Thursday, 16 February 2017

Fun Online Polls: Means-testing & in-car entertainment

The results to last week's Fun Online Poll were as follows:

Which taxpayer-funded services or subsidies should be means tested?

State school places - 2%
NHS - 5%
Police and fire brigade - 2%
Child Benefit - 30%
Public libraries - 4%
None of the above - 54%
Other, please - 2%

With the benefit of hindsight, I should have set up the poll to allow multiple answers.

I am relieved that 54% agree "none" (in which case the argument is - how should the government spend or redistribute taxpayer's money) but why means-testing of Child Benefit is so popular is a mystery to me.

For lefties, fair enough, they like means-testing because it is taxation by stealth and means a larger state apparatus to administer. Fine, but why piddle about with shaving £1 bn off welfare spending when you could go for broke and means-test much more expensive things like 'free' state education?

Why so many Conservative or right/libertarian leaning people support it is a mystery to me. I am genuinely baffled.
This week's Fun Online Poll is just out of personal interest.

"What do you usually listen to when you're driving your car?"

Vote here or use the widget in the sidebar.


KJP said...

When the welfare state was set up most people paid into it at some point: some got more back than others. but people accepted that. If you start to say to the people who are basically paying for the system you still have to pay but you can’t have any benefits then there will be great resentment – enough to bring it all down.
No box for moaning wife/husband or whining kids.

L fairfax said...

@"Why so many Conservative or right/libertarian leaning people support it is a mystery to me"
I guess they assume the cost of administrating it, dead weight costs etc are close to 0. I once turned down a job because the pay rise would after means testing make me worse off than before - the dead weight cost is not 0.

Mark Wadsworth said...

Kjp, yes. Re moaning family,you don't "listen" to them, you just "hear" them.

LF, agreed that must be that answer.

mombers said...

Interesting re Child Benefit. As a quid pro quo, should the childless have their state pension means tested? Can't really expect as big of an equity stake in the next generation's private property if you don't contribute as much to their upbringing. Also a handy way to pay back the Child Benefit or its predecessors that they got when they were younger.

L fairfax said...

No they shouldn't it would be cruel and save little money (also women if who didn't have children probably paid a lot more in taxes).

Dinero said...

"From each according to his ability, to each according to his needs" ,communist doctrine, particularly ironic then that it is popular with Conservative or right/libertarian leaning people.

mombers said...

@LF, just a thought experiment. Citizen's Income would sort the problem of externalised costs of an ageing population - children get a CI of 50% of and adult's until they are 18. At the moment, the cost of raising a child is approx £250k - much more than Child Benefit, which is now only paid to c. 80% of children anyway and shrinking. Those who don't have this expense should be expected to put some of it away rather than tucking into on the private property of the next generation. I really don't want my children's life chances to be curtailed by funding decade long holidays for people who really should be contributing a little more now.

L fairfax said...

I am not sure that an ageing population is such a problem. With automisation the population could probably decline without problems. Sadly single mother worship and immigrationin the UK will probably mean that the Japanese will have to invent the robots to do lots of work before we do and they will get the money.

mombers said...

@L just look at the disgusting and declining state of care homes and hospitals to witness the ageing population problem. Can't automate elderly care and health care costs balloon the older you get so it's a black hole. The revenue requirements are going to be impossible to meet without worsening the deadweight losses of our current taxation system. Ant morality of whacking one generation for so much more than another is dubious.
An ageing population is much less of a problem with CI as the economy is MUCH bigger absent all the deadweight costs and the amount spent on the elderly is funded, i.e. they just get double what working age people do. And the single mum problem that you describe gets sorted too as the disincentives to keep a low income household intact disappear. Immigration is sorted too as the low skilled aren't attracted as much as they have to compete with folk who have enough income to accept lower wages

L fairfax said...

I am not sure if "Can't automate elderly care" will always be true. Cleaning and housekeeping robots could bring down costs and we could save in other areas.
Also peace in Colombia might help cure Alzheimer’s which would save a fortune.

mombers said...

@L I'll believe it when I see it. Elderly people needing care are going to double in number in the next 20 years. Say we automate it to an incredible degree and double the productivity of care workers. It'll still be a huge wage bill. Then there's the extra cost for the robots and the people employed to design, manufacture operate and maintain them - people taken out of the private sector labour pool.
Note that this is economic activity that is funded by the state so comes at the expense of private consumption. Compared to other state expenditure like schools, the army, infrastructure, police, etc., you don't get a return on it from subsequent private economic activity. It's an incredibly valuable thing to do, keeping the elderly in some sort of dignity, and it would be a terrible state of affairs if we had the elderly living in squalor. But it is somewhat like putting alloy wheels on a jalopy just to tow it to the scrapyard

L fairfax said...

Diseases have been cured before, why not Alzheimer's? The main problem with this "As a quid pro quo, should the childless have their state pension means tested?"
Is that you could have someone who worked all their life get a smaller state pension than Karen Mathews - I find it hard to believe that would be fair. (Particularly since the cost of her imprisonment and benefits is going to eat up a lot of the benefits of her having children).

mombers said...

@L that's a bit of a Daily Mail case to me I'm afraid. In the grand scheme of things the amount spent on people like her is a pittance compared to old age welfare, BTL subsidies, etc. Lots of this is to do with the incentives to split up families by discriminatory means testing, etc. I'm merely positing a thought experiment, would prefer means testing of everything to be abolished. Means testing CB will only decrease the birth rate and make a bad demographic situation worse. And not to be too un-PC about it, aren't wealthier people in a better position to raise children anyway? And the childless have received Child Benefit or its predecessors when they were young so it is only fair for this gift to be repaid somehow. Best way is to keep it universal.

The reason we're in such trouble is the intergenerational bargain is broken due to welfare being on a pay-as-you-go basis with the 'pay' bit coming from labour and capital instead of land. This is completely broken now with an ageing population and a poorly designed taxation and housing welfare system, and will only get worse.

L fairfax said...

That "that's a bit of a Daily Mail case to me I'm afraid." is a bit of virtue signalling to me.
@"In the grand scheme of things the amount spent on people like her is a pittance compared to old age welfare, BTL subsidies" I am not sure if that is true and even if it is. For someone without children them getting less than her would seem very unfair.
"would prefer means testing of everything to be abolished."
Don't suggest more then - someone might think it is a good idea. There is no idea so stupid that someone might think it is a good idea.

mombers said...

@LF MW has the figures - working age benefits have remained largely flat as a percentage of GDP around 5%, £10bn and rising of which is benefits paid to private landlords, not working people. Pensions and old age NHS spending is rocketing though.

The goods news is that people like Karen Matthews tend to claim less old age benefits as they peg off quite young...

I'm pretty sure my viewpoint is culturally different. My grandmother just died at 89 but funded her own care. The state safety net is very thin where she lives and she was lucky enough to save up enough money for herself. There are lots of very poor people there who are not in such a position to save but they largely depend on their own children for care rather than other peoples'

paulc156 said...

LF. A cure for Alzheimers is a bit like nuclear fusion. Always a couple of decades away. I heard a really wonderful lecture from the LSE last year. It's well worth a listen and about 26 minutes 40 seconds in he gets onto Alzheiners. Starts off with embryonic disorders, then cancer before Alzheimers at 26 min 40 secs in. He makes a case that they're not even on the right path with this disease.

Bayard said...

"As a quid pro quo, should the childless have their state pension means tested? Can't really expect as big of an equity stake in the next generation's private property if you don't contribute as much to their upbringing."

Hang on, what about all the tax that the childless pay to educate other people's children? (and don't say it goes to pay back what was spent on their own education as in what way are the ones with children paying this back, then?)

mombers said...

@B, what do you get for your contribution to the education system? If you were state educated, you are given a free springboard for life. Even if you were privately educated (I was) you get to leverage the skills of state educated people in your own business, as well as consume the goods and services the millions of state educated people who run the economy. It's not a tax saving not to have people go to school - it pays for itself many times over. If you don't want to contribute to the current education budget or make good for what was spent on you, how do you intend to avoid free-loading off the wealth that state education has created?

In Japan they are 'saving' billions by closing down a school every week but they are utterly stuffed and are desperately trying to figure out how to prevent a collapse of their population from 127m to below 100m. Young people in Japan are in a terrible state - that's what a society that is running itself down does.

Mark Wadsworth said...

M, you're on top form again. Pity you don't have time to lead a party like YPP and say this in public!

Frank said...

This week's poll: Other. I don't drive. ;-)

L fairfax said...

"MW has the figures - working age benefits have remained largely flat as a percentage of GDP around 5%, "
That doesn't include the £3.2 million cost of the kidnapping in her case. Nor the police time. If you think people on benefits only cost the benefits please read wasting police time it is good.
"benefits paid to private landlords, not working people. "
That is like saying my salary doesn't benefit me just the bank,Sainsburys, inland revenue etc.

Mark Wadsworth said...

F, ah, good answer.

LF, it's not just people on benefits who commit crimes. I fail to see the relevance. That has nothing to do with means testing v flat rate benefits.

Housing Benefit clearly benefits primarily private landlords. Conversely, social housing benefits everybody - low income people, private tenants, the taxpayer, local councils etc. The big losers from spending money on social housing instead of Housing Benefit are of course the banks.

L fairfax said...

@Mark Wadsworth
True good point about crime. However the idea of means testing pensions if you have hadn't had children is silly. Suppose X's children don't work or go to prison does X's then get mean tested because X have been less beneficial to the UK than Y who has paid exactly the same amount of tax, but has had no children - but X's children cost a fortune.
Of course best not to have means testing maybe X was a wonderful parent but the children were mentally ill - not their fault, or y wanted to have children and couldn't. It is a lot of cruel work for little money.
(FWIW neither is applicable to me although I do know real life Y and possibly X).
@"Housing Benefit clearly benefits primarily private landlords"
It obviously benefits them and their tenants. If I pay £x for a service then I get a service worth £x to me and the supplier gets £x.
True in many cases without housing benefit the landlord would only £0.3x (or another fraction, please don't quibble about the exact fraction) - so in that case the landlord* does get more than they should do. However in many cases the tenant would get a different house or no house at all.
For example, I know someone who came to the UK from another country to live on benefits because she can't form stable relationships and is lazy. Without benefits she would have had to work in her own country - she benefits a lot from the system.

*If as doesn't happen very often the landlord build the home then that is benefit to everyone.

"Conversely, social housing benefits everybody - low income people, private tenants, the taxpayer, local councils etc. "
Has anyone ever tried to see if the private sector could do this cheaper? I reckon it would be possible to build homes in Wales for people who live in Westminster but don't work there and move them and sell their houses in Westminster. Could save a fortune and would certainly benefit those who can now move to Westminster.

Mark Wadsworth said...

LF, I personally am not in favour of "means testing" at all. Either everybody gets it or nobody does, and taxation is means testing enough.

Mombers was merely taking the warped "means test" logic to various obvious and unpalatable conclusions to show how stupid the idea is.

As to private sector provision of housing, the whole thing is clearly a complete disaster, because it's 90% rent seeking by land owners, the bricks and mortar is more or less a side issue.

Clearly, it makes no sense for welfare claimants with no intention of working to occupy council housing or receive Housing Benefit in high wage, high rent areas.

I'm a land valuer taxer and I am consistent on this - if some Poor Widows in Mansions get prised out by LVT then I shed no more tear for them than for Council House Slappers with seven illegitimate kids. It's the Homeys who make an arbitrary distinction between the two.