Which is worse: work or welfare?

by Robin Thorpe

The viability of full-employment has been debated since the industrial revolution. Ever since we began replacing human labour with machines, people have sought to create more efficiency in the workplace. Agriculture, manufacturing and construction now need fewer operatives to generate a higher yield. Individuals are increasingly employed in offices and call-centres dealing with the flow of information and money. Those without the skills or opportunities for this type of work are supported by the community as part of a philanthropic welfare state.

The Tory-Lib Dem government seems to have decided that the burden of welfare is too great and that work should be made “more attractive”. This ideological goal is to be achieved by reducing the extent of benefits available to the unemployed (whether through ill-health, redundancy or lack of skills). However, the reality is that often, although not exclusively, people would prefer to be in work, but do not have the opportunity.

At the same time as cutting benefits, the government has chosen to reduce the funding allocation of local authorities, universities, police, military and other public sector employers. These cuts will increase unemployment. The NHS is also being asked to make efficiency savings, which again will probably result in higher unemployment. And further private sector redundancies could arise in businesses that rely on public sector contracts. A by-product of high unemployment is an increase in the welfare bill.

Unemployment is a logical and unavoidable by-product of the type of efficiency savings that the Tory-Lib Dem government is calling for. Reducing public spending and decreasing taxation, to allow for financial growth and increased spending, may sound rational in a Whitehall office. But they fail to take account of true value for money.

In a free market, full employment is not a viable reality. But the government is seemingly pinning its hopes on the private sector picking up the slack in the employment market. But what if it doesn’t? What if the balance sheets show that the current staffing levels are the most efficient? What if the value-added services, previously provided by the public sector, cannot be provided at an efficient cost by the private sector?

The government’s gamble could well result in enormous damage to the health and wellbeing of vast swathes of society. There is recognised evidence that shows that being in work is good for your physical and mental health and is an effective means of reducing poverty and social exclusion. With appropriate support many of those who have the potential to work, but are currently not working because of illness, disability, or social disadvantage, can access the benefits of work. But instead the government is reducing education and training support.

The obvious question is: “Is it more efficient to pay people to be in work or to pay them to be out of work”? Right-wingers might propose that we should not support them at all. Perhaps someone could rewrite Swift’s Modest Proposal to reflect the current crisis afflicting the socially disadvantaged.

Unless government regulates the market in some way, we will see a widening of social division.

Let us assume that private sector organisations take up the mantle and provide some of the services previously offered by the state. And that entrepreneurial business rise up and service some gaps in the market. Surely this will be at an increased cost to the individual? Is that not the essence of the private sector – to maximise profit for shareholders?

Does private enterprise actually do the same job more cost-effectively than a public body? Not without substantially reducing staff remuneration and/or work-related benefits. If this is the case, is it more cost-effective or just cheaper?

Price and value are different entities. If the services that communities enjoy are not to suffer, private enterprise must step into the breach. It follows that if prices go up then some individuals will be without that service. Others will be left with no choice as to whether they pay for a service, especially those living on reduced benefits. There will be no training or support to enable them to re-enter the employment market, as they simply don’t have enough money. The only winners are private investors who pocket a tidy profit.

The crux of the Tory-Lib Dem argument is the creation of profit, and therefore tax revenue, which results in increased investment, which in turn equals more jobs. This is their economic model. But can this model deliver full employment? If not, then the cost of this model is damaging to individuals’ and, by extension, societal, health and well-being.

The key argument against the Tory-Lib Dem economic model is that it benefits mainly venture capitalists: the few and not the many. Is this the way that the big society is going to work its way out of recession?


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17 Responses to “Which is worse: work or welfare?”

  1. William says:

    What nonsense.Do you want to bring back Clause 4?The NHS has had money thrown at it,and almost no output growth.In the years after the last two recessions, there were 3 new private sector new jobs for each 1 lost in the public sector.The man from Fife hid unemployment by calling 1.36 million ‘incapacitated’, who now admit they are not,stuffed an extra 1 million into public sector non jobs, and kept the economic illusion going by flooding the labour market with immigrants.Compare and contrast the GDP per capita of Russia and China with the UK.

  2. theProle says:

    It is a considerable while since I’ve seen anything as economically illiterate as this piece in print

    Let me explain.

    1) In order to understand market driven employment, you have to look at the big picture. When people are made redundant due to new technology, this is making it possible to produce more with the same number of people. Ultimately, what will happen is there will be more companies making more things with the same number of people in total – which cuts the cost of things to buy (i.e. everyone gets richer relative to their wage). It is a fallacy to look at one company discharging people, and assume that this is bad – provided these people are absorbed into useful work elsewhere, it is good. The real objective of a capitalist society is to produce the maximum amount of production from each person.

    2) Many of the current unemployed, particularly the NEET’s are unemployable. They are not willing to work. I work running a factory shift. I regularly take new starters on who are dismissed after a day or two because they won’t take an interest in actually doing some work. The best thing we could do for these people is to cut their benefits – if they were hungry, then they would work. Since they currently all seem to have new mobile phones, and expensive trainers, I assume they are already funded sufficiently. I have no problem helping the genuinely needy, but it makes my blood boil to think my taxes are used to keep people who could work from working…

    3) The public sector is hopelessly inefficient. Particularly because of the problems of dismissing incompetent people, they tend to be replaced without being sacked. Private companies, due to the need to remain competitive, and make money, generally sort these problems out. Therefore it is often possible to privatise public sector activity, and both reduce costs and let the private firm turn a profit. Where this doesn’t work well is monopolies – this is why the railway system has benefited little (if atall) from privatisation, despite considerable government largess compared to the days of BR.

  3. Chris says:

    @William

    “What nonsense.”

    No, your comment is the nonsense. And use the space bar after punctuation marks, FFS!

    “The NHS has had money thrown at it,and almost no output growth”

    Why then did it take 10 months to get angiogram in 1995 and 10 days in 2010?

    “In the years after the last two recessions, there were 3 new private sector new jobs for each 1 lost in the public sector.”

    You claim to have a cantab 1st in economics and you’re quoting this drivel? How many people work in the private sector compared with public sector? How many of the jobs in the figures you quote above are from privatization of public services?

    “The man from Fife hid unemployment by calling 1.36 million ‘incapacitated’, who now admit they are not”

    No, the lady from Grantham did that.

    “stuffed an extra 1 million into public sector non jobs,”

    I’d contest the 1m figure but how many of those non-jobs were doctors, nurses, police officers, teachers, medical administrators, school secretaries, university lecturers?

    “and kept the economic illusion going by flooding the labour market with immigrants.”

    LOL, do you actually know anything about economics?

    “Compare and contrast the GDP per capita of Russia and China with the UK.”

    Yeh because we’re so similar to those countries…

  4. Chris says:

    @theProle

    “It is a considerable while since I’ve seen anything as economically illiterate as this piece in print”

    Its been a while since I’ve seen such condescending, pig headed wank dressed up as gospel in a comments section. And I read the Daily Fail comments for fun.

    “In order to understand market driven employment, you have to look at the big picture.”

    Ermm, did you read the article?

    “The real objective of a capitalist society is to produce the maximum amount of production from each person.”

    That is why we shouldn’t be a capitalist society.

    “Many of the current unemployed, particularly the NEET’s are unemployable. They are not willing to work. I work running a factory shift.”

    What do you actually make?

    “I regularly take new starters on who are dismissed after a day or two because they won’t take an interest in actually doing some work.”

    Is the work interesting?

    “The best thing we could do for these people is to cut their benefits – if they were hungry, then they would work”

    Fair enough that is your opinion but we had unemployment before the welfare state, didn’t we? Were the Jarrow marchers just a bunch of slackers?

    “Since they currently all seem to have new mobile phones, and expensive trainers, I assume they are already funded sufficiently.”

    JSA for under 24s is £51 a week. Actually living on that on your own is a hand to mouth existence, we pay the poorest OAPs a minimum income of £132 a week. And isn’t just possible that these scroungers have indulgent parents? Or nicked/went to primark for the trainers?

    “I have no problem helping the genuinely needy”

    Oh the usual cop out. Who do you class as the genuinely needy? There are 5 jobseekers for every vacancy, young people are in an especially tight spot competing with each other for starting roles but also older, more experienced jobseekers. But hey let them starve, they’re just lazy.

    “but it makes my blood boil to think my taxes are used to keep people who could work from working…”

    So, if we time limited dole to 6 months would we suddenly see the slackers get out of bed and down to hammer on your factory gate for work?

    “The public sector is hopelessly inefficient.”

    Urban myth.

    “Particularly because of the problems of dismissing incompetent people, they tend to be replaced without being sacked. Private companies, due to the need to remain competitive, and make money, generally sort these problems out.”

    More of the same urban myth.

    “Therefore it is often possible to privatise public sector activity, and both reduce costs and let the private firm turn a profit.”

    What like Railtrack? The privatized public service can turn a profit but generally by reducing the service and pay & conditions of the average worker. Take British Gas, they used to come round and fix your boiler for free if it took less than 30 minutes in the 70s. Now, they want £170 to even turn up.

  5. William says:

    Chris, you have a problem.Capitalism works,GDP per capita in democratic capitalist countries is way higher than the state controlled ‘capitalism’ of your hero countries.I guess theProle and I know a fair bit about wealth creation from our own experience.You may have a point about Railtrack, but the privatisations of BT, gas, electricity and water produced huge gains for the taxpayer and consumer.As for the 3 new private sector jobs for each 1 lost in the bloated public sector, it’s in the latest Red Book,confirmed by the Treasury as the experience of the aftermath of the last two recessions,and spotted so far only by the Spectator.I seem to remember Mr. Blair won 3 times by embracing capitalism.

  6. Chris says:

    @William

    “Capitalism works,GDP per capita in democratic capitalist countries is way higher than the state controlled ‘capitalism’ of your hero countries.”

    Please do tell me my hero countries? You cited China in your comment above, which is the poster child for state controlled capitalism.

    “but the privatisations of BT, gas, electricity and water produced huge gains for the taxpayer and consumer.”

    I don’t think you know very much about the privatized utilities. A recent report by the energy regulator was damning in its criticism of the privatized energy firms. Going as far as floating the idea of re-nationalising energy generation by recreating the CEGB. With water, since privatization in 89 its cost has risen 42% in real terms with zero investment in infrastructure. And one quarter of all water is lost due to leakage.

    “As for the 3 new private sector jobs for each 1 lost in the bloated public sector, it’s in the latest Red Book,confirmed by the Treasury”

    Yes, and when that figure was first quoted in the media the immediate question was how many of those jobs created were straight swaps for public to private by privatization.

    You dismissed the above article as nonsense yet don’t seem to have understood one of its main points, how does it help an OAP if their carer is sacked and service withdrawn if that carer then gets a job in the retail industry. There is more to life than the bottom line and the effect of these cuts won’t be reflected by just gdp figures.

    “I seem to remember Mr. Blair won 3 times by embracing capitalism.”

    He embraced the Thatcherite consensus, which blew up in Autumn 2008 when we managed to recreate the massive financial crisis of times passed. We need to form a new consensus based around a more distribution of wealth and power.

  7. William says:

    Chris, you need to calm down and move to another country.What is your illiterate ‘more distribution of wealth and power’?The electorate will not have it.I suggest you start with an ice axe for Comrade Brown ,who ruined the Labour party and the UK.

  8. Chris says:

    “move to another country”

    You need to move to another party.

    “What is your illiterate ‘more distribution of wealth and power’?The electorate will not have it.”

    LOL, I missed out the key bloody word so how do you whether the electorate will have it or not?

    “I suggest you start with an ice axe for Comrade Brown”

    I’m no Brownite but it won’t do the Labour party any good to allow the economic narrative of the past 13 years to become the tory one of endless profligacy.

    “,who ruined the Labour party and the UK.”

    WTF? He was only leader for 3 years, he must have worked fast! Blair has far greater responsibility for disillusionment with the Labour Party, or don’t tell me you think Iraq was a bloody good idea?

  9. Robin Thorpe says:

    I’m glad that my article prompted some debate about the principle of paying people to be in work but disappointed that some thought it would be acceptable to let people starve to force them off welfare. No one seemed to pick up on (what I intended to be) the central tenet of the piece, which is that people’s health is substantially better if they are in work rather than on welfare. TheProle stated that “It is a fallacy to look at one company discharging people, and assume that this is bad – provided these people are absorbed into useful work elsewhere, it is good”; which is a fair statement but it also reinforces my question on whether a private market can provide full employment? The other main principle I attempted to bring into the discussion, which Chris did pick up on, was the value-added nature of many of the services that will be cut as a result of efficiency savings. Social care, teaching assistants and community involvement programs are not essential front-line services, but do help people to lead a fuller life. There are many other things that cannot be rationalized into economic terms.
    I have been criticized for being economically illiterate but I made no boast about my credentials or experience – that’s why this brief essay is in the Grassroots Section – I am neither a politician nor an economist. It is perhaps because I am not an economist that I can look beyond the bottom line and see the human consequences that may arise from “efficiency savings”. I have made no manifesto here for a centralized state, although I do come at this problem from a socialist angle, but was merely asking if the socio-economic ramifications of massive cuts to public expenditure had been considered. If unemployment increases in the long-term not only will the welfare bill increase but so will the cost of running the NHS, as the health of an individual has been shown to be affected by their employment status. The status of parents will have an impact on their children; this will affect the running of the education system.
    I actually agree that a massive centralized state is not the answer, it is not the job of Whitehall to directly provide jobs; but I would expect central government to have a plan about who is going to provide employment and to have some plans for ensuring that NEETS are employable in the future. The plan at the moment seems to be to “free” the market to determine employment and training for all (and we know what a great job the market did with the financial industry). If, therefore, the private market is not capable of providing full employment, which is worse, paying someone to work or paying them to stay at home.

  10. William says:

    Chris,some facts.Thatcher spent 4 years in opposition getting Keith Joseph to analyse the problems.She then won 3 times, and her mantra of abolition of exchange control,union legislation, lower income tax was adopted by Blair, who also won 3 times.Did you notice that Cameron called himself ‘heir to Blair’? New Labour went off the rails,post 2000,when Brown increased public spending at a rate way in excess of GDP growth, which caught up with him he was PM.For Labour to move from a party of opposition to an alternative government, in the eye of the electorate,it needs to have a positive agenda,which openly disowns the failures of Gordon Brown,and the public perception that Labour is tied to corrupt Scottish poliitics.I am not moving from the South Downs.

  11. Chris says:

    @William

    I notice yet again you didn’t answer any of my questions, oh well. One thing though PUT A SPACE AFTER PUNCTUATION MARKS.

    “some facts”

    There are no facts only interpretations.

    “Thatcher spent 4 years in opposition getting Keith Joseph to analyse the problems.”

    She spent 4 years presenting as smaller target as possible, she did not start in 1975 attacking trade unions or calling for wholesale privatization. Like all good leaders of the opposition she kept quiet on specific, detailed policy.

    “She then won 3 times”

    Yep, that is a fact but you’re deluded if you think it was all down to her and her policies. She was lucky. her poll ratings in the first term were terrible until the Falklands, she came to power as North Sea oil started paying massive amounts in tax, the main opposition party split.

    “and her mantra of abolition of exchange control,union legislation, lower income tax was adopted by Blair”

    Yes, those three were her only policies….

    “New Labour went off the rails,post 2000,when Brown increased public spending at a rate way in excess of GDP growth, which caught up with him he was PM.”

    People wanted increased public spending, Blair campaigned on saving the NHS, reducing child poverty, reducing school class sizes, etc. New Labour went off the rails in 2003 when Blair went into Iraq, how much did that cost? Moneywise? in lives? To blame everything on Brown is sophistry; Blair was the one who went into Iraq and lied about it, he introduced tuition fees having claimed he wouldn’t, Blair introduced all the authoritarian “anti-terror” laws.

    “which openly disowns the failures of Gordon Brown,and the public perception that Labour is tied to corrupt Scottish poliitics.”

    WTF? Corrupt Scottish politics??? WTF? Please explain that one!

    “I am not moving from the South Downs.”

    I’m not suggesting you move house just to a different party, one where you can mutter to the other members about how great thatcher was.

  12. William says:

    Chris,which political party had an elected Westminster MP , from a Scottish seat,commit suicide,due to threats ….? I hope I have explained that one.Most people want increased spending but are constrained by their income and their bank manager.You must live in Monaco.The fact is,not an interpretation,that Labour lost the 2010 general election,under a new leader elected by nobody,having won the previous three.

  13. Chris says:

    @William

    “which political party had an elected Westminster MP , from a Scottish seat,commit suicide,due to threats ….? I hope I have explained that one.”

    Nope, are you talking in riddles now?

    “Most people want increased spending but are constrained by their income and their bank manager.”

    The whole point is that up until the financial crisis our spending was well within the constraints of our income and bank manager.

    “The fact is,not an interpretation,that Labour lost the 2010 general election,under a new leader elected by nobody,having won the previous three.”

    No, that is an interpretation. You can easily argue that the tories lost 1997, on Black Wednesday, rather than Labour winning; all that Labour needed was a decent candidate and some coherent policies. Also, while the above maybe fact it is your interpretation of those facts that it was all down to Brown.

  14. William says:

    Chris,Gordon McMaster MP,Paisley South, killed himself, aged 37, on 27 July,1997 following pressure from 2 MPs he named.Since 1997,under Brown’s financial mismanagement, the UK had a balanced budget in one year only,2000.Nobody elected him to be leader of the party,hence briefly PM,and the party lost the 2010 general election.Fact.His replacement did not receive either ,in votes, a majority of the membership or the parliamentary party…

  15. Chris says:

    @Robin

    Thanks for the further explanation.

    @william

    Going ever further off topic.

    “Gordon McMaster MP,Paisley South, killed himself, aged 37, on 27 July,1997 following pressure from 2 MPs he named.”

    Sounds like a very sad episode but has got bugger all to with Labour’s image or Brown’s, you digging it up and using to attack Brown just shows how far out of touch you’re with mainstream opinion.

    “Since 1997,under Brown’s financial mismanagement, the UK had a balanced budget in one year only,2000.”

    It wasn’t mismanagement, it was a conscious decision to borrow money to spend on infrastructure investment. This wasn’t money borrowed to pay for day-to-day government costs or welfare benefits or MPs expenses. It was invested in the countries infrastructure; building or upgrading a hospital, railway, city centre, etc will at the very least improve the lives of the people using it and almost certainly generate income over the long term.

    You’ve claimed previously to have a well paid job in the city and thus an “excellent understanding of financial markets” yet from your comments you seem to have very little understanding of finance, investment and debt.

    “Nobody elected him to be leader of the party,hence briefly PM,and the party lost the 2010 general election.”

    No other Labour MP got enough nominations to force a ballot, Brown was a elected by default. You’re just reheating old anti-Brown propaganda, its pathetic. The reasons for Labour losing the GE are numerous but Labour not having a ballot in 2007 wasn’t even in the top 100. That you’re dragging it up again demonstrates your personal issues with Brown.

    “His replacement did not receive either ,in votes, a majority of the membership or the parliamentary party…”

    Yawn, the procedure for electing Labour leaders has been in place for decades and was well known before, during and after the contest. You’re attempting to undermine Ed victory is frankly, yet again, pathetic (a recurring theme with you); he won 30,000 more votes than David, Ed has the biggest electoral mandate from the Labour Movement of any leader in modern times. Unlike previous Labour leaders there was no coronation or union block vote, instead there was a 5 month long contest in which at least three of the candidates had a genuine chance of winning.

  16. William says:

    Chris,corrupt Scottish politics?Tommy Sheridan, found guilty of perjury.OK, expelled from the Labour party, but hardly an advertisement for the Left.Labour has to lance the boil of Scotland to have any chance of electoral success.

  17. Chris says:

    @william

    Even for you this is clutching at straws, Sheridan was expelled from Labour in 1989! Its not like he was the Labour candidate for a high profile public office, unlike Archer was for the tories.

    “Labour has to lance the boil of Scotland to have any chance of electoral success.”

    Yeh, I’m sure that is really damaging them in Scotland. A far better idea would be for Labour to campaign against corruption in politics generally, Westminster is packed full of lobbyists and corporate goodies for those in or potentially in power. Maybe you should lance the boil in your brain before commenting further.

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