"Paying more in"

Over the last five years, I've paid almost £2000 in home insurance and got nothing back. This is unfair. It should change.

Now, anyone with an IQ higher than their hat size will spot a problem with this. Paying in more than you get back is not a fault of insurance but a feature. The point of insurance is to pool risk, so that the lucky - those who don't get burgled - pay in whilst the unlucky take out.

This shouldn't need saying. But it seems it does, because Liam Byrne writes:

we must do more to strengthen the old principle of contribution: there are lots of people right now who feel they pay an awful lot more in than they ever get back. That should change.

This is just confused. Even the best institutions for pooling economic risks - whatever your conception of them might be - will have some people pay an awful lot more in than they ever get back. This is simply because some people will be lucky and not suffer economic risks. This will be true however strong the principle of contribution is.

The only way you can avoid having some people not pay in more than they get out is to have no welfare state at all (and no private insurance for economic risks either). In this world, people would protect themselves against risk by saving and borrowing, in effect self-insuring.

So, what is Byrne doing here? One possibility is that he's just being stupid: he has form. The other possibility is that he's not. He's trying to pander to a prejudiced public who are ignorant of the facts of the welfare state by invoking a silly notion of a distinction between the deserving and undeserving poor. I hope none of you were daft enough to think "divide and rule" was only a Tory strategy.

Comments

[Mark]

Are you similarly frustrated that the public don't see their state pension in the same way as other benefits? Seem to be convinced that they pay for their pension; I've not done the sums but when you look at NI contributions and what they pay for it's intuitively clear that they don't pay in anything like enough to generate a pension of £7000 a year indefinitely.

[Tom]

Unless he includes the assumption of risk by the state as part of the 'getting out'?

[Sam Barnett-Cormack]

Perhaps, just maybe (we can hope) what they're doing is badly expressing a desire to move to a model of unemployment benefit seen on the continent, where people who've been working longer and making more money get something nearer their old salary, for a while, when they become unemployed. As long as that's on top of current provision, I see no problem with it, personally. Of course, that wouldn't be revenue-neutral.

[Blissex]

The obsession with talk about benefits seems to me pure politics:

* It distracts from the state of the economy.

* Directs anger for reduced living standards for the middle class not to to the upper class or the inordinate "aspiration" of the middle class for massive tax-free capital gains forever, fueled by debt.

* It promises a simple solution to fiscal issues: soak the working and unemployed poor, who live in indolent luxury and could well do with smaller mansions and fewer horses and Cadillacs or T-bone steaks.

* Psychological research shows that most people have difficulty relating or comparing their situation to those who have a much different one, such as immensely wealthy finance heroes of wealth creation whose jobs and bonuses are funded by the ever generous Bank of England, but they find it much easier to relate to and criticize the lifestyles of those nearer to them.

But the technique is ancient. Here is again my usual link to a collection of 19th century cartoons about the luxurious lifestyle on benefits of the Irish parasites who took so much from the English, and their captions would merely need minor updating:

http://irishstereotype.blogspot.co.uk/2010/01/racism-anti-irish-cartoons.html

[Blissex]

«the public don't see their state pension in the same way as other benefits? [ ... ] they don't pay in anything like enough to generate a pension of £7000 a year indefinitely.»

That will also be taken care of in due course.... :-)

But for now what matters is the politics of the situation, that pensions benefit disproportionately women, in particular older women with property (and their heirs), and women are a very powerful swing constituency.

The Coalition (and New Labour before it) gives incredibly sweet "insurance" deals to three "aspirational" categories in particular: middle aged and old women, , bankrupt bankers, house speculators.

It is not just non-contributory pensions and NHS care that are untouchable, but also hundreds of billions in non-contributory bankruptcy insurance for bankers and fairly large sums in non-contributory floodplain insurance for house speculators, and now non-contributory "deposit risk" insurance for the same house speculators.

And if you look at criminal law it is largely the same: it is very difficult to convict women, bankers and real estate speculators no matter how outrageous their actions.
Both in the USA and in the UK, even if with somewhat different flavours.

Rather different than what can be meted out to working or unemployed men (especially if younger and northern) can be, as they are the new parasitic, feral, nasty "niggers" or "paddies".

[gastro george]

"... the public don't see their state pension in the same way as other benefits?"

Nor their tax relief on private pensions, and the list could go on ...

"So, what is Byrne doing here?"

Being an unreformed Blairite?

"... what they're doing is badly expressing a desire to move to a model of unemployment benefit seen on the continent."

I wouldn't think so considering his record.

Bravo Blissex.

[Luke]

We do seem to have some sort of bias about paying paying in and out- Chris doubtlessly knows the name. People don't like the idea of annuities ("what if I die tomorrow?"), and often feel, after paying years of insurance premiums, that they deserve something back. Anecdotally, I have heard that insurers try to devise policies that make occasional small payments for customer satisfaction - and increased premium. (I wonder if that's what a no claims bonus really is? I digress.)

Where does that leave us? I suppose with an incentive for a "nasty party" to make sure that as few people get benefits as possible to make benefits (aka social insurance) seem a bad deal. Say by stopping child benefit from being universal....

[paulc]

Liam Byrne along with Frank Field and several other notables may as well go and join the tories and be done with it. Why do we have the three main parties all pandering to the lowest common denominator of the electorate in some sort of macabre game of beggar thy neighbour. Except in this game the neighbour is a scrounger and the aim seems to be to turn him into a beggar. Can someone remind me...what exactly are Labour for again?

[Kath]

And for avoidance of doubt - I believe this is the most wickedly cruel government we've ever had. This is not remotely a poor country and Liam Byrne is pandering to people whose resentment has been assiduously whipped up by the criminals in charge instead of telling the truth.

[Kath]

Where did my 1st post go?

[Kath]

@ Blissex - please be careful, you're on the edge of more divide-&-rule stuff, and sexist/ageist at that. Bash the bankers all you like :)

[Kath]

Oy! My polite reasonable post vanished again! Female pensioners banned?

[pablopatito]

I think you misunderstand him. He means people who make a claim (ie when they lose their job) get back less than they have put in. It would be like your insurance company only paying out £100 if you got burgled. You'd rightly argue that the policy wasn't worth it.

[Kath]

I did explain and I do understand, but my post keeps getting deleted.

[Kath]

Trying again briefly - state pension is different b/c everybody gets old, not everybody gets sick, homeless etc. Also explicitly contributory.

[Keith]

Both Labour and Tory (and now the Lib dems ) have broken the contributory principle repeatedly. Huge numbers of people have been robbed of their past contributions by cuts to pension and benefit entitlement!! Plus the right wing economic policy they support is incompatible with full employment.

This is smoke and mirrors to be polite or cynical deception to be frank. As for Byrne he is a tory who agrees with "conditionality" which is a device to undermine the welfare state and give slave Labour to big firms.

I may be suffering from a poor memory these days but I do not recall that the Labour Party was established to increase profits at poundland or tesco but to raise the living standards and opportunities of the masses.

A honest socialist party would say it supports a comprehensive system of social security and social protective legislation and progressive taxation. Not to mention policies to increase demand and production. Instead Labour wait around for "the market" and neoclassical economics to deliver the goods. But there is no evidence that the theory does deliver the goods! Why not have a policy based on planning rather than waiting around for the magic market to do what it has failed to do every where it is applied?

[Alex]

Chris "Against Women", you've got to do something about this.

[Keith]

Blissex do you have a website? It would be interesting to see a fuller development of your arguments.

[Kath]

I have tried, twice, to explain clearly and reasonably why I hold the view that the state pension is different from other forms of social security. Happy to be disagreed with, happy to debate.

Someone with their finger on the delete button obviously doesn't want to know and doesn't want other people to know.

No remotely offensive content.

[oldcobbler]

Every time I start to think about voting Labour again, they say or do something bewildering to put me off. Here we go again.

As for Liam Byrne's "form", given the ammunition he gave the Tories with his "There's no money left" joke(?), I'm surprised he hasn't been expelled from the Party.

[cjcjc]

"Blissex do you have a website? It would be interesting to see a fuller development of your arguments."

Hahaha

Perhaps s/he could let us know under which law one might go about convicting real estate speculators?

[Clinton]

Thanks because of this! I??™ve been searching all above the web for that details. 330)

[D]

A fantastic post. I do wonder whether Liam is really that stupid or if he thinks we are (and which would be worse!)

[Bialik]

good thing nobody lives 'indefinitely' then... but seriously, Labour has form on divide and rule too. I think it was Brown who popularised the phrase 'hard working families' .

[hosting]

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