SOMETHING FOR NOTHING.

People complain about state welfare handouts. Handouts like out-of-work unemployment benefits. Being paid to people who have done nothing to earn it.

(I’m talking about a modern advanced economy which has a developed welfare state.)

But it’s not just welfare payments that are handouts. State education is also a handout. Your children get that no matter how many of them you have. So, if Jack has two children he gets state education for them. And Mary, who has three children, will get state education for them. From Jack’s point of view Mary is getting a handout of the cost of the education for one child. (Or rather that she is getting more of a handout than he is.) Because she is not paying any more in taxes because of her extra child.

Then there is progressive taxation. Which is, in effect, a form of tax credit. Meaning that it is the government giving to some people a discount on their tax bill. Which is the same as the government giving them some money for nothing, another hand-out. The calculation is as follows. The total UK government’s Tax revenue is £600 billion per year. This is £600,000 million. And the adult working age population is about 50 million adults. So that would mean the tax bill is (assuming no other sources of revenue!) about £12,000 per person. There are a lot of people who don’t pay that much in tax. They are, in effect, getting a handout of whatever amount their tax falls short of this £12,000. Of course people who get “state welfare handouts” pay no tax and so get the full £12,000 as well as welfare benefits they get.

But the whole “handouts” way of looking at things seems silly. The idea behind it is that some people are getting something for nothing. But getting something for nothing happens all the time: savings interest, stock market gains, rental income. The people who complain about state welfare handouts should also complain about that sort of thing.

The people who complain about others getting something for nothing are usually the same ones who complain about taxes. Because taxation is like the other side of the same coin. Welfare is other people getting something for nothing, for no good reason. And taxation is you having your money taken off you for nothing. But again there are other instances of this which are overlooked. Like paying interest on loans (especially mortgage loans) and paying rent to a landlord. If you are complaining about taxation then why not these other things?

If I was a government I would want to give something for nothing to people who have got nothing (regardless of why they have got nothing). I wouldn’t want to leave any people who have nothing because people who have got nothing are dangerous. They have nothing and so they “have nothing to lose”. Right wing people want people to fear not-working and they do this by cutting out-of-work welfare benefits. Another way would be to increase in-work benefits. Subsidise work so that working people have more to lose by not-working. This creates fear of not-working in a more positive way than cutting out-of-work welfare benefits.

Despite the common sentiment against getting something for nothing, at the same time there is a strong sentiment in favour of it. In the form of lotteries. People love buying lottery tickets. But a lottery is just another case of people having money taken off them for nothing and others (winners) getting money for nothing.

If you were born to caring parents who were able to provide you with a decent standard of living in a moderately civilised country. Then you got something for nothing that 98% (a number I just made up) of all the humans that have ever lived never got.

If we don’t like people getting something for nothing that means we don’t like helping people. Because helping people involves giving something to them for nothing. But often it’s clearly in our interest to do so. For example giving people a free education is in our interests because if we are surrounded by clever skilled people our lives will be better.

Which in itself is another example of getting something for nothing. The output of other people’s talents. So, for example, the vast majority of people can’t do surgery or produce smartphones. (The technology in a smartphone is beyond 99% of people’s comprehension.) Despite this they still get those things. Consider this example. Suppose that Mary is clever and earns 50K a year and Jack isn’t that clever and he only earns 5K a year. And I said let’s redistribute some wealth from Mary to Jack just for the sake of equalising. You might say no. But suppose Mary makes smartphones. That Jack would never be clever enough to do. Yet he can get one, even with his 5K income. So that’s redistribution? Jack might be living somewhere where there weren’t people like Mary who could produce smartphones. Then his 5K wouldn’t get him a smartphone. Or, more generally, it wouldn’t get him a standard of living as good as the one he gets in a place where there is Mary and people like her.

Some other trivial examples. If you are a larger size then your clothing will use more material but it will be the same price as smaller sizes. When you send a parcel the cost is usually the same regardless of distance within your country.

Instead of fretting about people getting something for nothing, maybe we should be more concerned about the opposite. Which is people getting nothing for something. For example if you work hard and get hardly anything (low wages) in return. Or you build up your career in some direction for ten years and then get made redundant due to the vicissitudes of “market forces” and so have to start again.

[13 July 2019]