Half a free market is better than none (1)

If at all possible, it would be nice to have a free market in everything. You can't really have a free market in public goods or core functions of the state*, but that's only five or ten per cent of the economy or overall activity.

The only other half-way sensible thing that a government can do is redistribution and/or subsidising merit goods, i.e. education and health. Given our starting point, it is politically a non-starter to call for the entire welfare state, NHS and State education system to be scrapped, but we can arrive at something approaching free markets via universal benefits and vouchers.

Completely private schools, barring the usual collusion, would compete to provide the highest standards at the lowest cost; but children of poor families who aren't lucky enough to win a free place at a posh school would have to make do with a much more basic education, or end up in schools run by sects. 

OTOH, if you give all school age children a voucher worth £5,000-plus, then as far as I can see, everybody wins. It would shave £20 billion off the schools budget (overheads and waste are enormous) so the taxpayer's happy; wealthy people with kids at private school are laughing because they no longer have to pay twice for education (once for the 'free' places they don't use and again in cold hard cash); the not-so-wealthy can now afford private education and children of poor families who can't afford much of a top-up to the vouchers still have a much wider choice of school - even if it's only a choice of state run schools without top-up fees.

Remember also, education is to a large extent a common good, i.e. having a good education is primarily for your own benefit, but even if you are an under-achiever, you are better off in a well-educated than in a poorly-educated society.

The same sort of principles apply to health vouchers, as ably expounded by Health Minister Dick P.

For some reason education and health vouchers are seen as right-wing, probably because they have been proposed by the Tories. But exactly the same principles apply to the Welfare System. The Citizen's Income idea is seen as left-wing because it involves (forcible) redistribution, but it is no more redistributive than education or health vouchers, and the same general rules apply.

In the absence of a Welfare State, we'd have hardly any single mothers (which is the root of a lot of problems) and more people working, albeit for low wages. But it is not fact that we have redistribution that causes this, it is the way the Welfare State has been designed, for example:

a) It actively rewards the feckless, i.e. an unemployed single woman boost her income by £120 or so a week if she has two children. If a married, working woman with a working husband gives up work to have two children, they lose the mother's income (obviously) and the welfare state gives them a derisory £24 or so.

b) It actively discourages stable families.

c) It actively discourages taking up temporary, part time or low paid work (to the extent that the National Minimum Wage hasn't destroyed many of those jobs anyway) because you lose as much in benefits as you gain in net income.

The idea behind the Citizen's Income scheme is, broadly, 1. Take the entire amount that 11 million pensioners, 5 million working age adults, 1 million students and 12 million children currently receive, plus the billions lost in fraud and administration costs; 2. Extend the class of those entitled to stay-at-home parents (of which there are only about a million or two) and better-off students (of whom there are only a few hundred thousand) and 3. Dish it out as non-taxable, non-means tested weekly payments (lower rates for children and higher rates for pensioners, obviously). To avoid overlaps with the tax system, there'd be a choice - claim the CI payment or a much higher personal allowance.

This would still be redistribution and a safety net against poverty, but the way I see it, would completely avoid problems a), b) and c) listed above, provided of course that Child Benefit were considerably less than the cash cost of bringing up a child to prevent 'baby farming', to reinforce this, it could be restricted to the first two or three children-per-mother.

* Although you could have half a free market in e.g. police, street lighting, refuse collection if local councils had one source of revenue and one source only, i.e. Land Value Tax. Property prices in areas with cleaner, safer and better lit streets would of course be higher than in crime-ridden areas. If the council in the crime ridden area wants more revenue (which is just human nature) they will have to concentrate on doing those things which push up property prices, i.e. make it more desirable, i.e. that add value - like reducing crime and so on. To the extent that councils make a surplus by concentrating on doing sensible things, you would hope that this is returned to the voters in tax reductions or spent on other stuff that adds value, so that ultimately cost to taxpayers = value of services they receive = cost to the council of providing those services, which is the ideal of free market capitalism. 

If the mood takes me, I shall explain why LVT, unlike existing property and wealth related taxes (which are pure revenue raisers and/or jealousy surcharges) makes the land market more like a free market in a later post.