Duncan’s Economic Blog

Making Work Pay/A new Agenda

Posted in Uncategorized by duncanseconomicblog on June 23, 2009

Paul notes that Yasmin Alibhai Brown is talking of ‘tough choices’ which should be read as ‘cuts in the welfare state’.

Don Paskini has two posts up about the Joseph Rowntree Foundation/Fabian research on attitudes to reducing poverty and inequality.

Don summarises the findings as: 

1. Nearly all the participants in the discussion groups placed themselves in the ‘middle’ of the income spectrum, despite the fact that they came from the full range of socio-economic groups. They interpreted the income gap in terms of the gap between the ‘middle’ and the ‘super-rich’.

2. Most participants believed that ‘deserved’ inequalities are fair. They were therefore not opposed to high incomes in general because they tended to believe that these were deserved on the basis of ability, effort, performance or social contribution.

3. Despite a widespread belief in ‘fair inequality’, participants strongly supported a progressive tax and benefits system – although they complained that the system is not generous enough towards the ‘middle’ (that is, where participants placed themselves)

4. Participants’ attitudes towards those on low incomes were often more negative and condemning than their attitudes towards ‘the rich’. For example, they placed far greater blame and responsibility on the former for their situation than on the latter.

5. Most participants were strongly attracted to a social vision founded on improving quality of life for everyone (more so than one founded on explicitly egalitarian objectives, and far more so than one founded on economic growth).

  In his second post he makes, to me at least, the key argument: 

One criticism of the welfare state is that once you include tax credits, child benefit, housing and council tax benefit and so on, a lone parent who is not in paid employment and has two children has roughly the same income as a single person who works and gets the average wage.

One possible reaction to this is “that’s a disgrace, and it shows that benefits are too high.” This is the one which you will read a lot in the newspapers.

But another is “that’s a disgrace, and it shows that wages for the average worker are too low.”

Which of these – prioritising cutting benefits or raising wages for middle income workers – is more likely to help improve people’s quality of life and make sure that hard work is properly rewarded?

 The people in the middle, seem to agree with him.

I think we are stumbling towards an agenda here.

9 Responses

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  1. charliemarks said, on June 23, 2009 at 10:31 pm

    Attitudes towards poverty will be shifting as more people find out that despite their hard work, they’re standard of living is affected by forces beyond their control.

  2. Jane Pir said, on June 24, 2009 at 12:46 am

    >> I think we are stumbling towards an agenda here

    I hope so.

    The welfare state can either be a safety net or a cause of poverty. It has now become the cause of poverty for many.

  3. newmania said, on June 24, 2009 at 5:15 am

    Not sure what it is Duncan but you are stumbling into the world people live in in which it is not taken fro granted , as you do , that what people earn is a boon granted to them by either fortunate circumstances or a benevolent state but the product of their work and sacrifice.
    I sometimes wonder of people like you for whom work is a sort of extension of education have any idea how plan nasty it is . Its not creative , is usually humiliating and shrinks your soul to the size of a pea.
    To look around and see others getting a free ride is infuriating .As we have already established to make the system more progressive you have to attack the top half of incomes but that top half is part of the household of the majority and the vast majority during a working life .

    • duncanseconomicblog said, on June 24, 2009 at 7:54 am

      Newmania,

      Yes – for many people work is rubbish. I get that. I want them to be rewarded for it. And yes, in my ideal world, those earning less than say 15k a year would pay zero tax.

      Equally I do realise that I am lucky to have a job I find interesting. I accept that I worked hard to get this job, but I don’t mind paying more tax to help those less lucky.

  4. newmania said, on June 24, 2009 at 5:15 am

    PS work would pay more if it was taxed less

  5. VinoS said, on June 24, 2009 at 6:47 am

    Indeed. The key agenda should be higher minimum wages and more in-work benefits. That’s the way to make work pay – not by cutting the benefits of those who are already the poorest in society.

    It does seem that public opinion is receptive to that argument. Its a shame the govt is not making it!

  6. […] seriously, I’m increasingly convinced by the argument that the fundamental driver of the economic crisis is the falling labour share of national income. […]


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