The Welfare State

30 January, 2007

In most western countries tax payers pay a great deal of money to the government in taxes, much of which comes back to themselves and others in the forms of various kinds of welfare. It seems to me that there are three distinct rationales for paying welfare and that they are often not stated but somehow assumed and I think lead to confusion over what we are trying to achieve. My three rationales are:

1) A social safety net. This is the barest minimum level, and the idea is only to protect those in real hardship from starving etc and ensuring all minors say have the ability to obtain at least a basic level of education.

2) Redistribution of wealth. Welfare (along with progressive taxes) become a way of ensuring a flattening of the income distribution. We are taking from the rich to give to the poor.

3) Social engineering. Can come in various forms but the recent ones we’ve seen in Australia have been with regards encouraging families. eg. Family Tax benefit B and the Maternity payment. In principle though it could be anything but this is not income or poverty based, rather it tries to target various social goals.

It seems that you could divide these three into welfare that would be supported by clasical liberals in the first case. Social Democrats in the second and Conservatives in the third, although Social democrats also do the third rationale. There are no hard lines between the three categories. Obviously what is a bare minimum for a safety net is up for debate, but they do I think underline different ideas behind running welfare.

While I’ve been happy to enjoy the benefits of rationale 3, it seems to me the main purpose of welfare is 1) with an element of 2). I think some form of progressive taxation is a good idea and that the basic level of cover should be better than just avoiding starvation.

Where proposals such as mutual obligation come is also interesting (ie deserving poor tests). Generally it seems that they are an attempt to turn basic insurance into more social engineering. Its not clear to me that we should ever be doing welfare on the basis of 3.

Probably not my greatest post but just wanting to get some ideas down.