The state and equality

What proportion of state spending goes upon increasing equality? This is one of many questions posed by comments on my post about the left and the state.
I suspect the answer is: not much.
Let’s start with some figures. The DWP estimates that spending on welfare benefits in 2008-09 was £134.2bn. That’s 22.2% of all public spending. However, more than half of this was on contributory benefits, such as the state pension and incapacity benefit. This is just (on average) people getting their money back. Non-contributory benefits, at £61.9bn, represent just 10.2% of total public spending and 4.2% of GDP.
For example, income support for the under-60s is just £8bn, or 1.3% of spending. A similar proportion goes on support for poorer pensioners. Housing Benefit is 2.8% of all spending, Jobseekers Allowance just 0.3%.
Cash transfers to the poor, then, are only a small fraction of public spending.
But of course, these are only a part of the link between the state and inequality.  Tawneyite socialists claim that spending on (say) health and education are forces for equality.
But are they? Julian Le Grand famously argued in a book in 1982 that the rich actually got more than the poor from these services - a claim supported more recently by the Joseph Rowntree Foundation.
In the case of healthcare, the claim is also supported by this paper (pdf). One reason for this is that the poor under-estimate their ill-health and so are less likely to make claims on the health system. Another reason is that the rich live longer (pdf) than the poor, and the bulk of health spending on most individuals comes late in life.
And it’s quite plausible that education spending is actually for force for inequality, for four reasons:
1. Kids from richer families are more likely to stay on (pdf) at school. This is because they get better schooling before the age of 16. Children of professional and managerial workers are almost four times (pdf) as likely to get 5 or more GCSEs as those of unskilled manual workers are only
2. Education is partly a positional good. This means those with less of it than others might be worse off as a result.
3. Schools can act (inadvertently) as a means of legitimating inequality and hierarchy.
4. Although romantics like to think of schools as a means whereby some kids from poor backgrounds (like me) can escape poverty, they often serve the opposite function. They might be ways of crushing the aspirations and abilities of poorer students, especially if they are black.
Now, I’ve deliberately overstated the arguments here, to pose the question of how egalitarian the state is.
I suspect that, in truth, the key to whether the state is a force for equality rests upon something we cannot see - the counterfactual.
Big government leftists suspect that the alternative to state provision would be little or bad healthcare or education for the worst off. But mightn’t the alternative be instead greater use of charity, scholarships or - better still - co-operative self-provision. (Remember, there‘s a big difference in principle between state financing of public services and state provision).
On this point, I have an open mind. But surely, all leftists should agree that the state doesn’t do as much as it should to reduce inequality. The question is: is this failing a bug, as big-state leftists believe, or - as I fear - a feature?

Comments

[RobW]

You seem to be becoming more liberal by the day. What's happening? Have you had a road to Damascus moment?

[dearieme]

The inequalities that probably matter most in life are:-
beauty, popularity, health, and intelligence.

Which of those can the State realistically do much about, if one precludes the socialist instinct to equalise beauty by scarring the faces of the attractive?

[kardinal birkutzki]

The answer: 100%

How much is it successful is the relevant question.

Answer: probably not much.

[CharlieMcMenamin]

"...mightn’t the alternative be instead greater use of charity, scholarships or - better still - co-operative self-provision."

You mean like the sort of rag-bag 'health' service which existed before 1948, and which Nye Bevan nationalised? Yeah, those arrangements were really well-known for promoting equality weren't they.

[Luis Enrique]

I suspect you've already seen this, but the most recent post in Lane Kenworthy's series on inequality looks at the extent to which government transfers reduce inequality:

http://lanekenworthy.net/

[Andreas Paterson]

Chris, I assume by the bug/feature thing you mean: Is this a problem that can be eliminated or is it a situation that will inevitably occur.

To which I'd really have to ask: So what if it is a feature?

What we're talking about here is nothing more than a few minor side effects as a consequence to something with major benefits for all. To be honest, I can live with problems like this.

[Giles]

Chris

Great thoughts as usual. But have you ignored something: the shape of the utility curves for the different groups in society? So, suppose it is right that the rich get slightly more in absolute terms (as http://www.statistics.gov.uk/downloads/theme_social/Taxes_Benefits_2005-2006/Taxes_Benefits_2005_06.pdf suggests they do) - is it still not the case that the £4k in benefits in kind that the poorest decile receives is worth more to them than the £6 that the top decile gets?

Giles

[Shuggy]

Interesting. But when you look at, for example, universal compulsory education and its impact on equality surely what you should compare it to is a situation where the state does *not* provide this. We have no example of a modern industrial country that has not felt the need to provide it in some form - leaving us only with historical examples. From these it is surely rather difficult to argue that the absence of the state from the business of education provision produced a more egalitarian result?

This is an example of a wider point: while you rightly point out that government involvement doesn't necessarily create equality in the way people tend to assume, you're very far away from showing that equality would be greater were the state to withdraw. Furthermore, even *if* state involvement doesn't have much impact on equality, it remains the case that it provides services that are nevertheless essential. The welfare state does not, as I know from professional experience, provide equality - but it does provide welfare. As with education, we already *know* from history what a society that would leave this to charities and friendly societies looks like. It's poorhouse-shaped.

[Andrew Hickey]

What Shuggy and Charlie said. For the richest, it's a choice between state-funded healthcare/education/whatever and privately-funded. For the poorest, it's a choice between state-funded or none at all.

[Alderson Warm-Fork]

"You mean like the sort of rag-bag 'health' service which existed before 1948, and which Nye Bevan nationalised?"

Without wanting to speak for Chris: the advantage of the state is that in a capitalist economy it's the only non-profit-making organisation that can take a major share of social wealth and co-ordinate its spending across the country.

But there's no reason to think that this is necessarily something restricted to the state, which no organisation with a different M.O. from the state might acquire.

A structure of grass-roots, non-coercive, locally-run, provision of services, with a non-state character in whatever way you want to specify, could conceivably, through combativeness and organisational strength, acquire state-like resources, whether through demanding funds from the state with no strings attached (and backing the demand with strikes, riots, whatever) or more directly. All it takes is collective organisation and struggle.

In fact, such an organisation might potentially replace the state completely.

[runescape accounts]

Just wanted to say HI. I found your blog a few days ago and have been reading it over the past few days.

[CharlieMcMenamin]

Alderson,
"A structure of grass-roots, non-coercive, locally-run, provision of services, with a non-state character in whatever way you want to specify, could conceivably, through combativeness and organisational strength, acquire state-like resources, whether through demanding funds from the state with no strings attached (and backing the demand with strikes, riots, whatever) or more directly."

But that's not what's on offer: what's on offer is a bastardised version of a market economy with the local or national state as 'community leader' (i.e. monsponic purchaser of services) which uses its funding to incorporate and defang any possible radical impulses in such 'grassroots' community organisations. I've huffed and puffed about this at some length over at
http://itslifejimbutnotaswknowit.blogspot.com/2009/04/whose-cradle-whose-grave-response-to_20.html

[Bob B]

As George Osborne so amazingly says:

"I am convinced by the arguments made by the likes of John Rose, chief executive of Rolls-Royce, and the entrepreneur Sir James Dyson that we need to create a more balanced and productive economy that is not so reliant on the three motors of finance, property and public spending for its future growth.

"That means radical reform of education, better skills training and overhauling our dilapidated infrastructure – and it means targeted help now for the many thousands who have lost their job."
http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article6122271.ece

Which reads a bit like Gordon Brown's rhetoric on the run up to the 1997 election and which suggests a Conservative government ahead intent on centralist intervention and micromanagement of the public sector with more targeted regulation.

So be it but how does "individual responsibility" fit in that agenda?

[John Q. Publican]

"But mightn’t the alternative be instead greater use of charity, scholarships or - better still - co-operative self-provision."

Um. They tried that in the Victorian era. While philanthropy got them a certain distance, it wasn't ever going to educate the entire populace; and in an age which is no longer industrial, an educated populace isn't an option any more. It's a necessity if one is to avoid economic failure on a scale such as we literally haven't ever seen before. When the means of production are increasingly automated and the economic make-up of your country is primarily tertiary industry, you can't afford not to educate everyone.

The problems with philanthropic assumptions are these: 1, there was never enough philanthropists with enough money. 2. Private interests are very dangerous in a world which is no longer either parochial or isolationist. Westboro Baptist Church High School, Hackney anyone? 3. The only reason philanthropy worked was the indoctrination of rich people with the value of Christian Charity. The rich no longer believe it is their duty to pay for the poor. Therefore, they won't.

Your last point, though: there we suddenly have immense common ground. We are now capable [1] as a species of decentralising authority to the extent that we can re-introduce functional individual autonomy to society for the first time since the city virus took root. The state is inefficient? Go round it. We can organise, now; the cost of entry to the market of ideas has never been lower, and good ideas at the edge can achieve huge take-up rates remarkably fast. I used to work as a international telecomms design engineer, and I have a huge attraction to any system which moves decision-making from the centre to the edge of the network.

[1] Low-bandwidth societies benefit from centralised authority structures, because they are very very good at taking a clever idea in place a and distributing it to places b - z. Observe how Kublai Khan administered the unrealistic empire his grandfather had built.

Bits of our civilisation are no longer low-bandwidth. That means it becomes cheap to distribute ideas very fast. That means that the Open Source movement can happen. There's a lot of lessons in there about how innovation works in a high-bandwidth society. Examine http://www.catb.org/~esr/writings/cathedral-bazaar/

[Laura]

Surely if we decentralised health and education provision, the cry "postcode lottery" would go up. This cry convinces me that we are not a country that likes decentralisation on matters beyond the very, truly local and specific (and even then I wonder).

Also, if we decentralised, are we assuming that this body that would take over is democratically elected or not? If it is, where's the difference between our existing state/council provision and this new form? What difference does the name make? (Maybe we should ask the Royal Mail that one.) Or are we saying that this new organisation would employ different, presumably less experienced individuals? Would that really help?

If our suggested replacement system is not to be democratically elected, wouldn't that lead to its own trouble? While democracy is far from perfect as a system and we could pick at its flaws all day, I'm not convinced anyone has yet come up with a better long-term alternative for the control of the provision of healthcare and education. Certainly neither the Victorian system of charity nor America's private provision of healthcare seems to be it.

PS Great blog.

[Bob B]

"Certainly neither the Victorian system of charity . . "

Least it be overlooked, the Elizabethans started out along the road of providing state sponsored social safety nets for the deserving poor:
http://www.victorianweb.org/history/poorlaw/elizpl.html

Bismark, the first Chancellor of Imperial Germany, deserves the credit for introducing retirement pensions financed by the state.

Britain was late in providing for universal basic education:

"We have noted a substantial body of original research . . . which found that stagnant or declining literacy underlay the 'revolution' of the late eighteenth and early nineteenth centuries. . . Britain in 1850 was the wealthiest country in the world but only in the second rank as regards literacy levels. [Nick] Crafts has shown that in 1870 when Britain was world economic leader, its school enrolment ratio was only 0.168 compared with the European norm of 0.514 and 'Britain persistently had a relatively low rate of accumulation of human capital'."
Sanderson: Education, economic change and society in 1780-1870 (Cambridge UP, 1995) p.61

[Laura]

"Bismark, the first Chancellor of Imperial Germany, deserves the credit for introducing retirement pensions financed by the state."

Bismarck was great. From history A level onwards, I spent years arguing that what Bismarck did was better than what democracy in Britain was doing at the same time. I'm a big fan of Bismarck. But Bismarck was an individual who used the system he found himself in, not a system in his own right. Germany got lucky in Bismarck; after Bismarck, Germany got a lot less lucky. I'm not keen on a system that relies so heavily on the whims of the individuals who get to the top of it.

Nor am I keen on religion or morality as a doorway between me and healthcare and education. What provision would there be for atheists? Should atheists be made to give up their beliefs to get treatment or an education? Or would this be a different kind or religion or morality where no moral judgements were made about the recipients of these benefits? Are there still enough of the practising religious in this country to shoulder the burden between them? Is it fair that they should? Or should we take the view that humans are innately inclined to follow moral codes and could be persuaded to follow these ideas without pressure from religion? It'd certainly leave a lot more money available for healthcare and education if we could find some way of tapping innate morality. We could use all the funding that currently goes on prisons.

[Alderson Warm-Fork]

"Or should we take the view that humans are innately inclined to follow moral codes and could be persuaded to follow these ideas without pressure from religion?"

Um, isn't that a fairly obvious fact? That religion is neither necessary nor sufficient nor particularly relevant to personal morality? 500 years ago when Bishops said that without religion everyone would start torturing each other, burning old women, and massacring Jews, they could avoid being proved wrong because there weren't many atheists around (or at least, not many left alive). But nowadays...I don't see how such a view could get off the ground.

[Alderson Warm-Fork]

"if we decentralised, are we assuming that this body that would take over is democratically elected or not? If it is, where's the difference between our existing state/council provision and this new form?"

State structures start with power and sovereignty held at the top and delegate it downwards, as we would expect seeing how they evolved (they are basically a monarchy that occasionally became a little bit more democratic, but only as much as was necessary).

There's no reason in principle why we couldn't have a country-spanning co-ordinating organisation that started with power and sovereignty held at the bottom and delegated it upwards (by individuals, then face-to-face groupings, then their delegates, and their delegates' delegates...) by representatives in frequent contact with their electors, easily recallable, and directly accountable.

See: the Paris Commune, Zapatista Chiapas, every popular revolution in between.

[Bob B]

For sources of morality without religion, try David Hume writing in 1748:

"All moral duties may be divided into two kinds. The first are those to which men are impelled by a natural instinct ... which operates on them, independent of all ideas of obligation, and of all views either to public or private utility. Of this nature are love of children, gratitude to benefactors, pity to the unfortunate. ... The second kind of moral duties are such as are not supported by any original instinct of man but are performed entirely from a sense of obligation, when we consider the necessities of human society, and the impossibility of supporting it, if these duties were neglected. .... We shall only observe, before we conclude, that though an appeal to general opinion may justly, in the speculative sciences of metaphysics, natural philosophy, or astronomy, be deemed unfair and inconclusive, yet in all questions with regard to morals, as well as criticism, there is really no other standard, by which any controversy can ever be decided."
http://www.constitution.org/dh/origcont.htm

As for religion, David Hume: Dialogues Concerning Natural Religion (1754) is an illuminating point of departure:
http://www.anselm.edu/homepage/dbanach/dnr.htm

[Joe Otten]

On the narrow point

or - better still - co-operative self-provision. (Remember, there‘s a big difference in principle between state financing of public services and state provision).

Cool, yeah, like having schools funded by the state but run by boards of parents.

Oh hang on, they are already.

Yeah I know, micromanaged box-ticking culture from the state, but I think my point stands. Why would the local co-operative whatsit make any difference to equality?

[rolex yachtmaster]

And a lot of it reflects a switch from bank deposits to securities; foreigners “other investments” in the UK, http://www.watchgy.com/ mostly bank deposits, fell by £143.2bn in Q1. And of course there’s no guarantee such buying will continue.
http://www.watchgy.com/tag-heuer-c-24.html
http://www.watchgy.com/rolex-submariner-c-8.html