Tuesday, June 26, 2012

On scroungers, dodgers and cluelessness

When a filthy rich Prime Minister goes on about "a culture of entitlement" and proposes that, if the Tories win the next election outright, more of us who claim state benefits will be forced to find jobs, it's a tad nauseating. Even if he was out of work tomorrow (if only!), Cameron is unlikely to need to worry about paying the rent. Still, it will keep Daily Mail and Telegraph readers and many of his back-benchers happy, especially those who resent having to share power with the Lib Dems.

It's all based on fallacies that Cameron's supporters are very ready to repeat.

Fallacy No. 1: There are far too many welfare benefits claimants.

In fact, the number of people claiming benefits they're not entitled to is exceeded by the number who don't claim what they are entitled to. The latest estimates from the DWP are as follows:
  • 0.7%, or £1.1bn, of total benefit expenditure is overpaid due to fraud; 
  • 0.8%, or £1.3bn, of total benefit expenditure is overpaid due to customer error; 
  • 0.5%, or £0.8bn, of total benefit expenditure is overpaid due to official error. 
  • 0.5%, or £0.9bn, of total benefit expenditure is underpaid due to customer error; 
  • 0.3%, or £0.4bn, of total benefit expenditure is underpaid due to official error.
Meanwhile, in 2010, the Citizens' Advice Bureau reported that...
  • as many as four out of five low paid workers without children (1.2million households) miss out on tax credits worth at least £38 per week - a total of £1.9 billion.
  • as many as half of all working households entitled to housing benefit (worth an average £37.60 per week) do not claim it – that’s up to half a million households.
Other benefits showing signs of significant under-claiming include council tax benefit and pension credit. Up to three million households are missing out on an average £13 a week in council tax benefit, while as many as 1.7 million pensioners are missing out on an average of £31 a week in pension credit.
Withdrawing housing benefit from under-25s might reduce the welfare bill by £1.8bn, but raking in all the tax that Cameron's cronies and other wealthy people avoid paying could add £69.9bn a year to the Treasury. Jimmy Carr's tax would be only a very small contribution to this.

Fallacy No. 2: There are plenty of jobs out there, if only all the unemployed would get off their lazy arses and look for them.

There are already more people needing work than there are jobs. This problem can only increase as the population continues to rise, and not just because of economic migrants but because the UK birthrate has gone up.

All we hear from all three main parties is that we need "economic growth" to generate jobs, but what jobs? So far, the notion of "growth" seems to hinge on consumerism; if people go and and buy stuff, any old stuff, it will get things moving again, like a big dose of laxative. When money is tight, most people don't spend money they haven't got. Apart from a friend with a handbag fixation, I hardly know anyone who's keen to go shopping. Producing and selling non-essentials in large quantities might keep the transport and plastics industries busy, but where does that get us? More traffic, faster consumption of fossil fuels, more rubbish to get rid of. If you were to audit the real cost of many of the jobs in retail, I think that you'd find that they actually cost more than paying people not to work.

So if you're selling, you need people to keep buying, and they're not. In 2009, Personnel Today, a publication for human resources professionals, reported that "Job availability falls at fastest rate to hit 12-year low", and that "The nursing, medical and care sector remained the only sectors to avoid the reduction in vacancies":
Mike Stevens, partner and head of business services at KPMG [accountants] said: "Yet another month of desperate news on the UK employment front, although the rate of decline in permanent placements has slowed. Most employers are now looking at ways to cut cost to mitigate falling sales revenues. High on the list of costs, for what has largely become a service economy, is wages." He said most employers were considering redundancy plans. "The best employers are already looking at more imaginative ideas, for example by inviting staff to volunteer to reduce pay in return for a shorter working week during the recession," he added. The Report on Jobs draws on survey data provided by recruitment consultancies and employers to a monthly indication of labour market trends. Earlier this year KPMG said it was urging staff to take sabbaticals on one-third of their pay to save their jobs.
Nothing much has changed over the last three years, except that increasingly desperate politicians from all three main parties are trying harder to convince us that they know what they're doing, when most of us can tell than they don't. Maybe they ought to just shut up for a while, and consult a few people who might have something to tell them, like Robert Skidelsky, a member of the House of Lords and Professor Emeritus of Political Economy at Warwick University:
Aristotle knew of insatiability only as a personal vice; he had no inkling of the collective, politically orchestrated insatiability that we call economic growth. The civilization of “always more” would have struck him as moral and political madness.

And, beyond a certain point, it is also economic madness. This is not just or mainly because we will soon enough run up against the natural limits to growth. It is because we cannot go on for much longer economizing on labor faster than we can find new uses for it. That road leads to a division of society into a minority of producers, professionals, supervisors, and financial speculators on one side, and a majority of drones and unemployables on the other.

Apart from its moral implications, such a society would face a classic dilemma: how to reconcile the relentless pressure to consume with stagnant earnings. So far, the answer has been to borrow, leading to today’s massive debt overhangs in advanced economies. Obviously, this is unsustainable, and thus is no answer at all, for it implies periodic collapse of the wealth-producing machine.

The truth is that we cannot go on successfully automating our production without rethinking our attitudes toward consumption, work, leisure, and the distribution of income. Without such efforts of social imagination, recovery from the current crisis will simply be a prelude to more shattering calamities in the future.
Dambisa Moyo thinks that things will get much worse, if they ever get better, because the Chinese have increasing influence on world economics, and a new report commissioned by Population Matters has found that projected population growth in the next 22 years could cost UK taxpayers over £1trillion gross in additional government spending and add a billion tonnes to our CO2 emissions. Cutting housing benefit to under-25s, even if it could be morally justified and saved money, seems pretty pathetic as a proposed solution to our problems.

Sound bites won't cut it, Mr Cameron, so be quiet until you have something sensible to say. You too, Milibland and Ball.

Sorry. I'd like to sound optimistic, but it's not easy. Essentially, what it boils down to is that there are too many of us, we need to have fewer children, and we have to get used to much simpler life styles. Money won't solve everything, but it helps to spread it around.
This planet has — or rather had — a problem, which was this: most of the people living on it were unhappy for pretty much of the time. Many solutions were suggested for this problem, but most of these were largely concerned with the movement of small green pieces of paper, which was odd because on the whole it wasn't the small green pieces of paper that were unhappy.
Douglas Adams, The Hitchhiker's Guide to the Galaxy

Postscript: I don't always agree with Polly Toynbee, but this time I do.
The Smith Institute reports that 95% of the £1bn rise in housing benefit this year is paid to people in work. Only one in eight people drawing the benefit is out of work; the rest are low earners. The cost is not about feckless people but the housing crisis, the failure to build social, rented or private housing over the last three decades.
Thanks to Lisa Tilley for the Skidelsky link

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