The Guardian says Harriet Harman is worried that Labour "will be viewed as the party of welfare, not work". This is unfortunate, because someone must stand up for welfare.
First, let's remember that working-age welfare recipients are, to some extent, not a fixed group so much as people who are temporarily out-of-work through illness or unemployment. ONS statistics show that in Q1, 886,000 people of working age moved out employment into either unemployment or inactivity whilst 509,000 moved from unemployment into work (27% of all unemployed) and 573,000 moved from inactivity to employment. For these reasons, only 326,000 of the 1.8 million people out of work have been unemployed for more than two years.
Except for the ill and disabled, there is not so much a bunch of claimants and bunch of workers, but rather people who shift from one category to another.
Welfare is, therefore, a form of insurance; we pay in in good times and get a payout in bad.
In fact, this is true in two other senses.
For one thing, welfare acts as a form of automatic stabilizer; higher welfare spending in bad times helps to support aggregate demand and so moderates recessions.
This matters. Recessions are unpredictable. Neither monetary nor fiscal policy can prevent them, therefore, simply because they cannot be loosened sufficiently before the recession becomes obvious. We need, therefore, a timelier and more automatic protection against downturns. Welfare spending is that protection.
And it protects us all. Benefits aren't so much a payment to claimants as a payment through claimants. They are spent at Primark and Lidl, and so support employment there. The distinction between welfare and work is therefore a false one; welfare helps to create jobs.
There is, though, a third way in which welfare is a form of insurance.
Imagine we were behind a Rawlsian-type veil of ignorance in which we did not know what type of employability we would be born into. Reasonably risk-averse types would, surely, agree upon some type of insurance whereby less employable types would get an income, paid for by the more employable. We can think of the tax and benefit system as replicating the sort of transfers that we would freely agree to behind the veil of ignorance. In this way, the benefit system corrects a market failure - our inability to buy insurance before we are born.
Given all this, what's remarkable is how small is the welfare state. Spending on benefits for children and working people, even including tax credits, amounts to just over five per cent of GDP.
Herein lies a paradox. Developments since the 1970s have actually strengthened these arguments for a strong welfare state. The collapse of demand for unskilled workers has increased the case for transfers to the less employable, because these have suffered the bad luck of being alive at a time when being unskilled carries a greater penalty relative to being more employable. And one reasonable inference from the Great Recession is that we need a bigger welfare state precisely because - given the failure of timely monetary and fiscal policy - we need more automatic stabilizers. And yet politicians seem to have drawn the opposite inference.
Of course, there is much wrong with the welfare system - I'd prefer a citizens basic income - but let's remember that there is a strong case for welfare. If or when the Labour party finds either a brain or a backbone, it might make this case.