Is The State Needed?

Introduction – Why The State?

Many in modern society automatically expect the state to undertake certain activities and often call for it to undertake more. Why do they do this when the state has been seen to fail in most of its endeavours where private enterprise has succeeded? With this article I want to challenge this automatic assumption that the state, and only the state, can provide these services to us. In the following sections I discuss briefly many of the areas that the state has been involved with in my lifetime.

Refuse Collection

This was one of the first services to be outsourced by councils during the 1980s. My company’s landlord procures a completely private refuse collection rather than use the council’s own (private) provider. This is because it provides a better service. Do we really need government to collect our waste? Is this really a service that we need government to do, or even organise, for us?

Welfare

This is an interesting area. It is now automatically assumed by most that government is the best provider of welfare. Why is this when there is so much evidence to the contrary? In fact our ‘magnificent welfare state’ was devised not to create welfare anew as the people didn’t have any, but to replace the competing companies that already provided a “comprehensive range of services”, as this didn’t fit in with socialistic bureaucrats’ view of an efficient planned economy. You can see more in my article ‘The Welfare State And The State Of Welfare: From Beveridge to IDS‘.

Car Manufacturing

In the post-war period the government took an interest in industrial policy and this included car manufacturing. The UK had a highly successful heritage of motor car manufacturing in the inter-war period, and despite many factories being requisitioned for production in World War 2, this continued afterwards. In 1968 Tony Benn, then Chairman of the Industrial Reorganisation Committee in the Wilson Labour government, encouraged the successful Leyland Motor Corporation to merge with the failing and near bankrupt British Motor Holdings (sounds familiar: anyone remember Gordon Brown encouraging successful Lloyds Bank PLC to ‘merge’ with debt-laden HBoS PLC?). The industrial carnage from this merger caused investment and consolidation problems for several years, with the company eventually being nationalised in 1975. There was no reason to nationalise this industry, it was already evident at that point that Germany and Japan could produce more mass-market cars, faster and hence cheaper, than we could. Even our top marques suffered: under nationalisation it was often remarked that you needed to buy two Jaguars – the second one for when the first broke down, as it inevitably would. Ford bought Jaguar in 1986 and invoked a Total Quality Management programme, dramatically improving the product quality and hence reliability. Public ownership of car manufacturing proved to be an expensive, highly unsuccessful experiment; subsidising an old inefficient industry to keep the workers (voters) happy is simply wrong. The same thing happened with the coal industry, which I won’t go into separately.

Airlines

When I was young the UK government ran an airline! Yes, I know! Why would anyone think this was necessary? At the time air travel was expensive and so generally used by wealthier leisure travellers and those on business paid for by their employers. These people were being subsidised by the taxpayer. Would we even contemplate this now with the huge number of airlines available? And in this ultra-competitive industry the airlines often regarded as the worst are the remaining few ‘flag-carriers’.

National Defence

This is one area that even libertarians often struggle to disagree that a centrally-organised system of defence is probably better than other options. This is due primarily to the ‘free-rider’ problem and I will cover elsewhere at some point in the future.

Roads

While there have been many historic and current examples of private roads these are relatively rare in the UK. Whilst private streets, to build houses on, are more common in the UK, the road, to connect adjoining places, is more complex to build privately. The need to negotiate rights-of-way with landowners is difficult and costly, so the state has a natural advantage here as it simply passes a law to seize the required land with whatever it considers suitable recompense. This abrogation of private property rights is similarly used with the building of new railways, such as the contentious High Speed 2 (HS2) line, though this is relatively rare since rail nationalisation in 1947. Despite this natural advantage of the state in its ability to over-ride property rights there are plenty of successful examples of private roads and a significant body of research into how this could operate privately.

Post and Telecommunications

This is an interesting topic and worthy of its own article, though I will cover briefly the key points here. From the 1830s until 1984 the UK government held a monopoly on every form of telecommunications that it deemed important, always nationalising a successful private market and turning it into an unprofitable inefficient service. The penny post was invented in London in 1680 by William Dockwra and after proving successful was effectively nationalised by the King’s brother, the Duke of York (who eventually became King James II, expelled in the Glorious Revolution). The telegraph was invented in 1837 but ignored by government as it used a system of semaphores. For 33 years private individuals “provided the capital,  incurred all the risk and developed the telegraphic system into a highly lucrative business, from which the profits were steadily increasing, so much so that the net earnings of the two largest companies ranged from 14 to 18 per cent per annum”, according to Charles Bright. In 1868, shortly after the second successful transatlantic telegraph was laid at considerable expense to its investors, the government began nationalisation of the domestic telegraphic companies, passing a monopoly of all telegraphic business to the Post Office. Within 18 years the Post Office was losing over £500,000 per annum on telegraphic services. The National Telephone Company, founded in 1881 was quickly profitable and by 1890 declaring a dividend of 6%. Legislation passed in 1892 and 1896 slowly took control of many aspects of this successful company and by 1912 it was fully nationalised. Over the next 72 years telephonic services became increasingly unprofitable, mismanaged and inefficient. Now we have an ultra-competitive market in comparison, despite the monopolistic licensing of services by Ofcom (a state agency that takes fees and limits entrants to the market). I can now walk into one of several shops on my local high street and walk out with a working telephone in my hand. Much of the information about the late-Victorian communications market is taken from a fascinating and illuminating essay called ‘The Evils of State Trading as Illustrated by the Post Office‘, in ‘A Plea For Liberty: An argument against socialism and socialistic legislation (1890)‘

Railways

Why do so many people think that we need the state to run railways? Yes, when they became less popular because of the adoption of the motor car, and hence less profitable, there seemed some validity in nationalising them (there wasn’t – but this was the only point at which it made any sense whatsoever). However, the railways are over-subscribed now, with government limiting fare rises to remain popular with special interest groups and therefore causing capacity problems. Rail transport was successfully privately run for a long time before the state interfered. The first partial attempts were made to nationalise rail in 1921, the railways being in state control from the outbreak of World War 1, and finally and completely under the disastrous Transport Act of 1947. The London Underground had been nationalised in 1933. There are plenty of examples of successful private railways across the world, why do we need a government to run a railway? We often hear passenger groups complaining that the state should subsidise their chosen method of travel – this is just another special interest group lobbying government for its share of the tax pie.

Policing

Policing is made up of many aspects, most common of which are crime prevention and detection. Regarding crime prevention there are 330,000 private security staff in the UK compared to around 132,000 police officers. I’m sure we would all agree that prevention is better than the cure where crime is concerned, so if the state’s crime prevention staff are so good then why do we need private security staff and why does crime occur at all? Crime detection after the fact may require legislation to arrest suspects (remember we all have the right to arrest someone committing a crime) and so may be better provided by a state agency. However in my lifetime we have seen many miscarriages of justice (e.g. Birmingham Six, Guildford Four, etc.) as well as mistakes during policing such as the execution of Jean Charles De Menezes and the unprovoked, and sadly fatal, assault on Ian Tomlinson at the G20 protest (not the only assault it seems). I have personally seen miscarriages of justice and experienced violence at the hands of the police, so remain sceptical that the state is best suited for this role.

Healthcare

This is a topic worthy of a separate article. However it should be said that the UK’s socialised healthcare system has often demonstrated itself to be lacking in health or care. Recently it has emerged that many parts of the NHS have a ‘care’ problem, with thousands of customers dying unnecessarily over a period of a few years in a small amount of Trusts. Adding to this poor outcomes for many treatments it is a wonder that this service hasn’t been abandoned; the only possible reason being the fixation with it as a near-religious icon as demonstrated by the ridiculous homage during the Olympics opening ceremony from Danny Boyle. With 1,200 dead in one hospital alone over a short period, and over 20,000 suspected to have died unnecessarily in 14 other Trusts, why do its advocates blindly worship this false idol? NHS-worshippers immediately attack its critics with the well-worn phrase: “you want the poor to die in the streets like in America?” No, but of 200+ countries in the world how many have emulated our ‘envy of the world’? Precisely zero. If you want a socialised healthcare system, at least do it properly like the French. I’d prefer their system over ours, happily accepting their higher costs, with their better outcomes and less idolatry.

Water

In the UK water supplies are provided by highly monitored and regulated private companies. The price regulator, Ofwat, provides controls limiting the providers’ charges; stringent regulations for water quality are controlled by the Drinking Water Inspectorate (within DEFRA) and effluent is controlled by the Environment Agency. Ofwat has 226 employees and costs £17m per annum for its main role of setting prices once every five years. This is a lot of bureaucrats, are they all needed? Does current legislation limit the market and its ability to meet customers’ requirements more innovatively? Why, for instance, does all water provided into homes and businesses need to be drinking quality? I suspect we drink less than 1% of the water provided into our homes, the rest being used for toilets, showers, baths, washing machines, dishwashers and to be used washing items in sinks; these are only internal domestic uses and exclude hoses or other gardening uses, car washes, industrial processes, etc. We could all comfortably live from drinking bottled water or other drinks – it is only the government than mandates that all water supplied has to be of drinking quality. The environmental cost of purifying all supplied water to drinking quality standard must be enormous. Note that this is only water actually used here, all the imported items, from fruit and vegetables to clothes and electronics, have a hidden water cost too. If we had truly private supplies we could have whatever water quality we were prepared to pay for. Rainwater collection mechanisms could be commercially popular for supplying toilet flushes, clothes washing, etc. and only drinking-quality water supplied as needed. Do we need this state interference? I don’t think so.

Education

While there is an obvious benefit to a society of its citizens receiving a decent minimum standard of education there was no sensible reason to force all children to attend school to the age of 16 previously, let alone the current age of 18. The previous government’s insane objective to get 50% of students to attend university was completely nonsensical. It dismisses the importance of vocational qualifications and other forms of education, as well as assuming that the many manual jobs that society requires are valueless. We will always need plumbers, builders, car mechanics and electricians: do these valuable trades need degrees. To be deliberately or accidentally misled by politicians’ misconceptions about what education is needed, many of whom were lawyers at that time, is a travesty; it damages whole generations at a time. The state should stay out of education: there is plenty of libertarian discussion around this topic and the popularity of home-schooling and free schools demonstrates the increasing appetite of parents for less state influence in their children’s education.

Courts

There are plenty of examples of private courts – though they tend not to be called that. Arbitration is commonly used in contract dispute resolution. David Friedman and others have lectured extensively on private law, so I will not go into any more detail here.

Food?

The topic I leave to last is my favourite example of why the state should leave us alone as much as possible. While many worship the National Health Service as the single entity that keeps us all safe and alive in the UK, I simply ask one question: how often have you needed the NHS to keep you alive in your lifetime? Not many people I know have needed our specific format of healthcare rather than just a good doctor or surgeon, and that would be very rarely. However, how often do you need food to survive? It’s vital to all of our lives, whereas socialised healthcare is, for most, required only infrequently. So if food is vital, it’s therefore more important than healthcare; but for all of my lifetime we’re told healthcare is “too important to leave to the private sector”. So why isn’t food? If food is more important, then why do we leave that to private enterprise? If we followed the same logic as socialised healthcare we would nationalise all the food producers and outlets: no more Tesco, Sainsbury’s or Waitrose; no independent farmers; no choice, just collectivised production and distribution. As most of us have dealt with the NHS on occasion, just imagine receiving your food through the same mechanism. You would have to go to a prescribed food outlet, with your ration book (we couldn’t just take what we need) to receive your government-defined allocation of food. Can you really imagine this being successful? If not then how do we expect healthcare to be provided through this mechanism?

The State And Industrial Policy

Today it seems incomprehensible that the state would get involved in industry, but only thirty years ago this was normal. Despite Britain starting the industrial revolution, and having a relatively free market for most of the preceding period, many industries were taken over to build armaments during the first World War. This short-term tactic fitted well with the prevailing socialist ideas at the time and over the inter-war period many industries were affected by state interference. During and following the second World War, up until Margaret Thatcher’s second government, many businesses were nationalised. It took until the mid-1980s for this trend to be reversed with many industries being privatised, including gas, telephony services, car manufacturing, coal mining, etc. Sadly there wasn’t the appetite to take this further with the postal services, education or healthcare. When private companies can build fleets of ships, factories, electronics, cars, etc., why does government need to get involved? The reason it does it to prop up failing industries in its own country that cannot compete globally and hence win votes from the self-interest groups (e.g. manufacturing staff) at the cost of higher taxes for everyone else. If a business is competitive and financially sound then it doesn’t need government loans or grants to prop up its cash flow, a bank will do that. We all know the problems that can arise when banks make overly-risky investment decisions based on higher rewards in precarious markets. Haven’t we learned this lesson by now?

The State As Provider

Why do people expect the state to get them a job? The common cry at the moment is “there are no jobs” despite there being over 500,000 listed on the Jobcentre’s books alone. How have we become this conditioned to believe that it’s the states responsibility to provide work or, failing that, pay us not to work? As of today, 1st April 2013, there has been continual debate in the press and on Twitter, for several days, about the recently introduced benefits changes. While there are some valid reasons to support people out of work temporarily it is not in society’s interest to do this long-term. If there are no suitable jobs for a person in their preferred market then they need to retrain to another market or accept a lesser-skilled, hence lower-paid, role. Supporting them financially any longer than a short time prevents them making a decision to retrain or try other work; if market conditions change they can always return to their old profession with an unbroken career history. As Murray Rothbard wrote of welfare recipients in 1971, criticising Milton Friedman and the Chicago School, if “they regard welfare payments as their right – a right to exert a compulsory, looting claim upon production – then the number of people on welfare will increase astronomically, as has happened in recent years.” We need to educate our fellow-citizens that the state isn’t needed for us to work or live safely; we need to wean them off this dependency culture that only benefits the stats apparatus.

The State And Taxation

To feed the behemoth that is the modern state it taxes its citizens and borrows what its citizens cannot afford to pay; it borrows against the security of its people and their assets: their property and future earnings. The economic crisis since 2008 has demonstrated that politicians are prepared to run up debts that can never be fully paid, in this instance bailing out private banks by privatising them, but in the past similar borrowing has been used to fund wars. We are currently sitting on a welfare state that is a huge Ponzi scheme. Not only is current expenditure not funded by current revenues, it’s not even funded by our children’s future revenues, but instead by our grand-children’s revenues. This is unsustainable, but the politicians’ incentive is to forever promise more expenditure to special-interest groups to get elected. The bloated state’s tax grab can only be reduced if expenditure is reduced too. We don’t need the state to undertake most of the activities above, so let’s not pay it to do them then.

Conclusion – The Death Knell Of The Modern State

The spiralling debt that governments of all persuasions have created in the last century is due primarily to the politicians’ belief’s that they know better than the private sector. The private sector is distinguished by entrepreneurs who risk their own capital (usually their homes or cars), to establish a business. Many of these are unsuccessful with dire consequences for these risk takers; most survive through hard work of the owner and their staff; and very few are successful. The popular socialist dislike and criticism of ‘big business taking advantage of the workers’ is simply wrong: in 2011 small and medium-sized enterprises (SMEs – up to 249 employees) accounted for 58.8% of the 23.4 million people in private sector employment. How do the bureaucrats and career politicians know better than these people on the ground what is best for them? They don’t.

The falsehood that the state can do many of the activities listed above better than private individuals has been disproved time and time again. In many areas the state has been rolled back over the last forty years. The few areas that the state is still heavily involved (healthcare, welfare, education) could be reduced too, leaving just the night-watchmen activities of policing, courts and defence left for us to argue over.

The state’s time has come, brought to an end by its proponents’ profligacy and greed. It is time for we humans to step out of the shadow of the state and return to the intellectual and economic freedom we experienced before the authoritarian, murderous 20th century. It’s time for us to grow up.

The Welfare State And The State Of Welfare: From Beveridge to IDS

Introduction

It was recently the 70th anniversary of William Beveridge’s famous report on the welfare of the UK people (‘Report of the Inter-Departmental Committee on Social Insurance and Allied Services’).

In it he identified five ‘Giant Evils’ in society: squalor, ignorance, want, idleness and disease. After seven decades the United Kingdom now has a ‘welfare state’ based loosely on the recommendations within this report. On all sides of political debate, from ‘left’ to ‘right’, from statist to libertarian, the welfare state can be seen to have fallen short of the ideals for which it was established. This article focuses on the changes to the welfare ‘benefits’ system that were proposed, implemented and subsequently evolved in the interim period.

The Report

The report’s initial objective was to “survey … the existing national schemes of social insurance” that were available at the time and “to make recommendations”. Existing schemes, surely not? Weren’t people left to die in the streets before the founding of the welfare state, that’s what I was taught at school? Well, surprisingly not; the survey documents considerable legislation. Over the preceding 45 years, beginning with the Workmen’s Compensation Act of 1897, there was a plethora of legislation designed to make certain insurances compulsory. The above act was initially limited to a small number of occupations but was extended in 1906 to cover all, with compulsory health insurance beginning in 1912. Similarly unemployment insurance began for a small number of industries in 1912 but extended in 1920. The Pensions Act came into force in 1908 giving a non-contributory pension to all over 70; this was added to in 1925 by contributory pensions, which also covered widows and orphans. The Unemployment Act of 1934 replaced several earlier unemployment insurance schemes and introduced a national Unemployment Assistance service. Adding to this huge growth in social insurance were medical services, disability assistance, child welfare services (including pre-school), death and ‘other contingencies’. These services were mainly funded by life assurance companies, friendly societies and trade unions.

The report’s authors found the existing landscape “impressive”: it showed “that provision for most of the many varieties of need through interruption of earnings and other causes that may arise in modern industrial communities has already been made in Britain on a scale not surpassed and hardly rivalled in any other country of the world“. The only areas of social care that the committee could fault were healthcare, funerals and maternity. However where they did rail against the existing array of systems was its organisation: “a complex of disconnected administrative organs, proceeding on different principles, found invaluable service but at a cost in money and trouble and anomalous treatment of identical problems for which there is no justification” (as if voluntary interaction needs ‘justification’). They concluded: “It is not open to question that, by closer co-ordination, the existing social services could be made at once more beneficial and more intelligible to those whom they serve and more economical in their administration.” Anyone who has dealt with the Department for Work and Pensions, with its lack of communication and coordination, would question that we’ve made that much progress under a state-centralised system in 70 years. The claim of improved efficiency by providing insurance services through the state is laughable; you don’t need to know about Friedman’s Law to recognise this.

Beveridge and his committee, through the bureaucrats’ rose-tinted spectacles of war, and its necessity to have central control over the economy, saw this wide range of services and suppliers as inefficient, wasteful and uncoordinated. They wanted to impose order: a centralised, government-led system.

Three Guiding Principles of Recommendations

The first principle argued that whilst there had been a working system of social services in the past they should not be afraid to be revolutionary, not evolutionary: “Now, when the war is abolishing landmarks of every kind, is the opportunity for using experience in a clear field. A revolutionary moment in the world’s history is a time for revolutions, not patching.” The destruction of war was used as a lens to see the future, to promote a brave new world.

The second principle was that “social insurance should be treated as one part only of a comprehensive policy of social progress.” Yet again, this is evidence that their aspiration was to design and engineer a new society based on their ideals.

The third principle was that social security must be achieved by a “co-operation between the State and the individual”. The State should “offer security for service and contribution”. (Benjamin Franklin is often quoted as saying: “Those who would give up essential liberty to purchase a little temporary safety, deserve neither liberty nor safety”). This Faustian pact with the ‘State’ required more than just service and contribution though. Amusingly the current critics of Workfare, a system that requires unemployment benefits’ recipients to work ‘for free’ (i.e. for their benefits), would abhor the controls and limits in place in the early welfare state. Most interestingly the third principle goes on to say “The State in organising social security should not stifle incentive, opportunity, responsibility; in establishing a national minimum, it should leave room and encouragement for voluntary action by each individual to provide more than that minimum for himself and his family.” This is shocking in its short-sightedness: the private market in social insurance was quickly destroyed by the implementation of the welfare state, with almost everyone expectant of, and becoming quickly reliant on, the state benefits. After 70 years the current system has inherent traps that even Iain Duncan-Smith’s planned far-reaching reforms, designed to ensure that work will pay, will not resolve. It has systematically achieved the end of personal responsibility over 70 years, in the same way that the universality of the NHS has discouraged primary health care over its lifetime. Fabians and other socialists should have the bravery and honesty to admit this, as a few already have, rather than continue to defend the indefensible.

National Insurance or Ponzi Scheme?

One of the recommendations was that pensions should be introduced to all citizens “without means test by stages over a transition period of twenty years, while providing immediate assistance pensions for persons requiring them.” This was a real insurance scheme, with contributions accruing over time and payouts reflecting the amount paid in; this is unlike the current scheme which pays the current beneficiaries not from their ‘contributions’, nor from the current contributors, but from debt borrowed against the next generation’s contributions. The current system is a Ponzi scheme, a fraudulent and fundamentally dishonest approach, not the genuine insurance scheme recommended by the report’s authors.

Social Security

The proposed scheme of social security had “six fundamental principles: flat rate of subsistence benefit; flat rate of contribution; unification of administrative responsibility; adequacy of benefit; comprehensiveness; and classification.”

Note two key points: ‘subsistence benefit’ and ‘flat rate of contribution’.

The population was to be divided into four main classes of working age and two others below and above working age:

1. Employees (employed under a contract of service).
2. Others gainfully employed, including employers, traders and independent workers.
3. Housewives (married women of working age).
4. Others of working age not gainfully employed.
5. Below working age.
6. Retired above working age.

Classes VI would receive pensions and class V would receive children’s allowances “paid from the National Exchequer in respect of all children when the responsible parent is in receipt of insurance benefit or pension.” Note that children’s allowance was only paid to the children of those on another form of benefit! This would cause uproar if proposed now and contradicts the principle of universality that many believe has existed in the welfare state from the start.

Contributions from classes I, II and IV were to be via a stamp on a single insurance document; class I would require the employer to pay a contribution too, as well as acting as the unpaid tax collector for the employees’ contributions towards the Exchequer. Interestingly contributions were to be “higher for men than for women so as to secure benefits for class III.” New mothers were provided for by a “maternity grant, housewives who take paid work will receive maternity benefit for thirteen weeks to enable them to give up working before and after childbirth.”

Beveridge was against means-testing due to the high marginal tax rates it caused, which discourage work.

Shortcomings

The idea of a centralised system of social insurance comes from socialist ideology, a dogma that the state can better organise, via its inherent bureaucracy, a comprehensive insurance scheme across all of the economy. It wasn’t proposed to replace a failing system, for self-evidently it wasn’t failing, but to fill a few gaps and counter the inefficiencies of the private sector. To design this system with this goal in mind allowed its architects the ability to shape society in the mould they wanted – a Fabian socialist society.

Beveridge’s report was imperfect in many ways, not least in recognising the changes in society towards the family. The evolving role of women in leading and running households, necessary during both wars, and the societal changes in the inter-war period, meant that women’s role in the family had forever changed. However Beveridge still had a very Victorian view of the family.

Beveridge was also a eugenicist, like many fellow Fabians. He believed that while men who could not work should be supported by the state they should suffer “complete and permanent loss of all citizen rights — including not only the franchise but civil freedom and fatherhood.” Can you imagine the furore if a current government minister suggested the loss of franchise for those on benefits? Or worse, limiting their ability to have children? Sadly this is the natural and obvious conclusion of a planned socialistic society, whether socialists recognise this or not.

While Beveridge may be considered to have good intent, to create a comprehensive efficient system of social insurance, he inadvertently created a system that would maintain and increase poverty, entrapping generations in benefits, teaching children that the state, and only the state, can always provide for them.

Outcomes of the current system

There was a major problem with Beveridge’s report: it was written during the middle of World War 2 when Britain was operating (reasonably successfully) a command and control economy, with full employment. He recognised this fundamental flaw and subsequently authored (though this was disputed by Hayek) a book on the issue: ‘Full Employment In A Free Society’ (1944), in which he proposes radical socialist changes from Keynesian ‘priming’ of the economy during periods of low demand, to introducing of wage arbitration to keep down workers’ wage inflation.

The current dispute over capping benefit rises at 1% per annum is a classic example of how much the current system has diverged from Beveridge’s original concept: he would be horrified to think that benefits would rise faster than the wages of those in work; benefits were intended to be a short-term safety net to help people whilst unemployed, not as a permanent replacement to working wages. In fact Beveridge has specifically proposed that unemployment benefit be low so that it didn’t encourage ‘idleness’. The general shock from many of a phone call to Julie Hartley-Brewer’s LBC show, the caller typifying the state-sponsored unemployment that the welfare state has created, demonstrates that many in society don’t understand the dangers of widespread ‘idleness’.

Frank Field MP is renowned as an expert on the welfare system. He was appointed by Blair to “think the unthinkable” about welfare; when he did Blair fired him. The Labour Party wasn’t ready to slaughter its sacred cow and actually do anything about the issues facing the welfare system. Why not? Well many of those who would suffer most under the changes would be traditional Labour voters: political expediency and populism won out over ‘doing the right thing’, addressing the need to change a rapidly-failing system. This brings to mind the famous adage “a government which robs Peter to pay Paul can always depend on the support of Paul” (ironically from Fabian socialist George Bernard-Shaw).

I recently attended an excellent talk by Frank Field on Beveridge, his report and its implementation. Frank is forefront in the Labour Party in admitting that the current system isn’t fit for purpose, its unintended consequences causing as many problems as it resolves. He recounted the story of three young unemployed lads who arranged to attend his surgery to discuss their situation. After arriving 30 minutes late they proclaimed that they wouldn’t get out of bed for less than £300 per week. He pointed out that no one would employ them at that salary as they were effectively illiterate. As they became more heated in their discussion one of the lads leaned across the desk and asked “so you’d have us take immigrant jobs then?”, to which Frank replied “yes, I would!”

Conclusion

We have created a system whereby many indigenous British people of working age see a high marginal cost to legal employment, especially for low wage jobs. As many of these lower-paid jobs are still attractive to immigrants, who come here to work not claim benefits as many critics would believe, these low-paid roles are taken by immigrants who often pay a significant share of their earnings in tax to subsidise the indigenous claimants.

By distorting the labour market with the national minimum wage and the inherently dangerous and corrupt modern welfare state we have come to accept 1-2 million unemployed as the ‘natural level of unemployment’; this is the real price of the current welfare system; millions condemned to the poverty of ‘idleness’ as Beveridge called it.

By not implementing Beveridge’s recommendations as he intended, we have not just moved away from the full employment his system required, but been driven to artificially high unemployment by the very system which was adopted in his name. This system is now unsustainable and will draw heavier on the economy as the population ages, and worse, while generations of children grow up with no working role model in their family.

Any rational person must see that the welfare state, as it exists now, does not represent the aims and ideals of its founders. As a mechanism to protect the unfortunate and promote opportunity it can only be seen to have failed. Put simply, is not fit for purpose.

No libertarian wants poverty or unemployment, despite what our critics think. While socialists won the moral debate how to resolve these issues in 1942, due to many of them within the intelligentsia at the time, their approach has failed and been seen to fail. It’s time for libertarians to reiterate the market as the natural solution to poverty and unemployment. The free market is the only welfare. The welfare state is dead; let us now improve the state of welfare. Without the state.