The Welfare State: Beat it with a stick or put it on the life support system? (1 Viewer)

[Silver Persian]

As part of a vague attempt to study for my exams tomorrow, I want to start up a discussion on the welfare state. The Howard government has been trying to reduce dependency on the welfare system by encouraging people to support themselves through the labour market. (This is using the 'welfare state' in its broadest sense, to include any government intervention into markets in an attempt to promote higher living standards)

Arguments for dismantling the welfare state:
-takes money away from the private sector, which is market driven and will therefore direct resources towards areas where there is consumer demand - allocating resources efficiently.
-These resources will be then be used efficiently by businesses, because they face the strictures of competition which will force them to be productive or face insolvency
-The welfare system encourages dependency - it mostly supports people who cannot be bothered getting a job
-The market ensures that individuals are rewarded according to their contribution to the economy - if individuals have spent the time and money to get an education, they deserve to be rewarded for this. Individuals who have not pursued an education, or made choices that have left them without a source of income, only have themselves to blame.
-Taxing the responsible is an infringement on their liberty - they have earned the right to their income, and should not have it forcibly taken away from them.
-The welfare saps incentive from the economy. If I can live at a reasonable living standard without working, why would I bother getting a job? Also, entrepreneurs are less likely to undertake risks if they are not going to be rewarded highly for it, and the high taxation needed for the welfare state takes away this incentive.
-By taking money away from the wealthy, you will discourage savings. Poor people will save less, because they need the money to buy food and stuff. The wealthy can afford to have a jar of money that they are not using at the moment - which can be put into financial institutions and turned into investments.
-The faceless bureaucracy of the welfare system reduces community values - individuals come to rely not on the individuals around them, but the state. This leads to the breakdown of communities and encourages selfish individualism and a lack of compassion.

Arguments against dismantling the welfare state:
-Social democrats tend to highlight notions of citizenship - claiming that individuals born within a country have an inalienable right to a reasonable standard of living, as well as healthcare, education etc. It sort if links to Rousseau's ideas of the social contract, where citizens and governments share a set of rights and responsibilties to fulfil.
-A more equal distribution of income will promote high levels of utility. If I have a dollar, and I get an extra dollar, that is like, heaps awsome. If a millionaire gets an extra dollar, he will not notice. So the living standards of people will be, overall, higher if income is distributed equally.
-The idea of the 'dole bludger' has been overemphasised. There are a lot more unemployed people then there are job vacancies, meaning that we can't claim that anybody who really wants a job will be able to get one. (To which an economist will respond that we need to get rid of the minimum wage. However if the government isn't willing to do this, isn't unfair to take income away from the unemployed when it is the governments communist fault that they cannot find work).
-Markets are historically unstable, and there needs to be a reasonably large government sector to rectify recessions when they occur and to ensure minimum living standards are provided to the broader population. By doing so, it will reactivate aggregate demand to pump more life into the economy
-Leaving individuals without any social welfare creates problems that need to be paid for - like worse health, higher rates of crime, worse education results, tendency towards depression/suicide. Reducing welfare payments costs money elsewhere.
-Markets sometimes fail to provide infrastructure needed for economic success. Things like railways lines, telephone systems and roads, require so much investment that private firms are generally unwilling to invest in creating them.
-Public goods: goods that are non exclusive wont be provided privately. For instance, if person x pays a private military force to protect the nation, persons y and z will benefit from this expenditure as much as person x will. In this situation, people will be unwilling to pay for this essential service, and the public sector needs to step in.


Whew...that's all I've got at the moment. Feel free to tear apart arguments made above, or add ones I've missed.

 

[banco55]

I think it's had a lot of unintended consequences. It contributed a lot to the rise of single parent families in the western world for example. I think the disability pension represents a lot hidden unemployment as well. An incredible number of people are on the disability pension in this country. I strongly suspect if you were to cut off the dole and/or disability pension tomorrow our shortage of unskilled labour would be largely fixed.

 

[Silver Persian]

ahahaha....exam question today = "What are the positive and negative effects of income redistribution". Spectacular.

 

[_dhj_]

Dismantle it, I say. I actually don't believe in welfare, really, because of some of the reasons you've outlined:

This is obviously another one of those naive libertarian solutions for all the world's problems.

Have you actually thought about the implications of totally abandoning welfare? Name one prosperous modern day country without a welfare system. Sorry but such libertarian idealism does not work in the real world.

 

[banco55]

This is obviously another one of those naive libertarian solutions for all the world's problems.

Have you actually thought about the implications of totally abandoning welfare? Name one prosperous modern day country without a welfare system. Sorry but such libertarian idealism does not work in the real world.

Hong Kong has a minimal one and Singapore also has a very minimal one. There's a lot of difference between outright abolishing it and cutting it down to size. Singapore's government for example spends less than 20% gdp. I forget the exact figure for Australia's government but it's around 35% of gdp. Cutting the single parent pension would be a good start.

 

[_dhj_]

Hong Kong has a minimal one and Singapore also has a very minimal one. There's a lot of difference between outright abolishing it and cutting it down to size. Singapore's government for example spends less than 20% gdp. I forget the exact figure for Australia's government but it's around 35% of gdp. Cutting the single parent pension would be a good start.

If you've been to Hong Kong you would have realised that it is a city with massive income inequality and a high level of relative poverty. I can also say that the countries with the highest standards of living (Scandinavian countries) have relatively large government sectors. The fact is that circumstances among countries differ, and thus the equilibrium level of welfare differs. What's certain however is that the equilibrium figure is never zero.

 

[Xayma]

Hong Kong has a minimal one and Singapore also has a very minimal one. There's a lot of difference between outright abolishing it and cutting it down to size. Singapore's government for example spends less than 20% gdp. I forget the exact figure for Australia's government but it's around 35% of gdp. Cutting the single parent pension would be a good start.

Unless it has dramatically increased (by double) it isn't 35% of GDP

http://en.wikipedia.org/wiki/Welfare_state

Footnote 6 has the relevant data up to 2001 when it was 18%.

 

[banco55]

Unless it has dramatically increased (by double) it isn't 35% of GDP

http://en.wikipedia.org/wiki/Welfare_state

Footnote 6 has the relevant data up to 2001 when it was 18%.

I'm talking whole of government expenditures. I assume you're talking about what Australia spends on welfare alone. The singapore figure of circa 20% is total government spending.

 

[withoutaface]

ahahaha....exam question today = "What are the positive and negative effects of income redistribution". Spectacular.

Hahahahahaha what subject? I could write an awesome essay on that.

Positive: - Such effects only exist for those who are unwilling to work, make irresponsible choices, or are disabled. The first two don't deserve money, and the final one can be more than catered for by private charity (sitting at $270 billion a year in the US).

Negative: - Tax involves money that people rightfully earn being taken from them, under threat of being imprisoned if they do not comply. This is theft.
- Provides disincentives to work, with the primary two being the fact that an individual will get money whether they choose to work or not, and that those who already have jobs are less likely to work to their full potential because a significant chunk of their income is being stolen by the government.
- Welfare depedent families develop, putting the children in those families at an unfair disadvantage compared to those born into families where the parents aren't lazy cunts.
- Such families tend to congregate in the same suburbs which have significantly increase crime rates, or worse, create shanty towns where aboriginal fathers rape their 14 year old daughters then get 3 months imprisonment for "cultural reasons".

 

[banco55]

If you've been to Hong Kong you would have realised that it is a city with massive income inequality and a high level of relative poverty. I can also say that the countries with the highest standards of living (Scandinavian countries) have relatively large government sectors. The fact is that circumstances among countries differ, and thus the equilibrium level of welfare differs. What's certain however is that the equilibrium figure is never zero.

The european welfare states have been widely cited as one of the major reasons that Western Europe has higher unemployment, slower economic growth and considerably lower gdp per capita than the US.

 

[withoutaface]

In 1970, Sweden was the world’s third-richest nation, but it has fallen in the rankings as the welfare state has expanded.[1] Indeed, Swedes now have less per capita disposable income than the average Western European and also trail the U.S., Canada, and several Pacific Rim nations.[2]

http://www.heritage.org/Research/Taxes/wm1219.cfm#_ftn1

hmmmmmmmm

 

[walrusbear]

Hahahahahaha what subject? I could write an awesome essay on that.

Positive: - Such effects only exist for those who are unwilling to work, make irresponsible choices, or are disabled. The first two don't deserve money, and the final one can be more than catered for by private charity (sitting at $270 billion a year in the US).

Negative: - Tax involves money that people rightfully earn being taken from them, under threat of being imprisoned if they do not comply. This is theft.
- Provides disincentives to work, with the primary two being the fact that an individual will get money whether they choose to work or not, and that those who already have jobs are less likely to work to their full potential because a significant chunk of their income is being stolen by the government.
- Welfare depedent families develop, putting the children in those families at an unfair disadvantage compared to those born into families where the parents aren't lazy cunts.
- Such families tend to congregate in the same suburbs which have significantly increase crime rates, or worse, create shanty towns where aboriginal fathers rape their 14 year old daughters then get 3 months imprisonment for "cultural reasons".

your profound understanding of the lower classes is amazing!
it's far easier to blame the poor than to understand problems isn't it

 

[withoutaface]

If you'd read my post you would've seen that I gave 90% of the blame to the system, and even expressed sympathy for those affected by welfare dependence.

 

[walrusbear]

i thought you were calling the welfare dependent 'irresponsible' and 'lazy cunts'

 

[withoutaface]

-A more equal distribution of income will promote high levels of utility. If I have a dollar, and I get an extra dollar, that is like, heaps awsome. If a millionaire gets an extra dollar, he will not notice. So the living standards of people will be, overall, higher if income is distributed equally.

But when the top tax rate is around 50%, that means millionaires have 50% less incentive to invest in new ideas that make products cheaper for the end consumer and enhance overall quality of life. For example a subsistence lifestyle today includes benefits that even the wealthiest among us would not have dreamt about previously (e.g. most people would consider a reliable refridgerator, hot water system, a telephone and perhaps a computer with dial up access to be necessary).

-The idea of the 'dole bludger' has been overemphasised. There are a lot more unemployed people then there are job vacancies, meaning that we can't claim that anybody who really wants a job will be able to get one. (To which an economist will respond that we need to get rid of the minimum wage. However if the government isn't willing to do this, isn't unfair to take income away from the unemployed when it is the governments communist fault that they cannot find work).

Why not campaign against both welfare and the minimum wage? If you have the power to change one you have the power to change the other.

-Markets are historically unstable, and there needs to be a reasonably large government sector to rectify recessions when they occur and to ensure minimum living standards are provided to the broader population. By doing so, it will reactivate aggregate demand to pump more life into the economy

More often than not recessions are a direct product of interventionalist policies, and even if they're not, where's the money for welfare coming from if the whole economy is going to shit?

 

[spell check]

Such effects only exist for those who are unwilling to work, make irresponsible choices, or are disabled. The first two don't deserve money.

do you really believe this? could you please make a list of which groups deserve to be supported and which should be left to starve?

to quote Eisenhower in 1954, "Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes that you can do these things. Among them are a few Texas oil millionaires, and an occasional politician or businessman from other areas. Their number is negligible and they are stupid."

 

[KFunk]

But when the top tax rate is around 50%, that means millionaires have 50% less incentive to invest in new ideas that make products cheaper for the end consumer and enhance overall quality of life. For example a subsistence lifestyle today includes benefits that even the wealthiest among us would not have dreamt about previously (e.g. most people would consider a reliable refridgerator, hot water system, a telephone and perhaps a computer with dial up access to be necessary).

Has some kind of sutdy ever been done on the relation between tax brackets and motivation to earn money. Even if high tax is a demotivator I would argue that the motivation of money is still extremely high. I reckon you could just about as easily argue that the 50% tax rate motivates them to earn twice as much.

 

[yy]

Has some kind of sutdy ever been done on the relation between tax brackets and motivation to earn money. Even if high tax is a demotivator I would argue that the motivation of money is still extremely high. I reckon you could just about as easily argue that the 50% tax rate motivates them to earn twice as much.

how does being forced to give half of your money away act as an incentive to earn more money? which would motivate you to work longer? $50 an hr or $100 an hr? especially you're already on high income, which means your basic needs have already been met

 

[yy]

now let's say i'm a doctor, i'm in the high income tax bracket. because half of the money i work in overtime gets taken away, i don't want to work overtime. ultimately there's shortage of doctors, and who suffer the most because of this? most likely the most vulnerable in society.

 

[_dhj_]

Actually doctors work fairly long hours as it stands. If they worked for considerably longer hours there would be a significant decrease in the quality of service.

http://www.theage.com.au/articles/2006/10/25/1161749190007.html