Tag: economics

People Column

Democratic enterprise the key to fairness

20th December 2000

I HAVE been a great admirer of CORI and its leader Fr Sean Healy for many years. While many on the left floundered in the failure of old socialist policies, CORI articulated a humane vision of society.

Furthermore, they put facts and figures behind the aspirations while others rambled on about poverty and social exclusion.

At the heart of CORI’s philosophy of fairness and economics is the policy of a basic income.

This concept, at once radical and ingenious, would amalgamate the social welfare and tax systems into one. An income of, say, £100 per week would be guaranteed to every adult in Ireland whether employed or not.

It is a very attractive idea. It provides a level playing field for everyone in society. It would save a fortune in the administration of the social welfare system. It would de-stigmatise the system. It would mean less intimate contact between the State and the citizen. And, of course, it would provide a safety net that would be almost impossible to fall through.

The big problem is how to pay for it. It means that when you do start paying tax, you pay at a much higher rate. CORI have suggested 50 per cent, which isn’t too bad seeing that you get £100 up front.

But in my view cost is not the major problem. The major problem is that the philosophy is fundamentally flawed.

CORI, and indeed many detractors of the recent Budget, say that income is the major problem for poor people. Only a fool could say otherwise in the short term.

But in the longer term it is the inability of large sections of society to participate in the economy that causes poverty.

Critics of the Budget point out that the better off did far better than the poor.

So they did. The reason they are doing well is that they are thriving in the real economy. They are working and getting paid for it. The extra money they got through the Budget was their money in the first place.

Personally I would have preferred if the Government would spend the money on making life less miserable for everyone, like building new hospitals, roads, an underground, etc.

But reducing tax on work will serve this economy well long into the future.

Last year, like this year, CORI criticised the reduction in the higher rate of tax. But why? These reductions paid for themselves. The exchequer actually got in more money than with higher rates. Nobody got any poorer because the top rate went from 46 per cent to 42 per cent.

What this tells us about CORI, and all other social democrat strategies, is that they know social welfare is a flawed means to a fairer society.

They understand if the gap between the rich and poor widens that society will be degraded and there will be a price for everyone to pay.

A few years back I covered the Dublin West by-election for another newspaper. Talking to the tallymen they told me that in some areas of west Dublin the turnout was less than 10 per cent. The conclusion was clear. There was very little point in politicians canvassing those areas.

I can reveal (although you already know it) that these areas were very heavily dependent on social welfare. It wouldn’t be inaccurate to describe them as slums. In my heart and soul I know that increasing social welfare is not going to transform these areas.

Neither is making people in Castleknock and Killiney pay more tax just for the sake of it.

The reason these people have no power is that they have no economic power.

I’m afraid you have to go back to the fundamental socialist observation that for a fair and democratic society the people need to own the means of production.

We know from experience that the State cannot provide this role. We know that the poor can’t be changed simply by taking money from the rich.

The answer is democratic enterprise in a free market. Working people working for themselves and their communities. Social welfare will never change anything.

As well as that…

The Steptoe & Son policy is still with us

INDIVIDUALISATION has now been forgotten about. You’d think the policy was dropped or something.

But it’s very much alive. A lot of people have forgotten exactly what it means. Let’s take next year (a short tax year from April to December due to the change to the calender year).

A single income family start paying the 42 per cent rate at £21,460.

A two income family start paying the 42 per cent rate at £29,600.

Does this seem fair to you? What it means, when the process is finished, is that the family will no longer exist in the tax code.

In my view this is a severe blow to the family as an entity even if it might resolve issues relating to couples who don’t make up traditional families.

We’re into who owns what territory here.

One of the most famous episodes of Steptoe & Son had the two gents deciding on dividing ownership of the telly. They watched a football match through a hole in the wall. So that each of them missed a goal.

It was hilarious. We laughed at the stupidity of it. Now the joke’s on us. Remember how you scoffed at the idea of the pre-nuptial agreement. We’ve now passed it out.