From the Australian Centre for Independent Studies, Peter Saunders was recently in Wellington promoting a plan for people to opt out of the welfare state. I didn't attend. I have heard the ideas before and while I think they have some merit they are also troublesome. That's OK. There are no perfect solutions. Goodness knows I have spent thousands of hours trying to find them:-)
But I do try to keep an open mind so made time to belatedly read his paper. Unfortunately I wasn't that far into it when I came across something of an exaggeration. I agree with the thesis that the welfare state has contributed to crime but let's keep things in perspective.
According to Peter Saunders (using information from Muriel Newman), Many of those who commit crimes are in receipt of welfare benefits — 4,600 of New Zealand’s 6,000 prison inmates in 2002 were on benefits before they got locked up.
According to the 2003 Census of Prison Inmates 29.4 percent of prisoners had been on a benefit before incarceration.
Perhaps 2002 was an aberration.
According to the 2001 Census the figure was 38.6 percent.
Both are a far cry from 76.6 percent. I think I know how the error has occurred. Probably the number going off benefits and into prison has been compared to the static prison population rather than all committals over the course of a year.
But before I am criticised for nit-picking, my broader problem with Saunder's proposal (in the same vein as Roger Douglas') is the compulsion element. Also, better minds than mine (eg Roger Kerr) have argued against a Taxfree Income Threshold. I accept those arguments.
Did anyone who attended the lecture have any thoughts?
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2 comments:
Lindsay,
You appear to have misunderstood my proposal. The argument is for *voluntary* opt outs, from government age pension and/or government health care. Nobody would be compelled to leave the state system if they didn't want to. The proposal flows from research on tax-welfare churning which suggests more than half of the money spent on the welfare state (i.e. health, education and income transfers) goes back to the same people who contributed it in tax. We could therefore allow people to opt out of their entitlement to government provision in return for reduced tax payments, while still funding the redistributive component of the system for those who really need assistance.
As for introducing a the tax-free threshold (TFT), economists are right to argue (ceteris paribus) that it would require higher tax rates (which is why they oppose it), but they ignore the churning issue. My argument for introducing a TFT set at welfare minimum floor is that it would allow low income people to retain most or all of their earnings while requiring few or no welfare top-ups. This would strengthen autonomy and self-reliance, as well as improving economic incentives.
As for the data on prison and welfare recipients, I took the estimate from Muriel Newman's website. If it is wrong, I apologise. But the main point, that welfare does not guard against criminality and social breakdown - remains valid. Crime rates went up 500% in NZ when welfare spending was increasing rapidly. In the US, critics of the 1996 welfare rfeorm warned it would lead to huge increase in criminality. In fact, crime rates plummeted.
Hi Peter, The compulsion aspect I refer to is the compulsion to save according to govt dictates.
"Accounts would have to be built up through regular compulsory contributions."
New Zealanders have already rejected compulsory Super savings. Perhaps some people want the right to save or spend their money as they choose. If that sounds naive it is only because the welfare state has taught us to accept being pushed around as the price of 'security'.
Of course, in your favour, I often ask myself is it better to be forced by the govt to pay for someone else's retirement or healthcare or to be forced to
pay for myself? The first is worse than the second. But I'd prefer neither.
As for crime rates, we are entirely in agreement. Not only does welfare not guard against crime, I believe it inflates it.
Probably our focus's are a little different, neither less valid. Your's is more on the churning, mine is on the human wreckage at the bottom of the beneficiary heap.
And I don't think being allowed to earn $11,500 tax-free would be enough of an incentive to make them abandon their workless, ill-disciplined often chaotic lifestyles.
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