The social welfare (4)

At the risk of sounding patronising and uncaring I will reiterate that any taxpayer funded benefits solve some social problems but also create others. I will offer my solutions in the closing post of the series but for now let us focus on why the current system cannot carry on forever.

As shown in the previous posts the domestic purposes benefit (DPB) in New Zealand has changed the basic rules of the institution of marriage. It has also created an easy option for young women who, in the absence of a better plan for life, become solo mothers and fall in the trap of long-term welfare dependency. A charitable and noble idea of assisting those in need has led to some very unpleasant social outcomes. Similar problems were caused by other types of welfare payments. The unemployment benefit has made it difficult for the industry to source workforce for menial, low paid jobs. Sickness benefit has encouraged some recipients to stay on it. In an ideal World none of this would be happening but we are dealing with the raw human nature which has some nasty sides to it.

If someone on welfare is only qualified to do menial work paying less than their benefit, only a true idealist would go to work and be worse off. We, as humans, have been programmed to first look after the number one so in this (real life!) example the financial incentives point the wrong way. If we were to raise the benefits, as proposed by the welfare advocates, the problem would become worse and even people with some professional qualifications would be better off on welfare. So why do we not raise the wages for everyone, to restore the incentives to join the workforce? Unfortunately, this is not how the economy works. Wages are not set but rather earned. If New Zealand companies were made to raise wages by a government decree it would drive the costs up and, possibly, put them out of business. If the government started paying all the teachers and policemen more, more money would have to be collected through taxes or else borrowed overseas. Economy is a zero-sum game – what someone gets others have to pay for. Also, if the wages went up, the welfare advocates would push for raising the benefits…

If you feel there is no solution to the problem of welfare I have to agree with you. In a democratic society, once the state-funded welfare sets in, it becomes a permanent feature of landscape and cannot be gotten rid of. But can anything be done to at least keep the welfare costs (currently in New Zealand running at 7.2 billion dollars a year) under control? Stay tuned to check if da-boss has the answer.

The social welfare (5)


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