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.
Equality of opportunity was one of the big themes of Gough Whitlam’s 1969 and 1972 campaigns. His 1972 policy speech promised "a new drive for equality of opportunities" through reforms to education, health and urban planning. He argued that opportunity depends on the kind of investments only government can make. In his 1985 book The Whitlam Government 1972–1975 he drew on Abraham Lincoln for support:
There is, of course, nothing novel in this idea of action by governments to promote community welfare. Before he became President, Abraham Lincoln wrote: "The legitimate object of government is to do for the people what needs to be done but which they cannot, by individual effort do at all, or do so well for themselves" (p 3).
Today we’re more likely to associate this Lincoln quote with Tony Abbott or his government’s Commission of Audit. But Whitlam argued that there were important things people could not achieve on their own. Equality of opportunity was one of them. According to Whitlam, for many Australians the doors to opportunity begin closing in early childhood. In the pre-school years "inequality is rivetted on a child for a lifetime", he said. He argued that "Education should be the great instrument for the promotion of equality" but "Under the Liberals it has become a weapon for perpetuating inequality and promoting privilege." According to Whitlam, only government can make sure every Australian has access to a quality education all the way from pre-school to university.
A decent society is one whose institutions do not humiliate people - Avishai Margalit
The Great Depression stripped many Australian workers of their dignity. For many, applying for government relief was like begging for charity. Instead of giving unemployed workers cash, state governments doled out relief through tickets that could be redeemed for food. The recipient would then present their ticket to the milkman, the baker, the butcher and the grocer and recieve their rations. Often they would have to work for this ‘dole’. To get any kind of relief, applicants had to show that they had exhausted all their resources and were incapable of supporting themselves or their families. Many found this means test humiliating.
In the wake of the depression it was harder for people to believe that unemployment was always the result of laziness or personal inadequacy. To many Australian, it no longer seemed decent to humiliate unemployed workers as a way of deterring idleness and dependency. When legislation to create unemployment benefits came before the House of Representatives, Labor MP Thomas Willams declared that the scheme: "will go a long way towards ensuring that the precious children of this vast and undeveloped continent will never suffer the shame and degradation which seared the souls of the children of this country during the depression" (p 2353 pdf).
But while the major political parties agreed that Australia needed a modern social security system, they could not agree about how it would work. The Labor government wanted unemployment benefits to be funded out of tax revenue. But Robert Menzies wanted an insurance scheme funded out of contributions. He argued:
According to the Australian, the Abbott government’s first budget will include tough new "learn or earn" Measures designed to force young people off the dole and into education, training or work. "One thing the government doesn’t want to do is to continue to pay people to stay at home and do nothing," a senior government source said.
There’s a sign on the wall
There’s a scene in the movie Wayne’s World where Wayne goes to a guitar store, picks up a Fender Stratocaster and starts playing Stairway to Heaven. The clerk grabs the guitar and points to sign on the wall – "No Stairway to Heaven" [video]. For decades, guitar students have been learning the song’s intro by heart and playing it to impress their friends. But guitar store staff are not impressed. They’ve heard it too many times.
Many people say the best way to influence government is to give policymakers practical solutions to problems they care about. According to this perspective, academics and think tanks scholars can get it wrong by spending too much time analysing problems and their causes. Policymakers don’t care about theory, they just want policies and programs that work.
Applied to think tanks, this pragmatic approach means identifying the most important problems policymakers are dealing with and producing products that explain how best to solve them within the constraints of electoral politics, institutional structure and government budgets. In Australia, the Grattan Institute seems to embody this approach. It promotes itself as a source of "Independent, rigorous and practical solutions to Australia’s most pressing problems."
The trouble with this view is that think tank scholars have sometimes succeeded by doing exactly the opposite. For example, Charles Murray is widely acknowledged as one of the most influential think tank scholars in the United States. His accent to influence began in the early 1980s with Losing Ground, a book that rejected the conventional understanding that poverty was the problem and welfare was the solution. According to Murray, welfare dependency was the problem, entrenched poverty was one of its symptoms and the solution was to abolish government welfare programs.
Researchers warn that substance abuse among the elderly will double by 2020, but few journalists or policymakers worry about age pensioners squandering welfare money on alcohol and drugs. Things were different in 1905–6 when a royal commission looked at establishing a Commonwealth funded old age pension scheme in Australia. The commissioners recommended: "That a penalty should be imposed for supplying an old-age pensioner with intoxicating drink."
By 1901 both Victoria and New South Wales had established old-age pension schemes. And it wasn’t long before newspapers were running stories about pensioners spending all their money on drink. According to a 1901 report in Sydney’s Evening News:
Work for the Dole doesn’t work, says economist Jeff Borland. Citing a study he and Yi-Ping Tseng carried out using data from the late 1990s, he argues that it does nothing to create long-term employment opportunities and too little to build skills. But maybe Borland is missing the point. Maybe Work for the Dole isn’t meant to help participants find work.
A recent Swiss proposal for a basic income guarantee has sparked interest from commentators on both the left and right. In a discussion of libertarian arguments for the proposal, Bleeding Heart Libertarians blogger Matt Zwolinski suggests that the classical liberal economist Friedrich Hayek supported a basic income guarantee. He relies on a quote from Volume 3 of Hayek’s Law, Legislation and Liberty:
The assurance of a certain minimum income for everyone, or a sort of floor below which nobody need fall even when he is unable to provide for himself, appears not only to be a wholly legitimate protection against a risk common to all, but a necessary part of the Great Society in which the individual no longer has specific claims on the members of the particular small group into which he was born (p 395).
A number of writers, including Zwolinski, his fellow blogger at Bleeding Heart Libertarians, Kevin Vallier and Julie Novak of the Institute of Public Affairs seem to interpret this as a proposal for the government to pay every citizen a basic income, regardless of their income, assets or willingness to work. I think this is a misinterpretation of Hayek’s position. What Hayek actually proposed was a means tested scheme restricted to those who are unable to earn a living in the market.
When political parties want to convey vision they typically reach for slogans packed with values words like ‘fairness’ and ‘strength’. But according to Ben Shimshon of BritainThinks: "Those grand vision words are almost always taken as a signal that what’s being said is just more ‘politician speak’, and voters’ keenly honed filters screen it out alongside all the other white noise."
Shimson says that parties should try to show rather than tell. What they need is not focus group tested slogans, but a handful of symbolic policies that show voters what the party values and what it thinks needs to change: