Financing the Social State
Towards a full employment economy
This paper was commissioned as part of the Social State series to address Beveridge's Giant Evil of ‘idleness’ and propose new policy priorities for tackling unemployment and underemployment in 2015 Britain.
There is no doubt that Beveridge saw idleness as the curse of unemployment that had afflicted so many in the 1930s. The cure to idleness was work, and Beveridge believed that the state should make sure work was available for all who wanted it.
Idleness has been a fact of life for far too many for far too long in the UK, and as is clear the matter has got worse in the current recession. At a macroeconomic level, involuntary idleness represents a massive waste of economic resources for this country.
In this paper the authors seek to show that the policy of austerity that has increased idleness, and which has now given rise to the additional problem of disguised underemployment, makes no economic sense. Now that we know that in the current state of the economy, spending on investment by the government does, at the very least, pay for itself in the short term whilst in the longer term it can generate the revenues needed to deliver deficit reduction.
This paper focuses on two core themes:
- Implementing a fiscal policy to tackle idleness
- A complete redesign of the Income Tax, National Insurance and benefits systems.
The authors' recommendations here are radical: they are committed to strong, progressive taxation. In 1942 Beveridge said the war provided a revolutionary moment and as he noted “a revolutionary moment in the world’s history is a time for revolutions, not for patching”. This paper argues that the global recession is now providing another revolutionary moment in which new thinking is required.
Howard Reed discussed this paper along with a range of other speakers at the Achieving the Social State event on Wednesday 13 March 2013 at the London School of Economics. You can listen to the event in full here and see our Storify for more information on the online debate.