Libertarians and the privatisation of income management

Employers are prevented by law from subjecting workers to income management. What if they weren’t?

Libertarians favour freedom of contract. They believe the government’s role is to enforce contracts not tell people what should be in them. One way governments have interfered with freedom of contract is by insisting that employers pay workers in cash. Laws like the nineteenth century truck acts were designed to prevent employers from paying workers in goods or forcing them to spend their wages in company stores. This restriction on freedom of contract continues today through the Australian Fair Work Act 2009.

Recently Andrew Forrest has suggested that a Healthy Welfare Card could help welfare reliant families by preventing spending on alcohol, drugs and gambling. According to Forrest, the card could offer stability and "help the most vulnerable families manage the routines required to hold down a job."

Many people who make this argument seem to assume that once someone moves into paid work, their drinking, gambling and substance abuse problems disappear. Or alternatively, they believe that until a person manages to overcome these problems, no employer will offer them a job. But in reality there are plenty of people with full time jobs who abuse alcohol, take drugs and have gambling problems.

What if someone proposed a scheme that allowed employers to offer jobs to people on income managed welfare payments and pay them using something like Forrest’s Healthy Welfare Card? They could argue that employers would be more likely to take on someone with long standing alcohol or drug problem if they knew their wages would be spent paying off a car that they could use to drive to work rather than on beer. The card could allow more people to get jobs, stabilise their lives and become self sufficient.

It’s hard to see how a strict libertarian could object to this arrangement. If a worker was willing to agree to this contract and an employer was willing to offer it, then making it legal would be an expansion of liberty. But this raises the question whether libertarians should support this expansion of freedom for everyone.

In a libertarian utopia with complete freedom of contract, employers would be able to offer payment on any terms they liked. If they were worried about hungover workers crashing company cars, damaging machinery or injuring themselves on the job, maybe they’d appreciate a Healthy Wages Card that prevented workers from spending money on alcohol and drugs. The only limitation would be finding workers willing to agree to these terms.

A libertarian approach to freedom of contract would allow the privatisation of income management. To me this seems like a restriction on freedom rather than an expansion. I think governments should put limits on things like employment contracts. But I’m not a libertarian.

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17 Responses to Libertarians and the privatisation of income management

  1. desipis says:

    To me this seems like a restriction on freedom rather than an expansion.

    Libertarianism isn’t about “freedom” as most people would understand it. It’s specifically focused on freedom from government interference. The idea being to maximise the power of private wealth at the expence of democractic (or other) forms of power. The end result of a libertarian utopia would be well past income management and would be something more akin to de facto slavery.

    • Moz in Oz says:

      I thought many libertarians are strongly in favour of slavery? What’s the point of absolute property rights if you can’t sell the most fundamental form of property there is – your own body?

      I’ve had a scary discussion with one who explained that compulsory purchase was fine, as long as he got to decide what the price was. So if he was buying, he’d set the price. If he was forced to sell, he’d set the price. He couldn’t see anything wrong with that.

      It’s things like this post, and that discussion, and Jamie Whyte, that make me incline to regarding Libertarianism as a philosophy only used by three year olds and their mental peers. “mine! MINE! {waaaaah}” At least three year olds eventually become four year old rules lawyers “but you said….” who understand universality “if Sammy can do it, why can’t I?”

      • TonyD says:

        Ah… if you sell your body, then it’s not slavery. It’s called paid work.

      • Tel says:

        I’ve had a scary discussion with one who explained that compulsory purchase was fine, as long as he got to decide what the price was. So if he was buying, he’d set the price. If he was forced to sell, he’d set the price. He couldn’t see anything wrong with that.

        Isn’t that normal with buying and selling?

        If I own the tin of asparagus then I get to decide which price it sells at, any lower than that and I walk away and choose not to sell. If I want to buy the tin of asparagus I get to decide which price I buy at, any higher and I walk away and don’t buy. That’s the entire basis of voluntary association. I’m very sorry it was never explained to you properly.

  2. Moz in Oz says:

    Interestingly, the problems of company script are already present in many remote areas, even though they use Australia currency. It’s fundamentally a monopoly problem – when the “competition” is unreachable, what the local store sells is what you get, and you pay whatever they want to charge. There’s an interesting balance in most of those outlets between what they charge and what they stock. Most obviously (or perhaps most visibly) in the community-owned shops, where occasionally outsiders get to see it all come out at the meetings where the community owners discuss what they’re going to stock and how they’re going to keep the operation running.

    Note that the competition for many of these shops is bush tucker, and one reason that’s less competition than it should be is what the British call enclosure – food that should be available isn’t because HRH and her agents have fenced it off. Then industrial food gathering has destroyed or disrupted traditional foods and using the replacements is a crime. What’s mine is yours and what’s yours is only yours… maybe HRH is a Libertarian too?

    • Patrick Caldon says:

      Yup. I once had a good long chat to a guy who in the 70’s (i think) had the mad idea of loading up a small aircraft with groceries, fruit and veg, flying it to remote places and selling stuff at a slightly daft as opposed to insane markup.

      He told me he did ok but got incredible opposition from the missions.

    • Tel says:

      Sure, and the appropriate role of government is to defuse the monopoly, by helping other business provide alternative supplies. When you dig deep, 9 times out of 10 you find government helping the monopoly side instead, and that’s the heart of our problem.

  3. Some of my younger libertarian friends seem outraged that their universities can require them to purchase various non-academic services, and want the government to ban it. I don’t think that they believe in libertarian freedom of contract that strongly, and have something more like a view that government should facilitate choices.

  4. PoliticoNT says:

    Fail. Welfare, of any sort, is not income. Calling it ‘income’ does little more than provide ammunition for the vast (and wholly self interested) welfare sector, especially federal public servants, and NGO/political staff of the left-of-centre breed. So call it what it is – welfare.

    Most people who have addictive problems, but who are either in work, or actively seeking work – will get their act together. It’s the stability and personal responsibility of holding down a job that does the trick. The Healthy Welfare Card is a rich person’s thought bubble. Playing at politics from a moneyed position is not the real world.

    Forrest would likely be as useless as Turnbull.

    • Paul Bamford says:

      Most people who have addictive problems, but who are either in work, or actively seeking work – will get their act together. It’s the stability and personal responsibility of holding down a job that does the trick.

      Epic fail: to quote from Don’s post:

      …in reality there are plenty of people with full time jobs who abuse alcohol, take drugs and have gambling problems.

      In reality, these people only have their act together during working hours. In their private lives it’s a whole other story.

      Incidentally, Kerry Bullmore Packer, who as the proprietor of Consolidated Press had the stability and personal responsibility holding down a job in spades and redoubled was a notorious high-roller. If your theory of addiction were true, he would never have sat down to a poker table in his life.

      • conrad says:

        I agree — I have a good anecdote on this. Many years ago I used to share a house with a junky, and she fits your pattern — she was especially reliable at getting to work (this being how she paid for her habit for a long time), and an especially quiet housemate (typically shooting up not long after she came home and more or less doing nothing after that). Unfortunately, she ran out of money and that was pretty much the end of peace and quiet and her job, which I imagine would have left her on welfare (or worse) had I known what happened to her after that.

        If we decriminalized substance abuse, she would have hurt no-one leading her fairly miserable addictive life and never ended up on welfare. So there is a conservative fail on both accounts here — that people necessarily get their act together because of work and that harsh penalties for illegal drugs helps these people.

  5. Jezery says:

    Many people who make this argument seem to assume that once someone moves into paid work, their drinking, gambling and substance abuse problems disappear.

    I beg to differ. What I think people assume is that, while we may have a right to dictate how money is spent if it is a welfare payment from the piublic purse, if money earned through someone’s own work and effort, then they can do as they like with it – including drinnking, gambling and substance abuse if they want.

  6. TonyD says:

    The Libertarian position is that the government doesn’t have the right to impose income management. If people, acting freely without compulsion, agree to certain things relating to their employment then it’s no one elses business.

  7. Tom says:

    @PoliticoNT

    “Fail. Welfare, of any sort, is not income.”

    As you might say, ‘fail’. Ever since there have been standardised national accounts, transfer payments from government have been defined as ‘income’. To be sure, welfare payments are not exactly the same as income from paid work, but they share many of the same qualities as other forms of income like wages: they are regular, can be exchanged for goods and services, and, in the specific context of this argument, can be ‘wasted’ on alcohol, gambling and so on. That’s why we have other words like ‘wages’ and ‘profits’ and ‘welfare’ to distinguish between different types of income, and a catch-all word like ‘income’ when we want to talk about phenomena that affect all different kinds of income.

  8. Tel says:

    What if someone proposed a scheme that allowed employers to offer jobs to people on income managed welfare payments and pay them using something like Forrest’s Healthy Welfare Card? They could argue that employers would be more likely to take on someone with long standing alcohol or drug problem if they knew their wages would be spent paying off a car that they could use to drive to work rather than on beer. The card could allow more people to get jobs, stabilise their lives and become self sufficient.

    It’s hard to see how a strict libertarian could object to this arrangement.

    As someone who is a bit leaning towards the Libertarian, I don’t object to this arrangement, providing it was in the broader context that all employment payment schemes became equally free and not this scheme in particular.

    I certainly would object to some government deciding, “Oh we have a healthy welfare card and we expect employers to start passing our dictates down to their workforce.”

    That ain’t freedom.

  9. Tel says:

    Many people who make this argument seem to assume that once someone moves into paid work, their drinking, gambling and substance abuse problems disappear.

    It certainly cuts into my drinking time.

    Work is the curse of the drinking classes.

    Smart man whoever said that.

  10. Stephen Hill says:

    Interesting I know of instances of quite a few people with gambling problems that were working for long periods of time – one who nearly cleaned out a cousin’s business with embezzlement that would have done Oceans 11 proud. Even on a smaller scale I can’t think of too many places of work where there has not been some sort of gambling – Melbourne Cup, footy-tipping comp, Lotto/Powerball syndicates – someone better inform Twiggy it might even be happening in Fortesque Metals.

    The other meme that has been proven wrong – is this mass of drug-using welfare dependents – which even I thought would have been higher. But interestingly we have some data from the US and I was shocked just how low the percentage of people on welfare had tested positive for illegal drugs in the various Republican states (Utah, Florida, Tennessee) that have legislated for mandatory drug tests (well below 1%). In each instance the cost of testing exceeded the welfare money refused to drug using welfare applicants.

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