From: riaedwards@halls1.cc.monash.edu.au (AUDREY EDWARDS)
Subject: Re: Currency problems
Organization: Halls of Residence, Monash University 
Date: Mon, 12 Oct 1992 03:03:08 GMT

In article <26691@castle.ed.ac.uk> fofp@castle.ed.ac.uk (M Holmes) writes:
>From: fofp@castle.ed.ac.uk (M Holmes)
>Subject: Re: Currency problems
>Date: 8 Oct 92 15:50:25 GMT

>riaedwards@halls1.cc.monash.edu.au (AUDREY EDWARDS) writes:

>>Seriously, at what stage does the 'free market' (with its benefits and 
>>pitfalls) end, and the state commence basic protection of those it considers 
>>in need?

>Well, if you want to believe some current advocates of the welfare state
>then anyone earning less than average income is by definition "poor".
>This kind of thinking leads to the prevalent nonsense of collecting
>taxes to redistribute to such obviously poor people as:

>1) Home owners. (Mortgage Interest Relief)

>2) Married couples. (I guess it's just intuitive that single living is
>cheaper than joint living).

>3) Every child in the country (since we apparently hand out child
>benefit whatever the earnings of the parents).

>and god alone knows what other nonsense.


>The result is that production, trade, and employment are taxed to
>subsidise folks who could manage well enough on their own. The result is
>that a few folks do better than otherwise at the cost of more
>unemployment, a slower economy, and less production.

>Now that it's becoming painfully obvious that government spending is way
>too high (estimate for borrowing next year: 50 billion, or if you prefer,
>around 25% of the government tax-grab) it's got to be time to look
>carefully at the welfare state. Surely most people would agree that it'd
>be better to live wiythin our means and start targetting the tax money
>at those folks who are, beyond the doubt of almost anyone, actually
>poor. 

>If it can be done in Sweden, then it can surely be done in the uk.
>There's no doubt that some folks will be screaming, but we'd all be
>better off with an economy that generates wealth than with one that
>leaves us to rely on borrowing.

>>Audrey.

>FoFP

Apart from winging on about inappropriate benefits, you have not 
answered my question (re. where does the 'free market' end?). 

The great difficulty with the welfare state only providing assistance to "
those folks who are, beyond the doubt of everyone, actually poor" is that if 
one tried to do a survey of who people think this type actually is there 
would be remarkably little concensus. Just to give you two examples - 

1) Should the state provide assistance to substance abusers? The antis say 
that it is the abusers' own faults, that it's maintaining their addition, 
and that it does not encourage them to change. The pros say it is an illness 
like the socially acceptable (like lung cancer) ones; it helps keep them out 
of crime (thus reducing costs of imprisonment); and it can keep families 
together (again reducing potential costs to state).

2) More contraversially, mortgage interest relief (a subject I know 
something of, as a solicitor acting for building societies in the UK). 
MIR at present is paid on interest only after 6 months of claiming 
benefits. At that stage, it is likely arrears have built up to sufficient 
levels to justify an application by the mortgage lender for repossession (
the courts have discretion only to delay it for a short period). BS's are 
at present content to accept the interest payment only, as there is no 
market for the repossessed houses, and it is looked on favourably by the 
government. If MIR was abolished, then considerably more repossessions 
would occur ( the BS's own view based on the statistic that at present it is 
calculated that over 10% of mortgages are in significant arrears due mostly 
to redundancy, the drop in house values preventing sale, and the break-up of 
families.) As there is little council housing left, and very little 
private renting (especially for families) there is the very real possibility 
that the abolition of MIR would lead to an great increase in homelessness 
and the consequent social problems. So perhaps MIR is a very cost effective 
insurance!

The point I'm making is that few people  (if any) are sufficiently 
educated as to whom the recipients of benefit are, and of the 
consequence of removal to make sensible decisions. Thus your initial 
comment that we should target benefits to those we all agree are "poor" 
is a dangerous one.    

Anyway, if we take your initial thread, is not all welfare payment wrong (
in free market terms)?

Audrey.