Chapter 81 Section 8 Curbing Welfare Dependence

Third, just as there is an effective Conservative response to crime, so too is welfare dependency.We must combine underappreciated, traditional insights with modern technology and the latest research.In an earlier chapter I described the system and its merits which were inspired by the Beveridge report.Beveridge advocated a universal welfare safety net, largely based on and funded by Social Security, supplemented by means-tested benefits.The size and complexity of Social Security today means that going "back to Beveridge" is hardly practical, but we can use Beveridge's ideas to solve our current difficulties.First, his report assumes that if the state interferes too much, it will reduce the individual's willingness to support himself—he is a big believer in the principles of thrift and insurance.Today, it is desirable to have individuals themselves make more contributions to sickness and old age insurance.Second, he was acutely aware of the need to well fund the massive expansion of benefits he proposed.Third, Beveridge describes his goal as eradicating "five ills on the road to reconstruction": "poverty . . . disease, ignorance, and laziness."What matters is that the ills he presents are moral, not just material, and they reflect behavior, not just circumstances.Encouragingly, we find that this analysis is very consistent with conclusions drawn by US contributors about welfare policy today.

If the main problem is the burden of welfare spending, then the main target of savings should be general welfare rather than means-tested welfare.If the broader "psychology of dependence" is the point, then we would be more cautious about establishing means-tested benefits because it would reduce the incentive for people to look for work and to be frugal.We're not going to just focus on Social Security and taxes.Certain means-tested benefits may also provide welfare recipients with benefits in kind, such as free medicine, free meals at school and assistance in cold weather.If a recipient of welfare loses his original benefits, he is automatically forced to lose other benefits as well, and the economic losses are often significant.

In addition, a person on welfare may find that the local authority has provided him and his family with the worst housing and the worst schools, possibly in areas where lawlessness and crime are rampant.Hence the terrible and paradoxical result of psychological dependence, which often confers great advantages on the economic side, and prompts them to live a life of indolence and despair.We should pay special tribute to those brave people who have made efforts in this direction.But the government should help them by eliminating or at least reducing these temptations accordingly. Measures have been taken one by one to overcome the psychology of dependence. The introduction of the household credit program for low-income families in 1988 was an important step in tackling the "unemployment trap" (in which people get better off when they stop working) and the "poverty trap" (in which people Worst case, they will lose some of their benefits after their income increases).Paired with the youth training and re-starting schemes already mentioned, this helps moderate some of the welfare-dependence issues.It can persuade those who are healthy and of working age not to drop out of the workforce.Whether such an initiative as Workfare is worth developing further is open to debate.In principle, those who want to make many demands on society should also fulfill some obligations to society.But the US experience shows that workfare can be costly and frustrating in practice because of bureaucratic obstacles.Perhaps the most important task in this context is to cut spending in general, and welfare in particular, while reducing administration and taxes, so that work and earning money have more real value.