There is, understandably, a backlash against the government's proposal that women who want to claim tax credits for a third child must prove they have been raped. For me, this highlights the importance of the John Cushnie principle.
Mr Cushnie was a star of Gardeners' Question Time whose reply to many questions was: "it's not worth the bother."
This answer applies to a lot of the welfare state. Maybe it is a good idea to limit tax credits to two children. But is it worth the bother, in terms of bureaucracy and intrusion and bad PR? Maybe you think claimants should prove they are seeking work. But is it worth the huge cost of finding out? Maybe benefits should be sensitive to variations in need? But again, is it worth the administrative cost?
Perhaps your ideal welfare state would entail many complicated gradations of need and desert. But these run against the Cushnie priniciple: it's not worth the bother. For me, one virtue of a citizens' income is that it avoids the deadweight cost of administering so many fine distinctions.
Of course, the Cushnie principle broadens. It's one reason why I advise my readers to hold tracker funds. Granted, it's possible that momentum, value, defensive and quality stocks would, over time, out-perform. But it might not be worth the bother of complicating one's investments so much.
Readers will recognise the Cushnie principle. It's an expression of Herbert Simon's theory of satisficing. We often lack the knowledge and rationality to maximize, he said, so why not make do with reasonable simple rules? But the Cushnie principle goes a little further, by seeing that an attempt at maximization might not just be impossible, but counter-productive. For example:
- There's the unnecessary labour in gardening or investing, policy-makers equivalent of which is the cost of bureaucracy. Of course, true maximization would take account of these costs. But it's easy to under-estimate them - thanks to the planning fallacy - as Iain Duncan Smith discovered with universal credit. How often do politicians say: "the cost of this scheme has come in way under budget"?
- In politics, the pursuit of the best policy might lose one political capital, which would be better expended upon higher priorities.
- Trying to maximize can make us vulnerable to cognitive errors. One virtue of tracker funds is that they protect us from the countless biases that worsen investment performance.
- The best can be the enemy of the good. In that wonderful film Whiplash Terence Fletcher's pursuit of genius destroys the lives of musicians who would have had perfectly decent careers. Similarly, investors who chase high returns end up over-paying for poor performing lottery-type stocks. And as John Kay has shown, attempts to maximize shareholder value can lead to corporate failure, for example by demotivating employees and encouraging corruption.
In these ways, the Cushnie principle has many applications. There's more wisdom in gardening than in politics.
Hm, perhaps.
But there is also the justice principle, where it may significantly improve citizen approval of the welfare state (and hence tax morality) that principles of fairness are applied, whereby free-riders are policed. Think also of the broken windows theory of crime prevention. If nothing is worth bothering about, then ultimately it's very difficult to uphold a social system (like a city or a welfare state) because of free-riderism.
So I'm fine if John Cushnie doesn't want to mow his own lawn, but I don't want him to manage the collective good.
Posted by: Christopher | July 16, 2015 at 02:40 PM
Oh, pfaw, if we give everyone a basic income, n one will need to police for the vanishingly small group of "free riders". Free riders usually exist as here in the US, when people are given union benefits (better working conditions) without having to pay union fees, Give everyone a good basic income and the free rider problem goes away. Create worker owned companies and the need for unions goes away.
Posted by: Carol | July 16, 2015 at 03:02 PM
CD: there's more wisdom in gardening than in politics.
President: "Mr. Gardner, do you agree with Ben, or do you think that we can stimulate growth through temporary incentives?"
"As long as the roots are not severed, all is well. And all will be well in the garden"
Posted by: Maurits Pino | July 16, 2015 at 03:11 PM
"Fairness" is obviously a subjective - and therefore political - judgement. What could be fairer than an unconditional basic income?
Efficiency appears to be more objective, but that presumes we understand a policy's purpose and scope and can therefore gauge it. The 2-child cap may cost more to administer than it saves in benefit payments, but that may be to ignore the indirect changes in behaviour it is intended to prompt, and whether it has an ideological purpose.
So why are the Tories keen to discourage births given that they are ostensibly "pro-family"? Is it simple class contempt (it was amusing to see the "Cambridges" coincidentally talk of their plans for a third child, which will presumably qualify for the Civil List); or a racist bogey ("1 in 4 births to foreign mums", according to the Daily Star); or is it just another reinforcement of the primacy of inheritance.
Posted by: Dave Timoney | July 16, 2015 at 04:11 PM
Perhaps Cameron/Osborne should have paid more attention to Mill's attitude. After all at its purist Mill said that children should only be created after their costs were carefully calibrated. He assumed that not being able to afford children was reckless behaviour. Therefore under Mill's analysis Tax Credits would be deleted. Now how would the aspirant hard-working Tory voters relish that? Compare the botched reductions for those earning £50K+ of Child Benefit. Cameron/Osborne are class-warriors who've noticed that the 2 child rule hits working-class (and especially ethnic) families hardest. They are shameful.
Posted by: Chris Purnell | July 16, 2015 at 05:13 PM
Isn't this just cost / benefit analysis? Or bother / benefit
Posted by: Luis Enrique | July 16, 2015 at 06:17 PM
There's more wisdom in many things than in politics. It isn't a very high bar.
Posted by: Steven Clarke | July 16, 2015 at 10:05 PM
@Luis, yes it's a cost/benefit analysis; but such exercises typically distinguish between "hard" and "soft".
The hard case suggests that the costs (bother) may outweigh the benefits (a reduced bill). That would imply the case is dependent on the soft side - i.e. there are intangible benefits that tip the balance.
The unwillingness of the Tories to discuss those intangibles suggests they are either unpopular or embarrassing. We're not a million mile away from Swift's "A Modest Proposal".
Posted by: Dave Timoney | July 16, 2015 at 11:31 PM
The right wing press often use outliers, to generate outrage, or deliberate aunt sally's, just how many people on the dole have ten kids.
It really isn't that big an issue.
We are not talking broken windows, but broken people, and blaming them for free riding just allows them to be demonised (they have no choice - free riding is the only option available to them), when they are the products of failed or deliberate government policy and like the ill we should treat them with more understanding and compassion. Or at least do something constructive to help them.
Just like with illness, you never know when it might happen to you. Or perhaps it has, and you are on a zero hour contract or spurious self employment.
The outrage of many on the left over the treatment of Greece, is justified. However Greece (Syriza) should not have been bluffing about quitting the Euro with club Med to follow?
It may happen now anyway as the only way to resolve the Euro Crisis.
The two issues are similar, it's just a matter of scale.
Of course if you are part of the client group, like Home Owners, London and the South East etc. You are all right and can ignore or enjoy, the consequences for others.
Posted by: aragon | July 17, 2015 at 11:50 AM
I would just like to share this:
http://www.theguardian.com/books/2015/jul/17/postcapitalism-end-of-capitalism-begun
An alternate vision of the future and a transition to it.
"But in the process technology has created a new route out, which the remnants of the old left – and all other forces influenced by it – have either to embrace or die."
Already known, embraced, and participating in :)
Hotelling in economics is Triangulation in politics, and Schadenfreude is enjoying others pain.
Posted by: aragon | July 17, 2015 at 01:26 PM
Yes yes yes. Always yes to a citizen's income.
Great post.
Posted by: Matt Moore | July 17, 2015 at 03:21 PM
Problems with the Cushnie principle IMO:
1. Long term returns cannot be predicted on most projects so immediate deadweight cost of decision making which is quantifiable/'qualifiable' might deter projects that could have made sense.
2. Externalities. Pursuing a project might make no rational sense for Party A but might make sense for Party B, who may be a related party and so overall welfare is maximised for both parties. Eg Husband spends ages shopping for a life insurance policy for himself which actually benefits his spouse.
3. Additive learning. The tories fucked up on the universal credit, but perhaps they learned something about the process of policy implementation that can make future projects successful (doubtful, because most tory policy is about distributive rather than efficiency outcomes).
Posted by: Matthew Maloney | July 20, 2015 at 09:19 PM