OPINION
Christopher Luxon is new to politics, so give him some slack when he says social welfare “isn’t working” and requires an overhaul.
What he doesn’t understand is that the system is working perfectly. Just because a system does not do what you intend for it doesn’t mean it’s broken. That usually just means you should probably “update your priors”, as the ‘smart’ people are fond of saying.
The welfare system is not and has never been about giving people a financial safety net. That’s what it says on the tin, but the purpose of a system is what it does. And welfare is built not to help the beneficiaries, but to give social workers something to do. I wish I were making this up.
Welfare is a bit like public schools in that regard. The entire point of the public school system is to employ teachers, union activists and Ministry of Education civil servants. There are thousands of these people, each of whom would risk their quite cushy livelihoods if the public school system were to shrink. I’m sorry if you’re hearing about this for the first time.
Public education was not introduced to improve education. It was meant to get rid of class distinction. You might think this means removing class distinction among children, but nobody who matters at the Ministry of Education ever mentions children. Public education is about getting rid of class distinction among teachers by bringing public school teachers up to the salary levels of their class rivals in private schools.
It’s the same story across the government. The incentive for every ministry is to never solve the problem for which it was created. The incentive is instead to “manage” the problem so that it can justify the continued employment of a permanent staff whose job it is to think up new pseudo-solutions that, ultimately, result in more civil servants.
It must be hard for someone like Luxon to wrap his head around this attitude, given his career in the private world (which also has its fair share of bureaucracies and self-licking ice-cream cones). But the reality is that success for a civil servant isn’t measured in effectiveness.
Civil servants gain prestige by the size of the national budget they can command and the number of ministries and departments that fall under their remit. Civil servants looking at Luxon’s speech this week will not be wondering how to reduce the number of dependants on welfare. Rather, they will be scheming for ways to use it to create entirely new bureaucracies set up to reduce the number of beneficiaries.
In other words, every attempt to reduce government always ends up increasing its size. Funny how that happens.
Under the modern regime in which the civil service are price makers and politicians are price takers, the number of beneficiaries can only go in one direction: up. After all, each new beneficiary adds more work for the civil service, and more work means more money. More money and more work mean more power. And the more power concentrated in the civil service ultimately translates to less power for politicians. Is this a good thing? Look around.
For their part, politicians are also incentivised to maintain the status quo. By promising to increase support for beneficiaries, one group of politicians can buy votes from this section of society. But when another political party promises to “get tough” on fraudulent beneficiaries, that party can curry support from a different social group. I think they call this “democracy”.
As the inimitable Harry Browne once said, “Welfare programmes didn’t arise because the people demanded them or because the free market was unable to provide needed services. They arose because the politicians found them to be a convenient way to buy votes with other people’s money, a convenient way to enlarge their own power, a convenient way to reward their political cronies and a convenient way to keep people dependent on government.”
Where Luxon and the civil service are about to butt heads is that while both see the “problem” of welfare from different angles, the truly perplexing thing is that they are both right.
The civil service believes it is taking care of people who are in desperate need of assistance. Whereas Luxon believes it is the civil service’s job to, well, take care of people in desperate need of assistance. See the difference? No? Let me break it down.
The civil service looks across the desperate landscape of needy Kiwis and sees injured workers, single parents, folks suffering from mental health issues and a panoply of other serious problems. All these people have real lives and responsibilities to others, and to New Zealand as a country. Therefore, they all deserve to be helped.
Luxon looks across New Zealand’s beneficiaries and sees wasted human capital. Like any person who has spent a day doing real work in the real world, Luxon knows that human capital is the most important resource in any business and country. A factory is useless without people to operate it. Without humans, assets become liabilities.
Luxon wants to help New Zealand not by simply putting dependants to work, but by unlocking their latent human capital. One of those “layabouts” might be a few steps from becoming the kind of person who invents the next big thing, if he gets a leg-up. Finding that person a “job” is not the point. The point is to build a welfare system that encourages him to flourish.
But the reality is that the welfare system has always been a Rorschach Test. Are beneficiaries being treated well? Sure, look how much money is being spent on them. Are beneficiaries being treated poorly? Absolutely, look how much money is being wasted on them. Whether money is “spent” or “wasted” hardly matters to the civil service. All that matters is that the money keeps flowing for them.
At no point in history has the debate ever been about the existence of a welfare state. The hidden grammar is always a question of structural incentives. The civil service is not and never will be incentivised to work itself out of a job. That’s the fact of life, so it’s best to accept it before you go crazy. We are trapped on a one-way road, ten cars deep, with no U-turn in sight.
But that doesn’t mean the situation is hopeless. It’s just that you’re not going to like my solution.
I’ve mentioned before, but it’s worth reiterating here, that the size of a government has an inverse relationship to the morality of the people. The more immoral you and I become, the larger the government gets because responsibility (power) must go somewhere. If you think like a slave, you will get a master.
A moral people would consider the question of the welfare state to be irrelevant. They would know that when people in your neighbourhood require assistance, that aid should come from the neighbours. Even better, it should come from their family. There should be no reason at all to ever engage with the state for assistance. That option would never occur to a moral people.
Of course, becoming the kind of person who can offer aid would also require the privilege of actual property ownership. After all, the resources would be drawn from your wealth, not the state’s. Actual property rights depend on a mutual agreement with the state that a property owner is fully responsible for what happens on their land. Responsibility = power.
The kicker is that when a property owner is fully responsible for their land, they cannot expect the government to offer any rebates, subsidies or safety nets when something goes wrong. The state is responsible for the collective security of the nation, that’s it. What happens between its citizens is up to those citizens. Are you ready for that sort of responsibility?
The truth is, we need a welfare state because we don’t really care about other people. Friedrich Nietzsche explained this ennui by pointing out that monarchy disappeared not because the kings were no longer worthy – but because the subjects weren’t worthy. We don’t deserve to have good government. Good government depends on a high level of public morality. Said differently, you get the government you deserve.
So, maybe Luxon’s next speech could announce a gentle government programme to encourage weekly local gatherings where neighbours can meet and support each other. The fraudsters and “bludgers” wouldn’t last very long in this situation because their neighbours’ real money and resources are at risk, and they would be held accountable by the entire group.
Focusing on the local is generally the answer to any social malaise. I know it works because local is how we all lived until very recently. I can already hear the retort, “if it was so good, then why did it change?” And while you might think that’s a smart counter-opinion, the history of the 20th century can be summed up in six words: we thought we could do better.
Look around. Is this really the best of all possible worlds?