Friday 27 September 2013

Welfare, Work or a combination?

Welfare or Work or a Combination?

Throughout economic and political history there have been ideas, suggestions, even occasionally (usually Opposition) policies that tried to combine the idea of welfare and work. But in general these two ‘Ws’ have been seen as binaries – implacably opposed. Most recently, partly under the pressure of recession, debt and the need to cut public spending, but also, beginning before the Credit Crunch, in response to public doubts about the size and scope of welfare dependency, governments have tried to encourage people into work and off reliance on benefits. This of course rests on the assumption that people on benefits are there because they don’t have the ability (or sometimes the will) to gain and keep a job – an assumption that is not necessarily correct, since availability of jobs varies enormously from one area of the country to another and not everyone is able or willing to move long distances in search of work, not least because they are aware that those who do relocate sometimes find that the job fails to materialise or ends quickly, leaving them without social support networks and possibly struggling with higher living costs in more affluent localities. However, there is little doubt in most people’s minds that Welfare needs reform, and many see the Coalition’s efforts as a step in the right direction. That said, I personally know some decent and potentially hardworking people in the rural south-west (where work is somewhat scarce) who are deserving of their benefits since their unemployed status has endured through no fault of their own, though at the same time I long for them to find suitable work.
            So, is there a way of combining people’s need (and in most cases desire) for work with a safety net that both ensures no one starves or is in real need (homeless or in rags as a result of poverty, for example – a strange idea to us now in this country but all too common a century ago), and prevents people from depending on welfare? Well, curiously enough, I wonder whether we should revisit the system that was used by Eastern bloc communist governments such as that in Poland between 1945 and 1989. Here everyone was guaranteed a job and therefore an income, but this doesn’t mean that all jobs were paid the same or had equal status. It merely ensured that there was no unemployment. Welfare also existed in the form of State provided benefits, but command economies such as these have had a (deservedly) bad press since such economies almost universally failed by the 1980s, which is part of the reason for their political demise. However, I think it is worth unpacking the different economic structures and looking at them individually, since their failure may be because of their production values rather than because of their employment policies. (These thoughts were sparked in part, by the way, by reading the chapter on ‘Communism and Consumerism’ in Brian Porter-Szücs’ forthcoming book Poland in the Modern World: Beyond Martyrdom, published by Wiley Blackwell – though the author merely describes and analyses the Polish economy during the communist years; I don’t wish to imply that he would agree with my ideas at all!)
            In an Eastern bloc country such as Poland the emphasis was on the supply side of the economy – industrial production was geared round producing a certain quantity of goods according to quotas, with the idea of selling these in the export market and generating income for national investment. There was no guarantee that these goods would sell, and to a supply-side economy of this kind, that didn’t seem important – at least, not to those who were producing the goods. (Of course, in the end it was important because without sales there was no money to continue investment and production, and the economy got into debt.) But what if there had been efforts to produce what was wanted by consumers, to advertise, to encourage some kind of demand-side economy to develop alongside the full employment commitment? Would this inevitably lead to a full-blown capitalist model where firms respond only to demand and employment becomes reliant on demand and growth continuing, where inflation is the major problem for consumers? It’s impossible to know for sure, but I think it is at least feasible that one could have both a full-employment (but no welfare payments) system where everyone is guaranteed a job somewhere, even if it is low paid and carrying out community-service type jobs (one unemployed man of my acquaintance says he would be more than willing to carry out such jobs and be paid to do so, but he is not allowed because these are set aside for convicts). It is then up to the workers to look for a better-paid and more rewarding job if they can find one.
            This is, I suppose, quite close to the idea that people should work for their benefits, but it may be that this is resisted because of the way it is seen and interpreted. If there were no benefits, only jobs, perhaps this mindset (which it seems to me is unhelpful) would change. Why, after all, should anyone think that he or she is entitled to payment just because he/she exists, except as a safety net to prevent destitution? And if there is another way to prevent destitution and have a job (which is in itself so much better than sitting around doing nothing, both in terms of wasted labour and in terms of self-esteem for the unemployed person), surely this is a win-win situation against which only ideological objections can be made? I’m not suggesting we should adopt communist economic principles – it is clear that they do not work, quite apart from the fact that they are associated with totalitarianism – but that doesn’t mean that it isn’t worth considering some ideas that such Eastern bloc command economies had.
            The other way to come at this problem may be through the idea of a Basic Payment received by everyone, set at a level that the country can afford, and untaxed (i.e. an individual right or entitlement), on top of which people may (and most are expected to) take a job paid at whatever rate their skills and qualifications merit. In such a system there are no welfare benefits, but no attempt at equality either. So far as I am aware, no country has yet implemented such a system, but the idea comes round occasionally, generally from fairly left-wing sources. It too has its merits, but since we have had no chance to assess it economically, it remains in the realm of blue-sky thinking. I haven’t seen it costed, but I suspect it would be very expensive, because unlike the full-employment model, the Basic Payment has no intrinsic labour value. Some people might  simply choose not to work (as some do, sadly, under the current UK Welfare system, in spite of the Coalition’s efforts to change this), even though that meant they would have little spending power. Of the two, I think the full-employment scenario has more mileage, though no doubt it would have its disadvantages, like most things!

            I would welcome some comments on these ideas – I’m still not sure who reads this blog (though I’m told that some people do …). You can leave a comment here, or on my website, If they have any merit, perhaps it would be good to spark a wider debate. Now who would want to take this up, I wonder? Ed Miliband (Old Labour used to like the idea of full employment), Nick Clegg (the fairness of the Basic Payment might appeal) or David Cameron (surely the Conservatives would like the idea of everyone having to work for a living)?