Libertarian Thoughts on State Welfare


Libertarian Thoughts on  State Welfare
By Sean Gabb
(26th October 2015)

One of the main British news stories at the moment is an argument over changes to part of the welfare system. The Government claims it wants to make the child and working tax credits system more efficient. The Labour opposition claims it wants to cut benefits to the poor. I realise that, in writing about the welfare system, I am under a double burden of ignorance. First, I have limited experience and knowledge of state welfare. Second, and partly in consequence, I am not able to say whether the Government or the Opposition is lying over the probable effect of the changes proposed. This being said, welfare benefits are an important issue; I have been urged to write about it; and, so long as I keep to broad principle, my ignorance of the details should not be a disadvantage.

As a libertarian, I try to judge the abstract legitimacy of any institution or government policy by asking whether it would exist without a state to uphold it. I have in my mind the idea of a purely natural order, in which all association between adults, excepting only defence against aggression, is voluntary. Since this natural order would have no government, and therefore no taxes and no redistribution of income, there would obviously be no state welfare system. On these grounds, I say that the British welfare state has no abstract legitimacy.

Note, however, the qualifying adjective. Just because something is illegitimate in the abstract does not mean that it should be immediately abolished, or even that its abolition should be high on the agenda of any military junta advised by libertarians. In applying libertarian principle to the world as it is, we need to take into account both abstract legitimacy and particular circumstances. Where state welfare is concerned, the circumstances should rule out abolition in both the short and medium term.

Though by any reasonable standard, I am on the political right, I accept one of the central insights of left-libertarians like Kevin Carson. This is that we should not confuse the present order of things with a natural order. We should not defend the present structure of outcomes as if they were the outcomes of a free market. To look only at England and America and the rest of the civilised world, there are many people – perhaps ten or twenty per cent – who cannot earn enough to enjoy what is generally seen as a fair standard of living. Some of these people are what used to be called “the undeserving poor” – that is, they are lazy, or they are drug addicts or habitual drunks, or they have in some other way made parasites of themselves. But many are victims of circumstances that, like state welfare, would not exist in a natural order.

I have no doubt that some kind of wage system would exist in a natural order. There are people who do not like risk, or who have a high time preference. Rather than produce today for an uncertain future return, they will prefer to sell their time for a more secure periodic wage. But the nature and scale of the wage system that presently exists is not natural. It came into being and is sustained by a set of laws and institutions that set at least the poor at a structural disadvantage.

I am lucky. I am able to get a living almost as if I were in a natural order. I write. I am a private tutor and educational consultant. I teach for a small salary. I have no debts, which fact counts as an income in itself. I am not rich. I have to limit my expenses in ways I find unwelcome. I have to juggle unavoidable commitments in ways that I sometimes find embarrassing. But I have no one source of income, and any that goes down can be replaced without a plunge into actual want. Though I have fairly unusual skills, many more people should be able to live like this. They cannot, because, as said, they have been placed at a structural disadvantage.

There is always a demand for taxi drivers and delivery couriers, and for child minders, and for beer and wine made in small batches, and for cooked food, and for other goods and services that, in themselves, require little skill and capital to provide. But these goods and services are so taxed and regulated that they can only be provided with credentials or on a scale that most people cannot manage. If they are to get a living by work, it must be for wages.

When I was a boy, this was not a great practical evil. There was no shortage of paid work, and most wages were not very far from the median. Since then, further market distortions have driven much industry out of the country, and placed a firm and continuous downward pressure on unskilled and semi-skilled wages. Worse, there are parts of the country where almost no paid work can be had.

The various kinds of state welfare available are a necessary corrective to what would otherwise be grinding poverty. I agree that state welfare may encourage idleness. But there is worse than idleness. State welfare is a secondary distortion to markets to correct primary distortions that some libertarians still insist on calling market outcomes.

It is a disgrace to claim welfare when you do not reasonably need it. But there is no disgrace in claiming it when circumstances are against you. If we ever move towards a natural order, state welfare will eventually disappear. But it should not disappear before the distortions that presently make it necessary have been removed. By all means, let systematic fraud and wilful idleness be discouraged. But, for the moment, no one with any sense or humanity should wish to take away the safety net.

And I will be honest. I have said I live almost as if in a natural order. But “almost” is an important qualifier. When I was at university, I had a full student grant. I paid no tuition fees. I use the National Health Service. My wife collects whatever family allowance is nowadays called. We send our daughter to a state primary school, and are preparing her for the eleven plus examination that will let her attend a grammar school at public expense. In due course, I hope to claim my old age pension. If I get one, I will make full use of my free bus pass. No one who is in my position has the right to denounce the poor if they claim different benefits. So far as state welfare is based on robbery from the tax payers, we are nearly all thieving from each other.

I turn now to the specific benefits that are said to be under threat. Working tax credits are paid to those in work whose income falls below a certain level. Child tax credits are paid to those with children whose income falls below a certain level. They were introduced by Gordon Brown. Though otherwise an infamous man, he did much to rationalise a benefits system that tended to encourage idleness. Because, as said, I am ignorant of them, I will avoid going into details. But tax credits are a reasonable approach to the negative income tax proposed by Milton Friedman. If we are not to abolish state welfare, it should be fully rationalised. We should end unemployment benefit and housing benefit and old age pensions and family allowance and free school dinners and free gas boilers, and all the other ad hoc benefits brought into being in the twentieth century. We should replace them with direct cash payments, via that tax system, to bring every family to what is seen as a reasonable living. By all means, deter fraud, and exclude recent immigrants from the system. But let us have a welfare system that gives security and even dignity to the poor.

And so, to the extent that it really is trying to roll back the least objectionable part of the state welfare system, the Government is to be condemned. The politicians should think again about how to cut public spending. This is not the place to list the things that ought to be cut. But I am sure I am not alone in being able to find other economies than hurting the poor.

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20 comments

  • Sean, this is one of the best pieces – about anything at all – that you have written for months. Please could you syndicate it widely, er, please? You would do us all a favour.

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  • Just because something is illegitimate in the abstract does not mean that it should be immediately abolished, or even that its abolition should be high on the agenda of any military junta advised by libertarians.

    I don’t think we’ll see a military junta for some time yet, but I suppose I should prepare a memo to send them when it happens. Every day I see new candidates for the list of people I want shot.

  • Yes. And some other points: 1) tax credits are increasingly required because of property prices. There is no point deleting welfare until property prices come down. Most forms of welfare are in fact indirect welfare schemes for rentiers. 2) The primacy of the Commons has to be disputed where a party with 36.8% of the vote has a majority in the chamber. Why shouldn’t such a party be subject to checks and balances?

    • Most forms of welfare are in fact indirect welfare schemes for rentiers.

      Indeed. Many people not on welfare are benefiting from the system, e.g. people renting property that nobody other than welfare recipients would live in, and people providing “services” that are inflated in price because the state is paying for them via benefits. People on benefits are often merely a conduit between the government and various people whose businesses depend on them as customers.

  • “Where state welfare is concerned, the circumstances should rule out abolition in both the short and medium term.”
    Only if you share the goal of mass politics, i.e. in coddling untermenschen. The existence and acceptance of welfare/reliance on the state to tie your fucking shoes is exactly the problem.
    Yes, if you abolish welfare, a lot of fat, ignorant proles will become foaming-at-the-mouth thugs, or starve. In either case one should deal with them appropriately, ignore them when possible, shoot them when necessary.
    The money taken by the state does not belong to anyone, it’s not possible to connect it with coherent economic activities or individual choices. To put it simply, people who need the State to survive should have their genes eliminated as rapidly as possible. One can be a legal libertarian and have nothing but contempt for the masses, who are essentially parasitic and useless as anything other than unreliable capital inputs.

    • A very unEnglish attitude. If there is hope, it lies in the proles.

      • Unfortunate, all political change has to be led by people other than proles. Even Lenin understood that — the Bolsheviks were a middle-class leadership.

      • Fuck the English. Go start another world war, you lunatic cunts. I could give a shit about Britishness; they’re like a petri dish of what’s wrong with American culture.

    • So, the state is a parasite. The big companies are parasites. The rentiers are parasites. The masses are parasites.

      We are running out of candidates for “host” in this parasite/host analogy.

      • Georg Holger Bård Mahesha Hummel

        The fact that a few people can eke out some rational productivity despite most everyone being useless, indisgintuishable subhuman cunts. Most people are parasites, and if not for the people better than them, directing them (often against their will) they would all be dead. Most people are alive today only because of the behaviour of a tiny minority of persons, whom they resent. All the others, whatever they ‘provide’, are essentially interchangeable nobodies whose very existence brings down the level of civilizational possibilities.

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  • Given the parlous state of the world economy, chronicled at such places as ZeroHedge.com, the question is how to come up with a workable vision for a future where you start from an economic system in ashes.
    The wage model is dying if nothing else because it simply can’t function in the post-industrial age. The middle class is no longer necessary to the financial system. Demographics, technology, and government malfeasance have doomed the current system. The question then is what it will be replaced with. Transhumanists have unrealistic dreams of resurrection as immortal machines, collectivistics are stuck in the last century… and the libertarians here are trying to King Canute the situation and retain some idealised England / Western Civilization that never really existed.
    Shaking my head.
    Here’s my hunch: slavery will return. It wasn’t an institution that lasted for thousands of years for no reason other than the moral failing of past societies. Fact is, some people are fit only to be slaves. For me, I’m not even sure it really went away… it just became a little bit more “civilized.” The chains may chafe a little less but I don’t see by any reasonable standard how I would be characterized as having the attributes of a free citizen acting on his own needs and desires compared to back when there was a clear distinction between a free man and a slave.

    • Western civilization existed and still exists. If I read any more of this feeble doom-porn I’ll scream. The collapse! It’s happening! It is always happening….tomorrow and tomorrow and tomorrow

      • Georg Holger Bård Mahesha Hummel

        It is happening, and has been. No, it’s not likely to turn into a tsunami of riots and civil wars. Instead, you are seeing the progressive degeneration of the human race into something no longer worth keeping alive. That is the real collapse, the collapse of moral and intellectual worth. Depressions, wars and volcanoes can be endured, but the selling out of the culture and the future for political advantage and insane ideological fantasies, that is the death represented by the Modern world. Not the Apocalypse, but Brave New World. If you can’t see how inherently this is worse than, say, a bunch of nukes, you are a twat.

      • Define, “western civilization.”

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