Monday, July 21, 2008

Against workfare

This term 'workfare', originally coined in the United States, describes a welfare system where the able-bodied unemployed are compelled to work for their benefits. Although sketchy at the moment, this seems to be what the government is proposing.

Here Johann Hari declares himself in favour on two grounds. One is that a system that allows people to languish on benefits for years erodes the work-ethic and as such does the welfare recipient no favours. The other related point is that if we don't confront this fact, the Conservatives will introduce a much more punitive system.

I had intended to dismiss this second point with a single sentence: being harsh with people to pre-empt the Tories being even harsher with them isn't a good reason for doing anything. But it occurred to me this needs fleshing out a bit for if he is serious about this as a Tory-defeating strategy, what he is advocating here is triangulation. With regards to welfare, it's worth taking a moment to consider what the implications of this has been in the United States. It wasn't Nixon, Reagan or Bush Snr who promised to end 'welfare as we know it' but President Clinton. One of the ironies of his presidency is that he achieved precisely the sort of thing his rightwing critics advocated - but gained no credit for it because he was perceived as being on the wrong side of the 'culture wars'. Ending welfare as the Americans knew it was exactly what he did, for he terminated a federal government responsibility to provide relief to the able-bodied unemployed that had been established since the New Deal. This has laid the foundations for the 'Wisconsin model': Johann rightly criticises this punitive system but fails to make the connection between this and the sort of triangulation he is advocating.

But what of this erosion of the work-ethic, which is the central thrust of Johann's argument - as it is of most critics of the current system? Of this business of people living a life on benefits he says:
"This isn't what the Welfare State was intended to look like. You were not supposed to fall asleep in the safety net and raise your kids there so they know nothing else."
This is quite correct. Beveridge, when constructing his famous report, envisaged the experience of living on unemployment benefit - as it used to be called - to be a temporary affair. But it's worth remembering why: Beveridge imagined that unemployment benefit would cover those temporarily afflicted by seasonal and frictional unemployment. The more severe problems of cyclical and structural unemployment were something he thought could be solved through the then fashionable doctrine of demand-management. Easy to understand why these ideas should be in vogue in a nation emerging from the experience of total war; easy to understand how they came to be dashed on the rocks of experience, as indeed they were in a seventies Britain trying to cope with the combined challenges of newly-industrialising countries and oil-shocks.

Which brings me to this: to me there are two questions that Johann doesn't really grapple with here. These are: what causes unemployment and how does welfare system work? I can't pretend to give a comprehensive answer to either of these questions but I do want to suggest a couple of things that are missing from what I consider to be a fundamentally moralistic, and therefore flawed, analysis of these social and economic problems.

Of the first, I think this has to be acknowledged: unemployment is not a function of the morality of the poor - it is a function of capitalism. You don't have to buy into the vulgar Marxist notion of capitalists conspiring to create a reserve army of unemployed labour to bid down wages. You don't even have to be a Marxist of any kind to recognise what I consider to be two incontrovertible facts that can be verified from economic history. The following should, in my view, be accepted as a bare minimum:

a) Mass unemployment has been a periodic characteristic of capitalist economies from their genesis simply because they lack any inherent mechanism to prevent it.

b) To maximise profits, capitalists using the best technology available will economise on labour wherever possible.

These leaves workers who are available to move into areas where they can produce goods and services for which there is greater demand - but it is the transition that is the problem. This is what economists call structural unemployment. Now, in making this transition, we are asked to believe that it is self-discipline and moral character that is causing the difficulty here and it is on this point I have the greatest disagreement with David Cameron and his New Model Tories - and by extension with Johann Hari in as far as he with him. And while he would no doubt strenuously object, agree with him he does. If you've read the piece linked above, you'll have read the morality tale about his pal 'Andy' who started smoking spliffs at school and never bothered getting off his arse after that. An anecdote perhaps - an anecdote certainly but we are assured this is no isolated case:
"Go to the place where I was born – Glasgow East, site of the potentially Brown-busting by-election this Thursday – and you will see them spreading before you in great concrete estates of poverty. You can taste the ennui in the air. Ask the kids what they want to do when they grow up and they shrug with heartbreaking indifference and say, "Dunno"."
I'll decline the injunction to 'go there' on the grounds that I've already been there. Taught there - and in this capacity it's a case of swallowing the 'ennui'. But there's no point in making this observation without asking why this is. There's the problem of unemployment, which won't go away no matter how many people get on their bikes - but there's something else as well and it has to do with how our welfare system works.

It is characteristic of Victorian piety to demand from the poor a moral fortitude that their critics neither exhibit themselves, nor expect from their peers. This is why, for example, David Cameron can smoke weed and snort coke and all that happens to him is that commentators admire the way he deflects 'unjustified' questions about his 'private life'. But the left-behind society has no such privacy.

The other curious thing about our society is that we are asked to believe it is only the well-off and the rich that respond to incentives to work. Don't tax incomes or profits too much lest you incentivize inertia, the Thatcherites told us. Very well - so why doesn't this apply to the poor, the low paid, the unemployed? I can't claim to set the world to rights but I can make a small suggestion: we might want to consider reforming a system that has a marginal benefit withdrawal rate starting at 100%, falling to something around 80% when you break into the 'applicable amount' and your housing benefit starts to disappear. Then there's the rate of marginal tax once you break out of the benefits threshold altogether. Maybe a minimum citizens income might be an idea? Not sure about this myself but right now I'm thinking it would be preferable to this notion that the poor should be forced through 'community service' to genuflect towards the work-ethic.

Because the poor are different from us: they have less money.

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