4 thoughts on “Contribution vs. redistribution: why contributory welfare won’t happen”

  1. Posted 25/06/2013 at 10:43 | Permalink

    Surely we have a contributory system – what are NI and taxes for?
    In most cases if you are unable to ‘contribute’ it is not your fault – ie if no jobs, your are sick/disabled etc.
    This scheme, suggested by right-wing think tanks, Tories and Labour ‘Tory-lite’ seems to be another way to enhance the neo-lib agenda of shifting cash to the richest section in society?

  2. Posted 25/06/2013 at 14:40 | Permalink

    To be clear on our ‘welfare state’ principles over people’s whole lifetimes, we need to distinguish between different state benefits. It is true that there may be some people — the severely disabled, for instance — who may need help (would anyone mind if I call it ‘charity’?) on a permanent basis. But some others may only really need help, from time to time, on a temporary basis. Unemployment benefit, which was always essentially contributory, falls into this category. We don’t expect most people to be permanently unemployed. In normal circumstances they can be expected to look after themselves. Some benefits, such as Winter Fuel Payments have nothing to do with contributions (and nothing much to do with ‘need either). They were just an attempted bribe which is now proving difficult to withdraw. In the same way, so-called ‘free’ health benefits or ‘free’ schooling have nothing to do with contributions. They are intended to be available to all who need them — on the whole, mainly the old or the young respectively. State pensions, on the other hand, also intended for the old, clearly started out as contributory: they were not originally intended to be redistributive. If the politicians now want to make changes, I dare say the transition will prove difficult. One of the difficulties is that if people have in fact contributed through various kinds of taxation over their working lives, in the expectation of being entitled to certain state benefits in their old age, it could be regarded as ‘unfair’ to change the rules when those people have retired from work.

  3. Posted 26/06/2013 at 15:11 | Permalink

    Can anyone explain the purpose of a contributory only system? I can understand the purpose of a redistributive system (even though I heartily disagree with it), it’s obvious and goes with the term. But why have a state-operated contributory system? If individuals are sufficiently able to contribute a sufficient amount for their welfare, why not do it privately and eliminate the deadweight costs and inefficiencies of a state monopoly? It might perhaps be that people won’t save ‘enough’ (who is to say what constitutes this?) in the absence of compulsion? So then, why does the state attack saving via constant inflationism and ‘demand stimulation’?

  4. Posted 27/06/2013 at 12:30 | Permalink

    Whig,
    it’s mostly for moralistic reasons. Historical proponents of contributory state welfare (especially Bismarck, and Beveridge as well as far as I know) believed that private insurance was immoral. Nobody should commercially benefit from the risks of life. Even they did not claim that private solutions would not work, only that they were morally inferior to state action.

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