More on welfare privatisation: Dick has
responded to my
recent post and, as he has been away for a few days, I thought I'd refrain from an instant reply and compose a more considered installment.
"I still feel his idea is unworkable. The analogy between car insurance and employment insurance isn't very accurate. Car ownership is optional, having an income is not. In otherwords, if you can't afford a car and its insurance, it's no big deal, you can always take the bus. If you find yourself without a job and have no insurance or inadequate insurance, you've few alternatives."
Ok, I don't maintain that car insurance is an exact analogy, more a way of thinking about the shape of unemployment insurance. Maybe life assurance might have been a better fit. Not everyone has a car but everyone dies, (yet probably more people have car insurance than life assurance). The thing about car insurance is that it is something everyone who has a car has to, grudgingly, pay. There is also an appreciation that, (if you take out the rip-off we endure in Ireland) that the cost is graded to reflect the risk, and that the "no claims bonus" acts as a disincentive to make a claim. People who take out car insurance don't tend to consider it as a "contribution" towards something which they will eventually draw upon. I think we would all be better off thinking about unemployment "benefit" the same way.
"A privatised welfare system would only work with a certain segment of the unemployed. I'm thinking of someone who had a decent job, was laid off and needed a couple of months to a year to find something else."
The thing is, there's no incentive under the current system for such a person to take out unemployment insurance. The key is that whatever we say about welfare being a safety net for those who find themselves out of work the way the system is designed and managed is inimical to it working this way. The dole is considered to be part of the redistribution from rich to poor and the only discussion which takes place posits the fact that the primary consideration should be the comfort of those who receive unemployment benefits. There is little discussion about whether the system penalises those would take up work or acts as an incentive to remain on the dole or operate in the black economy. There is little discussion about whether a generous welfare system is affordable in the long term, given trends in birth rates. There is little discussion about whether the current system contributes towards stagnation and is incompatible with a dynamic entrepreneurial economy.
"Frank proposes a transitional arrangement for the long term unemployed. However, what of those who find themselves long term unemployed in the future?"
Ok, the problem here is that Dick and I differ as to the cause of the phenomenon of "long term unemployment". It is my view that this is a creature of a relatively comfortable welfare regime with attendant health and housing benefits. Most of the long term unemployed are making a rational decision to stay unemployed given the benefits available. This is in itself unremarkable, obvious even. It may well be that through years of unemployment they become "unemployable", growing unused to the regime of working a 37.5 hour week but in a reformed system the number of those who are "unemployable" would be small indeed.
"What happens if the employment insurance they could afford proved to be an inadequate means of support?"
I imagine that people will have to make an informed decision when taking out unemployment insurance and be prepared to judge the risk. Try it another way and try to think about unemployment not being a permanent state but being, to use the euphemism, "between jobs". Thus the issue is not whether someone is going to starve but what their short term cashflow is going to be like. What happens if someone pays too much for a house and cannot get by on their income after they pay their mortgage? - sell the house, What happens if the market collapses and they have "negative equity"?, well ummm. The thing is, a free society implies that people take personal responsibility for their actions and decisions, a government which micro-manages your cashflow is, for me, a paternalistic tyrannical nightmare.
"What happens to the person who leaves an abusive spouse and find themselves with no place to live and several children to look after. This kind of thing happens all too often still. Are they to be denied welfare because they hadn't worked enough or hadn't worked at all? There are plenty of cases which may not fit nicely into Frank's system."
There may well be "plenty of cases" which don't "fit in" to my system but I'm not so sure that they "fit in" with the existing unresponsive overbearing bureaucracy either. The question is not that because there are complications with family breakup that we have to accept the existing regime, warts and all, but are there other methods for dealing with hard cases such as this? I have no doubt that there are. My brand of (oxymoronically) moderate libertarianism would hold that the individual should have no government-mandated* responsibility towards "society" or anyone else... except children they have wittingly brought into the world.
*note that I believe individuals
should behave responsibly towards "society" and everyone else but this should
not be enforced or coerced by the government
"Can a private company be relied upon to look after their welfare? I'm not convinced and if this is the case, the end result is poverty, and not of the relative kind."
Dick betrays his managerialism with this question, he imagines that my privatised welfare regime would just be the same as the existing system except delivered by a private company in the manner of British privatised utilities (perhaps it could be called something like Signonia?). I'm suggesting that we get away from the notion that welfare is a service to be delivered.
"As Jon pointed out before, unemployment in Ireland is only 4.7pc. This isn't a massive burden on the state."
Ok, while I'm prepared to accept that Dick has hitherto made some good points in this post I'm afraid that he has descended into disingenuity in the last paragraph. Unemployment may only be 4.7% and this is as Jon said, nothing to be worried about. That is emphatically not the same thing as saying that this is not a burden on the taxpayer and the economy. In fact an argument can be made that a low unemployment level can mask the significant costs of the current welfare regime. Remember also that there are many costs to the system other than actual dole payments and there is a huge chunk of costly, benchmarked, public sector employment paid to administer the current regime.
"You'll never live like a king on welfare and I think its reasonable to say, both for Irish people and immigrants alike that most people would prefer a job than welfare."
Most people, all things being equal, would prefer a job to the dole but all things are not equal and the current system is what is keeping them on the dole.
" A state system does have the potential for fraud and abuse. I've no doubt that some people do take advantage of it. But you're talking about a minority of the aforementioned percentage. Isn't this inefficiency a small price to pay to ensure that no person will go hungry? I think so"
As for fraud and abuse, I am generally wary of schemes which assume the "perfect-ability" of human nature. It is safe to assume, remembering also our traditional reluctance towards full compliance with all that is requested of us by authority, that if you design a system capable of being defrauded it will be defrauded. It is self-deluding to dismiss this as a small minority. There is this reluctance to frame discussion about any public policy with any disparaging observations about human nature. It's as if it causes offence to a particular individual to recognise a fact about human nature which applies to that individual (as it does to all of us). So here's a little newsflash:
People are selfish! yes, shocking as that might seem we are not all altruists. If that wasn't true we wouldn't have evolved. Sure most people have an idea of the common good, but that comes way after self-interest and that altruism should never be taken for granted. The safest assumption is always that people will tend to do what they can get away with.