As the Resolution Foundation points out, time to blow up the welfare state

Not that this is quite what the Resolution Foundation actually says, but it’s a very strong implication of their analysis. For they complain that British families would find it difficult to survive if their main income were to disappear. No savings, d’ye see?

Newly-available data covering the 24 months leading up to the pandemic confirms this, with Figure 10 showing how long people (over the 2018-20 period) thought their savings would last them if their main income source stopped. Just over one-in-four (26 per cent) of all adults would not be able to manage for a month; and just under four-in-ten of those in the bottom two income deciles.

Now one reaction to this is to shriek in horror - roughly the Resolution Foundation response. Another is to try thinking for a moment.

Government abstracts to itself some 45% of everything. One of the things promised in return is a welfare state, one that includes income replacement if main incomes were to disappear. The Resolution Foundation is clearly stating that this isn’t good enough. That families should - the “should” coming from their obvious concern at the fact that they don’t - have enough savings to weather such outrageous fortune without that welfare state.

At which point, if families should have such savings and the welfare state isn’t good enough then presumably we should eliminate the tax to pay for the welfare so that families have enough to save for themselves.

Another alternative, of course, is that this calculation of who could survive should include the effects of the welfare state that everyone’s paying for - which is why they cannot afford their own savings.

Or even, having paid for the welfare state why should people have savings? Haven’t they already ensured that they’ve got them by paying into the collective insurance schemes?

The Resolution Foundation, by demanding both the welfare state and also the savings necessary in a world without it is guilty of cakeism. Or even anti-cakeism, demanding the absence of consumption by saving and also the absence of consumption by taxation.

About time people made up their damn minds. Should we have collective provision for the bad times or private? If collective then the absence of the private resources is the effect of the existence - and tax to finance - the collective. If the private must exist then we’d better get rid of the tax to pay for the collective then, hadn’t we?