It is somewhat a paradox that Rishi Sunak, the most generous chancellor to ramp up the support of the state has become vilified for his and his family’s financial success and actions to mitigate and reduce personal and business tax liabilities. The actions for which he has been criticised are not new and were certainly not brought to light when he was handing out furlough payments and benefits to individuals and businesses. Every time a benefit has been attracted there has been baying of mean-ness. But we need to be aware of three important things:
Firstly, when welfare payments are given or increased it is not the state’s money. It does not come from a magic money tree. It comes from either money borrowed by the state, which will be repaid by future generations paying tax, or by taxing current generations. Whether we like it or not money is being transferred from financially productive people to unproductive people. At each end of the spectrum of rich and poor this is fair and reasonable, but most individuals fall in the middle where the tax paid and the benefits received can make a difference in both directions.
Secondly, those calling for greater welfare payments tend to be politicians and activists that are seeking to receive power from a grateful group of recipients.
Thirdly, bureaucracy is an expensive barrier to welfare and change that eats cash up in the middle between tax collection and welfare payment. The more complex the system the more the bureaucrat benefits. We repeatedly see how inefficient delivery of benefits by the state is.
In contrast to this we tend to see great efficiencies in the delivery of welfare and services by charities. But these rely upon benefactors rich and poor, and in this way wealth is transferred by popularity of a cause rather than need. But considering my second point above is this any different than the politicians that seek popularity?
Government can increase and decrease poverty with good and bad policies. But throughout my lifetime I have seen a key area of government failure – the provision of affordable housing. Since 1990 we have seen added to this failure a repeated failure to plan and ensure the future provision of affordable energy. These two failings are significant and cut across all parties and are a significant factor in increasing poverty. Too much reliance has been put on business and the market place to provide without effective guidance, control or regulation steering progress. My fear is that we will soon see a third failing, the ability to ensure effective and affordable water management and supply. The repeated inability of governments to address and resolve these issues within a term of office, or at least turn the tide is the greatest political failing of our time. I fear that government can only turn these issues in a timely manner by either operating on a wartime footing or by a massive grand plan emulating the New Deal that Franklin D. Roosevelt created.
What role should the state have in supplying essential and non-essential needs? The Romans had an idea that the state should supply “bread and circuses”. My fear is that politicians have become effective only in providing the circus.