[This is the third in a short series of articles tackling the delusion of full employment; the previous two are Would Shakespeare be employable today? followed by Iain Duncan Smith and the fantasy of making work ‘always’ pay. Those interested in a deeper analysis of real economics should also read Who the Dickens was Major Douglas?]
The surreptitious use of workfare – without that name actually being used – was the only negative aspect of the recent Diamond Jubilee celebrations; the Communist newspaper the Morning Star reported that it a disgrace, and for once the comrades weren’t wrong. Although there have been and are ongoing attempts to bring it in here, the modern concept originated in the United States. Some though might argue that it has its roots in the workhouse, which is happily no longer with us, except, alas, in spirit.
Mitt Romney’s pep speech about single mothers and the dignity of work is typical of the blindness of even mainstream politicians to the real nature of the so-called problem of unemployment.
Along with the war on drugs and three or four other taboos we needn’t mention here, full employment is the biggest delusion of our age. In fact, it is probably true to say that full employment is the greatest political delusion of the 20th Century and now on into the 21st, because rather than being based on any economic or practical consideration, it is based on a moral one, or more accurately a pseudo-moral one, namely that people who are not gainfully employed are a burden or even a parasite on society - the undeserving poor.
There are of course exceptions to this: children, all the way up from babies to college and university students; the elderly, those who have contributed all their lives and are now retired; the chronically disabled, including those suffering from severe mental afflictions; people who have suffered some temporary disability that keeps them out of the workplace for lengthy periods, such as a severe accident. Then there are the undeserving poor. On the face of it, this argument is powerful and persuasive, but like so many superficially persuasive arguments, it does not stand up to the slightest critical analysis.
To begin with, there are many people who although ostensibly of independent means, produce absolutely nothing, and are actually a burden on society, albeit a concealed one. Then there are others who appear to be gainfully employed but are also a burden on society. Let us examine one example of each. There are the playboy types, men – and not a few women - who are extremely wealthy, having been born into wealth and privilege. No, not the Queen of England, who more than earns her keep, but the type who have nothing better to do than play high stakes poker all day long.
These people produce nothing; the argument that they spend money and thereby generate employment is facetious. Then there are those who do work and earn, some, perhaps many of them are industrious, but that doesn’t mean they contribute to the benefit of the community. To take an extreme example, burglars and pickpockets can be industrious: they may work long hours and take great personal risks. Not only that, they create employment: for the police, probation services, prisons, etc. We would all be better off though having no predatory criminals and a lot fewer police and gaolers.
There are people who play poker all day long, literally, some even win tidy sums at it regularly, ditto those who gamble on the horses, and those who play the stock market. There is a role for speculation in any capitalist economy, but everyone bar the fund managers and those would work with them would be far better off if all these funds were wound up and people were left to invest on their own account, or to allow the government to do it for them. How else is it that a parrot selecting shares with its beak can outperform 70% of so-called professional investors? When the government talks about creating jobs or employment, it never takes any of this into consideration. Now let us look at one person who thinks she has a solution to the phony problem of unemployment.
Her name is Katharine Hirst, and in 2007 she unleashed upon the world Working Welfare which is subtitled Welfare recommendations for the UK based on the U.S. reforms of the 1990s. This pamphlet was published by the Adam Smith Institute. Here are some of her observations:
Page 3: “Over 3 million working-age people in Britain have received benefits for over a year. Among other social ills, worklessness breeds inter-generational dependency, health problems and crime. The system as it stands does not incentivise work and in fact, through overtly high levels of provision, low levels of expectation and mind-boggling complexity, it actively deters claimants from getting into work, draining claimant, employer, and government of time and money.”
Under the American system: “if claimants wanted support they had to do something in return. ’Work; could be any of the following: unsubsidized or subsidized employment in the private or public sector, work experience, on-the-job training, community service, vocational training, providing childcare services and time-limited job search...The best results occurred where this was backed this backed up with tough sanctions for non-participation.”
Page 4: Recommendations include: “All working age people not meeting national disability criteria would face immediate work requirements – no work, no benefits.” She goes on “As a rule, subsidized work or compulsory work experience is better than training. If no work is available, the claimants should undertake community service.”
Page 5: “All conditions placed on welfare recipients should be backed up with tough sanctions”.
“If work does not pay additional support should be available”.
When she says the British system is too complex, few would disagree, but examine her arguments closely and you will realise they are not economic arguments, but moral and for the most part pseudo-moral ones.
“Among other social ills, worklessness breeds inter-generational dependency, health problems and crime.”
No. Lack of income, of purchasing power, of money, breeds these things. Shortage of purchasing power is undoubtedly a motive in many crimes committed purely for financial gain, but not for other crimes like rape, arson or serial murder.
“The system as it stands does not incentivise work and in fact, through overtly high levels of provision, low levels of expectation and mind-boggling complexity, it actively deters claimants from getting into work, draining claimant, employer, and government of time and money.”
This is partly true, although anyone who has ever been obliged to exist on benefits for any time will almost certainly take issue with the claim that the levels of provision are high in any sense of the word. Furthermore, the system should not incentivise work for the sake of work, rather if it does incentivise anything, it should incentivise productive work.
Regarding the American system, which obviously she admires: “if claimants wanted support they had to do something in return. ’Work; could be any of the following: unsubsidized or subsidized employment in the private or public sector, work experience, on-the-job training, community service, vocational training, providing childcare services and time-limited job search...The best results occurred where this was backed this backed up with tough sanctions for non-participation.”
Again, this is a pseudo-moral argument; she is saying in effect that claimants had to work to earn their benefit, but of course if they had to work to earn it, it was not a benefit. Presumably they were signing on, in UK parlance, because they were unable to find suitable paid work, yet when they claimed state benefit, welfare or whatever, they were paid this only if they did something for the state.
The reference to “subsidized employment in the private or public sector” is particularly telling, subsidised by whom? The taxpayer, presumably. So the taxpayer is going to pay an employer in order to employ an unemployed person in a job which does not pay a living wage. In other words, it is okay to subsidise employers, but not the unemployed.
Then there is “work experience, on-the-job training, community service, vocational training”. Work experience for what? Training for what? Community service – unpaid?
“All conditions placed on welfare recipients should be backed up with tough sanctions”.
Such as: prison sentences? Public floggings?
In other words, if these wretched people don’t perform some work, perhaps digging holes and filling them in again – as happened in British labour camps in the 1930s – they will not receive any benefit at all, or will be docked substantial tranches of it.
“If work does not pay additional support should be available”.
Again, these wretched people should be forced to work at any cost, even if we have to subsidise employers to take them on.
There is much more in this vein, for example on page 14 she lauds the so-called reforms that were instituted in Wisconsin in 1987, which included employer subsidy to help cover training costs.
This is the same sort of nonsense that is espoused by her American cousin, Robert Rector, who a while ago told the BBC’s Panorama programme that there is no poverty in America.
Before we proceed any further with our analysis we should look at the vested interest behind this specious pro-workfare rhetoric, beginning with Rector. He is widely regarded as some sort of expert on so-called poverty issues. He is also, at the time of writing, a senior research fellow with the Heritage Foundation. This is a free market think tank, and its patron is none other than Margaret Thatcher. The Heritage Foundation is a not-for-profit, a tax exempt foundation financed primarily by the wealthy to promote their ideology, and Rector is a career academic, one of many on both sides of the Atlantic, who live off their largess.
While the people who endow these organisations have the best of intentions – which of course have been known on occasion to pave the road to Hell – they don’t seem to realise that they are doing exactly what they oppose, in particular they are subsidising the likes or Robert Rector, who has never had a real job in his life.
This is rather typical of these free market academics; Rector has more in common with avowed Marxist Richard D. Wolff than with any of the entrepreneurs he clearly greatly admires.
Less is known about Katharine Hirst, but it remains to be seen if she has ever had a proper job either.
Academics of this type live in a world of privilege and pampering. They take long sabbaticals, their research, books and other publications are heavily subsidised, and they contribute nothing to increase the actual wealth of the community.
All these not-for-profits - whatever their professed ideologies - have their tax exempt funds invested in equities, government bonds and so on, and while they pay no tax, they receive interest in their ill-gotten gains, which is part of the problem.
The Adam Smith Institute that published the Katharine Hirst pamphlet functioned as a charity from 1981 to1991; it says that today most of its funding comes from private individuals. There is no reason to dispute this claim because it operates on a shoestring, certainly in comparison with the Heritage Foundation. It certainly generates no meaningful income from sales, because although Working Welfare was theoretically offered for sale, it remains to be seen if it sold more than a handful of copies; it was given away at certain political meetings, and probably still is. It can also be downloaded free.
While Libertarian organisations like the Adam Smith Institute have seen through the delusion of the war on drugs, they are totally transfixed by the even more powerful delusion of full employment and what Major Douglas alluded to as the ethos of punishment and reward that goes with it.
Indeed, this ethos of punishment and reward lies at the very heart of Working Welfare: these wretched people must do something in order to be paid a pittance, otherwise let them starve.
Fortunately, this ethos though held widely is not universal. For one thing, organised labour realises that workfare amounts to cheap labour, as does the scandalous practice of exploiting unpaid interns.
One of the comrades from the Socialist Workers Party wrote recently: We won’t work for nothing adding Millionaire hypocrites are behind hated workfare scheme – but they won’t work for nothing. Though for once their hearts were in the right place, their solution was not simply to scrap any mention of workfare but for the government to create jobs.
The real solution to the problem of unemployment is to recognise the simple fact that in today’s highly technologically advanced society, some people are unemployable, that is they are incapable of earning a living wage. Once this simple fact is recognised, we can do something meaningful about the problem, namely we can institute a basic income for all. But this would mean the abolition of the debt-based money system as we know it, including the use of tax exempt foundations for the accumulation of wealth which allows the likes of Robert Rector to make a comfortable living preaching the necessity of people less fortunate than himself tightening their belts. There can be no doubt that he is motivated by humanity rather than by malice, but by the same token there is no doubt that neither he nor Katharine Hirst would go that far.
Unless and until the current system is reformed, we will see more social unrest at the bottom, like the riots here last August, which however unjustifiable would not have happened certainly on such a scale if there had not been genuine grievances against the system coupled with a sense of hopelessness - and people willing to exploit them. The response to this sort of civil unrest is to paper over the cracks while making noises about such chimeras as police racism; this is not even a short term solution. The problem of unemployment is economic, and economic problems have economic solutions – in reality engineering solutions as diagnosed by Major Douglas - rather than moral ones.
[The above op-ed was first published June 10, 2012.]
Back To Digital Journal Index
Robert Rector: the career academic in the expensive suit
who advocates the modern day equivalent of the
workhouse for the “undeserving poor” while he
himself lives off the largesse of the super-rich.