The answer to “neat, plausible and wrong” solutions is to combine themby Andrew Harrop / September 8, 2016 / Leave a comment
Every human problem has a solution that is “neat, plausible and wrong” an American journalist said exactly 100 years ago. But sometimes when a problem grows knottier, it seems that the number of neat solutions multiplies. It certainly feels that way when it comes to the question of how to improve Britain’s creaking system of social security, a byzantine scheme of cash transfers which pays out over £200 billion each year.
As things stand, social security consists of dozens of different welfare benefits, variously available on the basis of present means, past contribution, compliance with conditions, family circumstances, age and residence. It operates on totally different principles for pensioners and non-pensioners. And it sits alongside a hidden system of “shadow welfare,” in the shape of tax reliefs, which like social security are intended to support household living standards. If there was ever anything in need of neat solutions, surely this is it?
Yet, the conclusion of a year-long study by the Fabian Society is that, while there are at least five neat and plausible solutions, they are all wrong—at least as single “silver bullet” answers. This is partly because of the complexity and heterogeneity of British economic and social life. But it is also because social security is designed to do lots of different things, which no single policy can achieve. In particular, cash transfers exist to redistribute money between groups of people—to equalise living standards and life chances, and prevent destitution and poverty. But they are also there to redistribute money over time, across different points in each of our lives to reflect variations in our lifetime earnings and living costs.
So what are the neat solutions, and why are they wrong? First, there is the fallacy of so-called “pre-distribution,” which contends that the need for social security spending can be greatly reduced with full employment, cheaper housing and a higher minimum wage. All of these things are, of course, desirable. But none of them are likely to lead to significant improvements in living standards, without more…