Sunday, 31 December 2017

Welfare for the poor... welfare for the rich

When we talk about the 'welfare state', we normally think of the poor on benefits:
BBC News - Welfare 'trapping' people in poverty says Duncan Smith
Benefits Street: territorial stigmatisation and the realization of a '(tele)vision of divisions' - Goldsmiths, University of London

Others would argue that the state actually provides welfare for the rich.

Here's a commentary from the United States from a couple of years ago:

Don’t Hate on Welfare Recipients — The Real Parasites are Elsewhere

Kevin Carson| August 7th, 2013

Everywhere you look in the right-wing commentariat, you see the recurring theme of the “underclass” as parasites. Its most recent appearance was the meme of the productive, tax-paying 53% vs. the tax-consuming 47%. And of course there’s the perennial favorite mythical quote attributed to Alexander Tytler, trotted out by many who should know better, about the majority discovering they can vote themselves largess from the public treasury. (If you really believe the majority control the government, or that the government serves the interests of the majority, you should avoid using sharp tools without supervision.)

But mainly there’s an endless supply of resentment against “welfare queens,” and friend-of-a-friend stories about the luxurious tastes of those using food stamps at the checkout line, whose cumulative effect is to reassure the middle class that their real enemies are to be found by looking down, and not up.

If your resentment is directed downward against the “underclass” and recipients of welfare-for-the-poor, it’s most definitely misdirected.

First, let’s look at the little picture, and consider the net effects of state policy on the actual recipients of welfare. Consider how state policies on behalf of land owners and real estate investors, like the enforcement of absentee title to vacant and unimproved land, drives up rents and closes off access to cheap living space. Consider how licensing schemes and “anti-jitney” laws, zoning laws against operating businesses out of one’s home or out of pushcarts, and regulations that impose needless capital outlays and entry barriers or overhead costs, close off opportunities for self-employment. And consider how zoning restrictions on mixed-use development and other government promotions of sprawl and the car culture increase the basic cost of subsistence. You think the money spent on welfare for the poor equals that drain on the resources of the underclass?

Next, look at the big picture. Consider the total rents extracted from society as a whole by the dominant economic classes: The inflation of land rent and mortgages by the above-mentioned absentee titles to unimproved land; the usurious interest rates resulting from legal tender laws and restraints on competition in the supply of credit; the enormous markups over actual production cost that result from copyrights, patents and trademarks; the oligopoly markup (once estimated by the Nader Group at around 20% of retail price in industries dominated by a handful of firms) in industries cartelized by government regulations and entry barriers …

Now consider, out of this vast ocean of rents extracted by state-connected parasites, the miniscule fraction that trickles back to the most destitute of the destitute, in the form of welfare and food stamps, in just barely large enough quantities to prevent homelessness and starvation from reaching high enough levels to destabilize the political system and threaten the ruling classes’ ability to extract rents from all of us. The state-allied landlords, capitalists and rentiers rob us all with a front-end loader, and then the state — THEIR state — uses a teaspoon to relieve those hardest hit.

Every time in history the state has provided a dole to the poorest of the poor — the distribution of free grain and oil to the proletariat of Rome, the Poor Laws in England, AFDC and TANF since the 1960s — it has occurred against a background of large-scale robbery of the poor by the rich. The Roman proletariat received a dole to prevent bloody revolt after the common lands of the Republic had been engrossed by the nobility and turned into slave-farms. The Poor Laws of England were passed after the landed classes enclosed much of the Open Fields for sheep pasture. The urban American blacks who received AFDC in the 1960s were southern sharecroppers, or their children, who had been tractored off their land (or land that should have been theirs, if they had received the land that was rightfully theirs after Emancipation) after WWII.

As Frances Fox Piven and Andrew Cloward argued in “Regulating the Poor,” the state — which is largely controlled by and mainly serves the interest of the propertied classes — only steps in to provide welfare to the poor when it’s necessary to prevent social destabilization. When it does so, it usually provides the bare minimum necessary. And in the process, it uses the power conferred by distributing the public assistance to enforce a maximum in social discipline on the recipients (as anyone who’s dealt with the humiliation of a human services office, or a visit from a case-worker, can testify).

Center for a Stateless Society » Under Capitalism, Welfare State’s Main Function is Corporate Welfare
Center for a Stateless Society » Support C4SS with Kevin Carson’s “‘Privatization’ or Privateering?”
Mutualist Blog: Free Market Anti-Capitalism: Welfare State for the Rich

And here's a commentary from the Guardian from just before the 2015 budget:

Direct aid, subsidies, tax breaks – the hidden welfare budget we don’t debate

Vast sums are handed out in corporate welfare and official silence is skewing the debate, so the public don’t know where billions of their own taxes are going

George Osborne will chop into the social security budget, with measures that will raise about £900m – the same sum as the state gives every year to managers who buy shares in their startup under the Enterprise Management Incentive. Photograph: Peter Byrne/PA

Aditya Chakrabortty

Tuesday 7 July 2015

In 2013, just days before laying out his autumn statement, George Osborne told the BBC: “The cost of welfare is one of the things that makes the public finances unsustainable. We need an affordable state.” The government had to cut the bloated welfare state because it was sucking up too much money.

Yet in the financial year ending March 2013, the Guardian can reveal, Britons handed £93bn in welfare to corporations. That is enough to wipe out at a stroke this year’s budget deficit – and it was given to companies in direct aid, subsidies and tax breaks.

The term “corporate welfare” may sound unfamiliar to some. In the Westminster thesaurus, welfare appears alongside benefits and social security as a term for public spending targeted at individuals and households. But corporations rely on public funds, too.

When Richard Branson’s Virgin Atlantic took £28m from the Welsh government in 2011 to set up a call centre in Swansea, that was a form of welfare. The German, French and Dutch companies that now run our train services are subsidised by the British public to the tune of hundreds of millions. The £45bn taken by firms in corporate tax benefits is a form of welfare. So is the ultra-low cost insurance scheme the government runs for exporters such as BAE Systems.

None of these are labelled corporate welfare, but that’s precisely what they are: direct public spending aimed at protecting and supporting businesses.

In many cases, the basic facts about this spending are almost impossible to find. Some of the information making up the calculations published by the Guardian – fundamental stuff such as which arm of the British state gave how much cash to which firm – is so hard to collate that even experts are forced to admit defeat.

Discussions about corporate welfare take place at the twilight checkpoint between economics and democracy. Researchers and civil servants know a lot about the individuals who claim hundreds in, say, employment support allowance: every last cough, spit and missed appointment at the jobcentre. Yet of the big companies that rake off millions in direct grants, taxpayers often hear very little. The result is that the public do not know where billions of their own taxes are going.

Yet were they to be widely known, the facts about corporate welfare would electrify our debates about public spending and the role of the state. On Wednesday, Osborne will set about chopping into our social security budget. Among the measures he is believed to be considering is taxing disability benefits. That will raise about £900m, according to the Institute for Fiscal Studies. That is about the same sum as the state gives every year to managers who buy shares in, say, their dotcom startup and see them soar in value, without having to pay much tax on the gain, thanks to a scheme called Enterprise Management Incentives.

Revealing how far taxpayers fund the private sector is not the same thing as saying the private sector should not receive any public subsidy at all. All rich countries do it, although there is evidence from the OECD thinktank and others that when it comes to corporate tax benefits or public-sector outsourcing, Britain is more indulgent to businesses than many other nations. But many might back public funding for green technology startups, say, or struggling social enterprises in deprived areas. The fundamental point, surely, is to allow public debate over where public funds go.

Full disclosure of the size of the corporate welfare state might also have improved economic debate over the past half-decade. When Cameron and Osborne launched their austerity programme in 2010, they argued that the public sector was “crowding out” the private sector. To enable the economy to grow, government needed to retreat and allow businesses to fill the void. That powerful argument was disproved over the next few years, as Britain stuttered and stumbled through the weakest economic recovery in its modern history. But it would have been undermined from the start had ministers been confronted with £93bn of proof that the relationship between public and private sector is far more complicated.

This research on corporate welfare takes you to the heart of one of the biggest arguments in British capitalism. For decades, the UK has operated on the basis that it is in an international dogfight to attract investment. It was summed up by Michael Heseltine in his 2013 report on industrial policy: “Unless we make it worthwhile for footloose capital to come here, it won’t.”

This orthodoxy has been swallowed by all the main political parties. It has led to the slashing of corporation tax rates, so that Britain has a lower corporation tax rate than the US, Japan or Germany. It has encouraged devolved administrations in Holyrood and Cardiff to disburse millions to big companies, without demanding much in return. The result has been fiscally disastrous. As this research shows, of the 44 companies that received more than £1m in government grants between 2005 and 2011, 13 paid no corporation tax at all; a further 17 did not pay any corporation tax either the year before or the year that they received public money.

Such a state of affairs reflects a severe imbalance of power between the public and private sectors. As Philip Baker QC, a European tax expert and Treasury adviser on the Google tax, remarked last month: “I don’t think in the last 20 years or so one can say that governments have driven corporation tax policy. It’s the large companies that have driven the direction of corporate tax policy.”

The result is a stratum of businesses that is not beholden to the same social settlement as previous generations. Modern big business has got so used to tax breaks, handouts and easy ways of making cash (such as squeezing staff pay and conditions) that it no longer researches or innovates.

Meanwhile, politicians and officials tout for investment, no matter how fly-by-night. But even the savviest operators get caught out. AstraZeneca was assisted by a local MP to get a £5m government grant to develop its research and development centre at Alderley Park, Cheshire. Five months later, in 2013, it announced it was closing the plant and shedding 2,100 jobs. Absent from the public record is what it told its local MP. He was, of course, the chancellor, George Osborne.

Direct aid, subsidies, tax breaks – the hidden welfare budget we don’t debate | Politics | The Guardian
The £93bn handshake: businesses pocket huge subsidies and tax breaks | Politics | The Guardian

In fact, those who criticise 'the state' should be directing their attention to the 'primary' interventions - and not the 'secondary' ones:

Some forms of state intervention are primary. They involve the privileges, subsidies, and other structural bases of economic exploitation. This is the primary purpose of the state: the organized political means to wealth, exercised by and for the ruling class. Some, however, are secondary. Their purpose is stabilizing, or ameliorative. They include welfare state measures, Keynesian demand management, and the like, whose purpose is to limit the most destabilizing side-effects of privilege, and to secure the long-term survival of the system.

The kind of “free market reform” typically issuing from corporate-funded “libertarian” think tanks and politicians involves eliminating only the ameliorative or regulatory forms of intervention, while leaving intact the primary structure of privilege and exploitation.

The strategic priorities of real libertarians should be just the opposite: first to dismantle the fundamental, structural forms of state intervention whose primary effect is to enable exploitation; and only then to dismantle the secondary, ameliorative forms of intervention which serve to make life bearable for the average person living under a system of state-enabled exploitation. As Jim Henley put it, remove the shackles before the crutches.

Regulations that simply limit and constrain the exercise of privilege do not involve, properly speaking, a net increase in statism at all. They are simply the statist ruling class’s stabilizing restrictions on its own more fundamental forms of intervention.

When the state confers a special privilege on an occupation, a business firm, or an industry, and then sets regulatory limits on the use of that privilege, the regulation is not a new intrusion of statism into a free market. It is, rather, the state’s limitation and qualification of its own underlying statism. The secondary regulation is not a net increase, but a net reduction in statism. On the other hand, the repeal of the secondary regulation, without an accompanying repeal of the primary privilege, would be a net increase in statism. Since the beneficiaries of privilege are a de facto branch of the state, the elimination of regulatory constraints on their abuse of privilege has the same practical effect as repealing a constitutional restriction on the state’s exercise of its own powers.

Brad Spangler used the analogy of gunman and bagman to illustrate the relationship between the state apparatus and the corporate ruling class. To apply that analogy here, a great deal of alleged statism amounts to the gunman telling the bagman, after the victim has handed his wallet over at gunpoint, to give the victim back enough money to pay cab fare back home so he can keep on earning money to be robbed of.

When the state is controlled by robbers, and every decision for or against state intervention in a particular circumstance reflects the robbers’ strategic assessment of the ideal mixture of intervention and non-intervention, it’s a mistake for a genuine anti-state movement to allow the priorities for “free market reform” to be set by the robbers’ estimation of what forms of intervention no longer serve their purpose. If the corporate-funded “libertarian” think tanks and the corporate stooges in government are proposing a particular “free market reform,” you can bet your bottom dollar it’s because they believe it will increase the net level of statist exploitation.

The measure of statism inheres in the functioning of the overall system, not in the formal statism of its separate parts. A reduction in the formal statism of some separate parts, chosen in accordance with the stategic priorities of the statist exploiters, may result in a net increase in the overall level of statism.

So don’t resent the folks who get welfare and food stamps. Your real enemies — the ones the state really serves — are above, not below.

Center for a Stateless Society » The Only Thing Dumber Than Libertarianism’s Critics are its Right-Wing Defenders
Center for a Stateless Society » The “Progressive” Welfare State Fantasy

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