and double-edged. If we are the recipient of a gift there is a danger that we see our own need as a weakness (which it is not) and this then erodes our sense of our own value. If we are the giver then the danger is that we view our gift as some subtraction from ourselves (which it is not) and that we feel a pride and superiority to which we are not entitled.

One approach to this problem is to deny the reality of property (the property as theft argument). But this leaves us all poorer – or all subject to whatever power is in the business of organising property (the state, the market or the gangster).

A better approach is to welcome the concept of property and the notion of property rights but to recognise that property rights are not absolute. Property rights must be balanced with other social rights in order to ensure that everyone has the right to enough – even if some have more and some have less.

Paradoxically the healthiest perspective is to recognise that everything is a gift – not from other human beings – but from God. Humility before God takes nothing away from the soul.

Design Requires Deeper Thinking

Design is a funny word. Some people think design means how it looks. But of course, if you dig deeper, it’s really how it works. The design of the Mac wasn’t what it looked like, although that was part of it. Primarily, it was how it worked. To design something really well, you have to get it. You have to really work out what it’s all about. It takes a passionate commitment to really thoroughly understand something, chew it up, not just quickly swallow it. Most people don’t take the time to do that.

Steve Jobs from Wired in 1994

This seems to me to be true of design in our welfare systems too. People are always in such a hurry, working so hard, but thinking so little. What this leads to in the end is poorly thought-through public policies.

It is not the lack of ‘research’ that is the problem – no design innovation ever came from research. But design should be driven by a deeper understanding of the problems that need to be solved and the outcomes desired. This understanding is certainly informed by research, but it also needs to be informed by an understanding of human psychology and a commitment to basic ethical principles. Without this moral and social realism new designs will just be short-term fixes that will fall apart under the slightest pressure.

Having been responsible for designing several new systems for the organisation of welfare systems (individual budgets, self-directed support, resource allocation systems etc.) nothing is more depressing than to see people get enthusiastic about new ideas without making any real attempt to understand how and why they work. This is what then lead to such poor implementation. Without any deeper understanding people implement a process, e.g. the seven steps to self-directed support, as if it were a magical formula.

Sometimes it is better that people are sceptical and resistant than that they naively embrace innovations for the sake of novelty. Innovation must serve powerful moral purposes; it must right real wrongs. Otherwise it will be wasted effort and distraction.

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