I get concerned when I see journalists/politicians/opinion-writers saying that it is time we 'restore the contributory principle' by 'giving more to those who have paid in more'.
Part 1: issues of merit
I'm concerned because it sets up a deserving/undeserving spectrum in which the more one earns, the more worthy one is. This is a normal idea under neoliberal and neoclassical thought; these approaches assume that one's earnings are related to merit. If earnings are related to merit, then it is unfair to take money away from those who have earned it (through tax and national/social insurance) and give it to those who have not earned or merited said money.
Unfortunately for these schools of thought, neoclassical economics has failed to show that earnings are related either solely or mainly to merit (see Steve Keen for the reasoning behind this statement). For example, the seller of a highly desired luxury good may earn more than the seller of a necessity, yet it is the seller of necessities who is necessary to society. If cleaners go on strike for a week, business can come to a halt as mess and dirt builds up; if the board of directors went on holiday for a week, business may continue very well without even noticing (the lack of directors would probably be noticed eventually, but not as fast or as dramatically as the lack of cleaners).
Basing merit (/worth/deservingness) upon income relies upon the assumption that everyone has the opportunity (but not necessarily the ability) to earn the same amount as everyone else (neoclassical economics is based upon the assumption that everyone has the same income, even though this is demonstrably not the case in real life).Yet opportunity is not equal, as much evidence shows, and this impacts life outcomes. Some people 'escape' (moving up the income ladder), but more frequent is that people born higher up the income ladder are protected from moving down (the 'glass floor'). As well as accidents of birth, there are accidents of illness and injury. Some people are precluded from gainful work by their own illness, injury or impairment, or through caring for someone else. These people may not be able to contribute substantially to society through paid work, but may contribute in other ways, including caring, volunteering and relationships.
Having assumed that income is not related to opportunity, the linking of income with merit then assumes that current salaries across different jobs genuinely reflect merit. In general, higher skilled jobs receive higher incomes; thus, income is related to skill level. However, to then equate skill level with merit is not necessarily valid. As with our cleaners and directors of the above example, some jobs are more necessary than others, yet are lower paid. These jobs may additionally be of lower qualtiy in terms of working hours, conditions and security; low income is linked to poorer quality of life, health and life chances (including for children); and politicians periodically moot the idea of paying less in benefits to these people than to the 'higher value' people on higher incomes. Thus some of the most important members of society, the secret grease on the wheels, are not only not rewarded for their contributions, they are even penalised and looked-down upon.
Where worth is linked to age, the argument seems even weaker. A person cannot be held accountable for their birthdate. Furthermore, the younger a person is, the more working years he or she has left, and the more he or she can gain from support and investment now. Rewarding older people who lose jobs with a higher level of benefit serves to entrench the differences between those on higher and lower income, protecting those who have done well out of life so far, and neglecting those who may need and benefit from help.
Part 2: Leaving austerity
My second concern is with the link between the austerity narrative of the last six years, and spending decisions of the coming four. With a new Prime Minister and Chancellor, the Conservative party may wish to leave behind the emphasis on austerity and use instead the principles of investment and reward. Increasing benefit levels for richer people might be part of this, using the argument that as the economy grows so our society can afford to pay out more in benefits.
Different spending decisions could be made. For example, if tax revenues do increase, the extra money could be used to restore the benefits that have been cut over the past six years, as the United Nations called upon the UK to do. As the UN reminded the UK, countries have a duty to "progressively realise" (essentially, increase over time) the rights of their citizens, which for the UK means that the government should "ensure that its fiscal policy is adequate, progressive and socially equitable and improves tax collection so as to increase resources available for implementing economic, social and cultural rights".
Increasing benefit levels for richer people before we have ensured that all members of society are adequately protected against loss of income would be inappropriate.
This morning I discovered UnlearningEconomics blog, whilst I was looking for information on how labour markets work. As part of the blog, UnlearningEconomics wrote a series of posts summarising the work of Steve Keen in his book, Debunking Economics.
The first chapter, and its associated blog post, is on the demand/supply curve. To help me understand what I was reading, I took notes - effectively summarising the summary - and arranged them into an order that helped me see the flow of logic. As it helped me, I thought it might be of itnerest to others.
This second part of my possibly incoherent and illogical musings focuses on the costs and benefits to both source and host countries of immigrants. It concludes that, to the extent that an immigrant is beneficial to the host country, it is negative to the source country - and where the source country is poor, this should not be consider an acceptable exchange.
This week I am trying to get my head round whether or not low-waged immigrants are a net contributor to the economy. It's a difficult issue, relying on many assumptions which, if changed, can greatly change the answer. It is complicated by making reference to the average immigrant, without explaining how different immigrants might have different effects.