The welfare state in the UK has failed in one area after another.
State education began in 1870 with the Forster Act, which allowed the creation of government schools. Its purpose was not to wipe out the existing private and charitable schools. The whole idea was to catch those few people who were missing out. It was reckoned in 1861 that 95 percent of children were getting between five and seven years of education. State education was started to save that missing 5 percent or less.
Now, 134 years later, with the state dominating education, a government survey reveals that 20 percent of the adult population is functionally illiterate. State education, instead of saving the bottom 5 percent, has quadrupled the number of those left out.
The justification for the beginning of the National Health Service (NHS)—the health insurance act of 1911 introduced by Lloyd George—was similarly that a minority of people were not members of friendly societies. The mass expropriation of charitable hospitals that took place in 1948 was done for another reason, because of the Marxist beliefs of Aneurin Bevan. A Labour Party pamphlet in 1943 found very little wrong with our hospitals except the classic socialist objection: they were not centrally organized.
Now, to choose just one statistic, according to Professor Karol Sikora, 10,000 people a year die unnecessary, premature deaths because Britain is so far below the average standard of cancer care in Europe. You will remember how angry and upset people got about the 1999 Paddington rail crash in which 31 people died. Well, the NHS is like having a Paddington rail crash every day.
It is not only health care and education where we see these abysmal results - the entire edifice of government handouts is also in a shambles. In 1950, before the welfare state had spread its influence, 3.4 percent of the population received government benefits. Now, 54 years later, the nation is 165 percent richer per capita. According to the expectations of Lord Beveridge and Clement Attlee, in this richer society, we should be pretty well free of benefit dependency. But on the contrary, now 24 percent of our population is on benefits - and that is excluding the basic state pension, the equivalent of America's Social Security retirement component.
Social Security Disaster
Why has the welfare state failed? It is the old story that people and institutions work more willingly and efficiently when they are working for themselves. As to why state social security has been a disaster, we can look at a story that offers part of it:
Frank Stent was a poor man. He had been unemployed for nine years. That in itself was almost certainly a result of the welfare state. His wife had cerebral palsy. This was in 1994, and suddenly Frank had some good luck. For a 25 pence stake at bingo he won £31,000. This was a small fortune to him.
He said later that he would have liked to do what you and I would think of as the sensible thing: to save it, to buy £20,000 worth of bonds and bank the rest, to have some financial security. But that is not what he did. He bought an antique gold medallion for £750. He spent £6,000 on holidays, £500 on children’s games, and £875 on TVs and video recorders. He bought a freezer load of food for £700. He dumped his money, spent it as fast he could, including £180 on a secondhand space-invader arcade machine.
Why did he jettison what could have been his financial security? Why did he behave so perversely against what he himself regarded as the sensible thing to do?
Because of the welfare state.
He thought that if he kept this money he would lose his welfare benefits. That’s why he dumped his money.
The state told Frank Stent not to save. State social security has also told people, in similar ways, not to work, to have children out of wedlock, and to lie. The state has given perverse incentives on a massive scale, causing mass unemployment.
By way of comparison, let us compare Britain (a large welfare state) with Hong Kong (with minimal welfare provisions). In 1950, British people still had the seventh-highest GDP per capita in the world. Meanwhile Hong Kong people had only the 20th. By 1999 Britain had slumped to 17th position, while Hong Kong, the formerly impoverished colony, had overtaken it and reached 11th.
Let us imagine, for a moment, that Britain had not massively developed its welfare state in the twentieth century. Using an OECD (Organization for Economic Cooperation and Development) estimate—that every 1 percent of tax reduces output by 0.6 to 0.7 percent—how wealthy might Britain have become?
We would have had far less taxation. If we had kept to the level of tax of 10 percent of GDP at the end of the nineteenth century, instead of having output per capita of $19,000 in 1999 as we did, it would have been nearly $24,000. We would have ranked as the second-richest country in the world instead of the 17th. We would have had higher average incomes than the French, Germans, Swiss, or Japanese. The only country with higher output per person than ourselves would have been America. And since we would not have been as heavily taxed as the Americans, our take-home pay would have been higher even than theirs. We would have been the richest country per capita in the world.
The welfare state has made British people substantially poorer than we would otherwise have been.
It has made the British far less-well educated that we would have been.
It has caused mass unemployment to become permanent.
It has caused the old to be poor, without savings.
It has caused mass lone parenting and what I call “broken parenting.”
Through unemployment, welfare dependency, lone parenting, and compulsory bad education, it has caused alienation, a loss of decency, incivility, crime, and unhappiness.
Through its failures and by its very nature, the welfare state has become the nanny state.
Above all, the poor have had the worst of it, suffered most in poor education, bad healthcare, unemployment, disenchantment, and crime.
The welfare state was a mistake. We would be better off, in many ways, if it had never been created.
James Bartholomew, who writes for the Telegraph and Daily Mail in the UK, is the author of The Welfare State We’re In.
© Copyright; Foundation for Economic Growth and various authors. Individual authors retain their own copyright.
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