Friday, August 27, 2010

Higher benefits, more jobs

Right-wing think tank boss Neil O'Brien writes that:

"If you give people more benefits, they will be better off today. But if that encourages them to stay on benefits, rather than find work, they will be poorer tomorrow. "The question to ask," as Nick Clegg wrote, "is what its dynamic effects are, particularly across the generations. How does it increase opportunities? Will it unlock the poverty trap or deepen it?""

Let's have a look at what these dynamic effects might be.

Between 1996 and 2009, benefits for lone parents were increased substantially. So according to the Clegg/O'Brien theory, we would expect more of them to be encouraged to stay on benefits. Over the same time period, benefits for single adults of working age decreased in real terms. The same theory would suggest that this would mean that more would find work.

Here's what actually happened:

In 1996, during a time of economic growth, 45% of lone parents were in work. In 2009, when Britain was in severe recession, 57% of lone parents were in work.

In 1999, 30% of single adults without children were "workless". In 2009, 29% of single adults without children were "workless". If you look at a longer time period, the value of out of work benefits has nearly halved over the last forty years, and unemployment has more than doubled.

If you give people more benefits, they will be better off today. But what the evidence shows is that higher benefits also helps people to find work and be better off in the future.

If you are a millionaire politician, this might be hard to understand, particularly when it is politically inconvenient to grasp the point. But it's not that difficult.

If the government pursues a strategy of class warfare, of demonising poor people and cutting their benefits, then people will concentrate on day to day survival, on trying to keep a roof over their heads and coping with ill health and all the other problems that are caused when you don't have enough money to live on. In consequence, they will find it harder and harder to get a job or stay in work. And, in any case, there will be fewer jobs in their community as benefit cuts suck money out of the local economy.

In contrast, if the government provides everyone with a decent safety net and enough money to live on, then more and more people will be able to think about more than just getting through to the end of the week. They'll get the confidence to apply for jobs, they'll be in better health and even have a little bit of money to spend on studying and developing their skills. They'll see their friends and neighbours getting jobs and help each other to be able to lift themselves out of poverty.

This isn't some wild-eyed theory, this is what actually happens in the real world. And Clegg's comments and those of his right-wing supporters just show, yet again, that they are the ones in denial.


At 5:53 pm , Blogger Newmania said...

If you are a millionaire politician,

Also if you are middling sort who is not entirely sure why they are required to pay other people to do what they ought to be doing anyway ? Shall we call it the "Stop being such a scrounging idle freeloader , credit ? "

It is of course entirely obvious that paying people to be idle will create idelness so this is a sort of conjuring trick. I am not sure what the trick is but I know its a trick .

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