How to pursue a redistributionist agenda when public support for it is low? Change public attitudes by restructuring the welfare regime, says a new book titled The Solidarity Society by the Fabian Society.
A key thesis of the book is: the more the welfare state attempts to target spending on the poorest, the less it will ultimately redistribute to them.
The reason is that different welfare regimes provide different political incentives. When transfer payments or social services are targeted, it is apparent that some people pay for them while other people receive them. Society is divided into two distinct camps: givers and takers, “us” and “them”. This limits people’s willingness to contribute, and ultimately politicians’ scope for increasing welfare budgets. It also fosters a negative view of the recipients.
But when payments or services are widely or even universally available, these matters are reversed. There are no obvious paymasters and recipients; almost everybody views themselves as a beneficiary, and is therefore more likely to support further expansions of the programme. This is why increasing spending on the NHS (universal) or child benefit is usually popular with voters, while increasing spending on social housing (targeted) is not.
The authors’ message is not simply “spend, spend, spend!”. They want to move away from targeting and towards a welfare regime that aligns the political interests of the middle classes with those of the poor. If the former pay and the latter receive, then the former will usually be inclined towards constraining welfare spending. But if everybody is on the receiving end, all political incentives will point towards ever-expanding welfare budgets.
I have hitherto believed that the one thing the Fabians shared with the IEA was a profound belief in the power of ideas. This book is about something more mundane than that. Ultimately, the authors call for extending and restructuring “welfare churning” in such a way that it becomes utterly impossible to tell who is a net contributor and who is a net payer. Net-payers should be deluded into believing that they really benefit from the big state, and applaud at every further expansion.
Britain has a long-standing, rich tradition of voluntary solidarity and philanthropy. Is the creation of fiscal illusions really the best way to revive it?