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The filthy poor
The trial of Karen Matthews could not have come at a better time for James Purnell. The description in an article in The Times was typical of press reports about the Matthews household:
Matthews is the mother of seven children by five different men. She has never worked, but lived off benefits of £286.60 a week. The Matthews’s house was filthy. A neighbour declared, “I wouldn’t want to keep a pet dog in there, let alone children.” Her relationships with men were so promiscuous that when police built up a family tree it stretched to 300 names.
Karen’s nine-year-old daughter Shannon was regularly drugged to keep her quiet, had feet encrusted with dirt, was infested with head lice and flinched at any sudden noise. Police found a note scribbled by Shannon to her brother: “Do you think we will get any tea tonight? If we’re quiet we might get a bag of sweets. Don’t talk too loud or get a beating.” This was in a family receiving in benefits the equivalent of £20,000 a year before tax.
The Times article was headlined "Well, we did pay Matthews to keep having children". The offence for which Karen Matthews was convicted was that of arranging for her daughter Shannon to be kidnapped, in the hope that she and her accomplices would obtain the reward money which would be offered for 'finding' the missing child; it was despite the extreme and most unusual nature of this crime that the media projected Ms Matthews as a representative of the several million people in the UK whose main source of income is state benefits. The editorial in the Daily Telegraph on 6th December 2008, entitled "Karen Matthews and the underclass thrive on Labour's welfare state", put it squarely:
...Labour has presided over the entrenchment of a benefit-addicted underclass, bereft of aspiration, trapped in dependency and unable or unwilling to escape.
The case of Karen Matthews, convicted of kidnapping her own daughter in order to claim a reward, has again pulled back the curtain to allow us a glimpse of this netherworld of taxpayer-funded fecklessness
Matthews did not live in poverty, though she did not have much money. She drank heavily, smoked 60 cigarettes a day and received benefit payments of almost £300 a week, which went up every time she had another child.
This is slightly misleading. The fact that Karen Matthews did not live in poverty is proved by the fact that she was able to squander money on her excessive habits- cigarettes and alcohol. But it seems that the reason why she could spend so much on dissolute luxuries was that she deprived her children. On her income, she would not have been able to afford both her copious intake of fags and booze as well as providing regular, healthy meals and other basic necessities for Shannon and her siblings.
Implicitly recognising this, the Daily Telegraph continued:
A report by social services said she was unable to put the interests of her children above her own. This is real impoverishment - not a meaningless income target set by the Government, but the creation of perverse incentives for people to spend an entire lifetime wedded to a belief that the rest of society will continue to subsidise their idleness.
Two days later, an essay by Conservative Party leader David Cameron, published in the Daily Mail, explicitly linked Karen Matthews' shocking abuse of her daughter with the family's position as welfare recipients.
A week before the conviction of Ms Matthews, a taxi driver called Neil Crampton was convicted for murdering both his children, their mother and her brother; and a self-employed businessman who has become known as the 'British Fritzl' was sentenced for the repeated rape, over a period of 25 years, of his two daughters. Neither case precipitated a public furore about the moral degeneracy of businessmen or taxi drivers.
However, it was to the credit of the Daily Telegraph editorial writer that he or she drew a parallel between the supposedly typical behaviour of the modern 'underclass' and the feckless lifestyles of the poor in a previous era:
It is tempting to say that the poor will always be with us, and anyone with a modest knowledge of British social history understands that this phenomenon is nothing new.
Hogarth's startling images Beer Street and Gin Lane, depicting the drunken mother dropping her child over a parapet, captured the excesses of a previous era. But can we really say we have advanced a great deal?
The absolute poverty of such times has been eradicated only to be replaced with a culture of dependency that saps ambition and undermines any notion of personal responsibility.
Putting aside the issue of whether the Telegraph writer should- to be consistent- have claimed that Hogarth's drunken mother was not actually poor because she could afford to consume excessive amounts of gin, this prompts a question which the Daily Telegraph editorial did not ask. If the immoral and irresponsible behaviour of Karen Matthews was induced by the 'preverse incentives' of the welfare state, what was it that induced the dreadful behaviour of the alcohol-soaked neglectful mother depicted by William Hogarth? In 1751, when Gin Lane was published, there was no welfare state; neither was there in the 19th Century when Dickens wrote his masterful stories of life in Victorian England.
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Gin Lane: fecklessness in pre-welfare England |
Unemployed, by any other name...
Nevertheless, when Britain's Secretary of State for Work and Pensions James Purnell announced the government's latest proposed welfare reforms on 10th December 2008, it was hard to object to some of what he said. As the Daily Telegraph reported:
Mr Purnell will publish a White Paper setting out plans to make "virtually everyone" on welfare seek work or face cuts in their benefits payments.
Mr Purnell told BBC Radio Four's Today programme the new rules will create "a system where virtually everyone has to do something in return for their benefits."
He said it was right to "penalise" people who do not try to get work. He said: "If there is work there for people, we believe they should do it. We can't afford to waste taxpayers' money on people who are playing the system." [...] He added: "Work is good for people. Leaving people on benefits is the cruel thing to do."
Who could possibly disagree that work, rather than idleness, is good for people? And who would claim it to be a good thing that large numbers of children are brought up in households where nobody has a job?
In Britain there are 2.6 million people of working age on disability benefits (up from less than one million twenty years ago); there are 800,000 adults who receive income support because they are single parents; most of these could be described as being among the 'disguised' unemployed. Also there are 1.86 million people (and steeply rising) who are officially categorised as unemployed, of whom 1.07 million receive unemployment benefit (which in the UK is entitled JobSeekers' Allowance). Is it a good thing that these millions of people do not have jobs? No.
Having agreed these points, which are uncontroversial except in the cases of people with such extremely severe disabilities or acute illnesses that there is no kind of work which could possibly be found or created for them, and of the single parents of very young children, we can consider what could be the likely effects of the Labour Government's proposals. These include subjecting people on disability benefits to further medical examinations in order that most of them can be declared fit for work; privatising parts of the benefits system; increasing the pressure on benefit claimants to prove repeatedly that they are actively trying to find jobs; introducing a US-style 'workfare system' in which benefit recipients who cannot find actual jobs will have to work for their benefits; and through these and other measures, removing entitlement to non-working welfare benefits for the different groups of claimants.
Whatever its eventual results on the lives of the people affected and the overall level of wages in the UK, the Welfare Reform White Paper has already yielded Prime Minister Gordon Brown an immediate and not inconsiderable gain on the tactical terrain of modern British party politics - that of siezing the ground of hard-headed 'toughness'.
The reaction of the Daily Mail- which is not only the UK's second highest circulation newspaper but is also the country's right-wing trend-setter on social and 'family' issues- was enthusiasm for the Purnell proposals, while arguing that they do not go far enough in cutting off benefits for welfare recipients. Noting that left-wing Labour Members of Parliament will probably vote against some of the proposals, the Mail on 10th December quoted Conservative Party spokesman Chris Grayling:
"These are Conservative ideas and they will need Conservative votes to overcome the likely Labour rebellion."
But then, on further consideration, Conservative Party leader David Cameron found himself unable to stomach the idea that single mothers with children under the age of seven should be compelled to gird themselves to enter the workforce, thus surrendering their progeny to the vagaries of childminders during the working day. For this excess of sentimentality or opportunism, Mr Cameron was lambasted by the Daily Mail in its 16th December editorial, which declaimed:
...what about the ever-growing multitude of feckless young women, who produce babies by every passing fly-by-night - and then hand all responsibility for supporting them to the rest of us?
In this real world, is it really so 'shameful' for the Government to try - albeit feebly - to make these women and their lovers accept a degree of responsibility?
Leave aside the obvious flaw in Mr Cameron's plan to offer full benefits to single mothers until their youngest children are seven - which would mean that mothers such as Karen Matthews, constantly churning out babies by different fathers, could remain on benefits throughout decades of childbearing.
No. The truth is the Tory leader has chosen to ignore the great paradox of the modern welfare state: it exists to relieve hardship caused by irresponsible behaviour - but in so doing, it subsidises and encourages that very behaviour, with all the crime and misery that goes with it.
And the Daily Mail took the opportunity to tick David Cameron off for another soggy and opportunistic misdemeanor:
At best, the Tory leader is sending out mixed signals. At worst, he is indulging in the politics of meaningless gestures.
Wasn't he doing the same thing on Monday, when he called for a 'Day of Reckoning' in court for greedy bankers, saying they should be treated just like thugs, 'locked up for mugging people on the streets'?
Yes, certainly law-breaking bankers should be prosecuted. But who exactly was he referring to? And while you're at it, Mr Cameron, show us some credible policies for welfare reform.
But the government's initial tactical victory in outmanouvering the Conservatives might yield other than success in the longer run. As Tony Blair proved, the benefits to the image of a Labour leader with a policy which makes him look tough and realistic are doubled when he is seen to overcome the dissident left-wingers in his own party as he succeeds in ramming through the policy.
Tough on poverty, ignoring the causes of poverty
However, as Gordon Brown has already discovered when the bill to imprison suspected terrorists without charge for 42 days was lost, the benefits of trying to look tough can disappear overnight if the policy is defeated, leaving the leader looking merely weak and unrealistic. And that is what could happen again if the dissident left Labour Members of Parliament, who are likely to vote against several sections of the welfare reform proposals, are joined in their opposition to the specific part of the bill which compels single mothers with children under seven into the workforce, by David Cameron's Tories.
Should that occur, the Tories would register a double success- the enactment of almost all of the Purnell proposals, which Chris Grayling claims on the Party's behalf to be 'Conservative ideas', into legislation, and also the humiliating parliamentary defeat of the Labour government on a single part of the bill.
Could the welfare reform proposals succeed in their stated aim of getting more people into jobs? In the cases of single parents and people with health problems, there are particular barriers to securing employment. According to the Daily Mail:
Britain's employment rate for lone parents is 56.5 per cent, the lowest in Europe. In Denmark, 80 per cent of single parents work.
However, in Denmark, the state ensures that high quality childcare is available for all children. No comparable childcare system exists in the UK.
As for those classed as disabled, it is certain that many of them are what used to be called 'discouraged workers'- people who have given up hope of finding and maintaining suitable employment, with health problems which are no doubt genuine but which could be accommodated (and in the case of mental health problems, perhaps even overcome) if they were to obtain jobs in a sympathetic working environment.
Not so many years ago, back in the days of strong trade unions and big nationalised industries, a worker who developed health difficulties which compromised his or her productivity could be placed on 'light duties', and frequent periods of being 'off sick' would be tolerated. Under the 'flexible labour market' of the modern neo-liberal economy, however, a worker whose effectiveness is lower than average is regarded as an intolerable burden to the employer. What will be the fate of such workers who are impelled into the labour market as their welfare benefits are terminated? The laws of capitalist economics provide no incentive for a company to employ a person with a record of poor health, and they dictate that anybody who develops worsening health problems should be dismissed as soon as possible for the sake of competitiveness and profitability.
But there is an even more obvious difficulty. Compared to the total of about five million non-working adults who could potentially work, there are less than 600,000 job vacancies in the British economy, a figure which is rapidly falling due to the economic crisis. And for several reasons, that figure does not mean that there is scope for reducing the numbers of people out of work by nearly 600,000. About 20% of the figure represents shortages of workers who have particular professional qualifications or experience, ie, very specific attributes which are possessed by hardly anybody who is out of employment.
Another factor is that the areas with the highest levels of vacancies are those with the lowest levels of unemployment, and vice versa- thus people living in high-unemployment areas do not have realistic access to a large proportion of the vacancies. Also, an unquantified but substantial number of the vacancies are merely 'frictional'- ie, they are posts which become vacant due to staff turnover, for which suitable candidates apply as soon as the jobs are advertised, and therefore are vacant only because of the time taken in selecting and appointing new workers.
Still, there are, among the almost 600,000 job vacancies in the British economy, a proportion which are unfilled because the rates of pay which are offered are so low that nobody with children to feed and clothe, rent or a mortgage to pay, responsibility for electricity and other utility bills, facing the price of transport to work and other basic living costs, could possibly survive on the wages provided.
With the aim of encouraging people to accept such sub-subsistence jobs, and while the previously existing opportunities for employment in well-paid working class occupations in the docks, coal mines, steelworks, car factories and other industries have been obliterated over the last thirty years, British governments have resorted increasingly to paying state benefits to people who have full-time low-paid jobs. Through the most important of these benefits, housing benefit and working tax credit, the state both provides the equivalent of a massive subsidy to low-paying employers and also allows people to enter the labour force and thereby become slightly better off financially than they would have been had they remained non-employed on state benefits. Yet, despite these 'in-work benefits' and the degree of compulsion which is already in use under the existing benefit regulations, thousands of people have so far successfully avoided being driven to accept jobs at below-subsistence wages.
In favour of the possible practical effectiveness of the welfare reform proposals, there is a respectable argument that the number of jobs available in a capitalist economy is not fixed purely by the existing level of demand for goods and services: so, if there is an increase in the number of people who, being either willing or because they are forced to do so, are prepared to accept work at very low wages, employers will recognise this and boost their profits by creating some additional low paid jobs. Of course, this argument can only be applied while the economy is expanding, and in the current conditions of catastrophic economic contraction it has no validity. There is no prospect whatsoever that the British economy will in the near future create hundreds of thousands of new jobs, even at minimum wages, in order to accommodate those who will be expelled from the ranks of the benefit claiming non-employed.
However, to be fair to the supporters of the Purnell White Paper, it is supposed that sometime during the next several years the beginnings of some kind of economic recovery will emerge, and it is after that that the welfare reform proposals would be expected to display their positive results.
Welfare success, US-style
Given that Mr Purnell's proposals are modelled quite closely on the welfare reforms implemented in the USA during the 1990s, it is worth taking a look at the effects which these reforms have had in the United States. Following this, there is another and very different example of how a society managed the issue of work and welfare which deserves some study.
Firstly to the main positive international example which is cited by British proponents of welfare reform, that of the changes enacted in the USA in 1996, under the presidency of Bill Clinton but framed largely by the then Republican-dominated Congress. The effect of these changes in welfare legislation, which drastically reduced entitlement to state benefits and which had a particular effect on single mothers, was hailed as a great success. In his testimony in 2001 to the US House Committee on Education and the Workforce, Ron Haskins of the Brookings Institution declared enthusiastically:
The theme that runs through most of these reforms is individual responsibility. Drug-addicts and alcoholics can no longer rely on government benefits to fund their addictions; families of children with minor health or mental health problems no longer receive monthly disability cash payments; non-citizens who come to America for opportunity no longer collect welfare benefits except in emergencies; fathers who abandon their children now find it very difficult to avoid paying child support; young adults—both males and females—have a host of incentives to avoid pregnancy outside marriage.
And, notably, there are now about 2 million mothers working who previously would have been on welfare.
Haskins happily noted that the wages that these two million mothers are earning are miserably low, far short of a level sufficient for survival; therefore, as in Britain, the government has been paying a subsidy to top-up their incomes:
The main effect of welfare reform has been to move more of these mothers away from welfare dependency and into low-wage jobs. Given that they work in jobs that are often somewhat unstable, we can estimate that the typical young mother who leaves welfare earns about $10,000 per year. If she did not receive work supports from government, she could not afford to purchase housing, transportation, food, and health insurance. In short, she would be worse off than she was on welfare.
But the work support system constructed in piecemeal fashion by the federal government since roughly 1975 ensures that mothers are much better off working than on welfare. Specifically, if a mother has two children, her $10,000 in earnings is supplemented by about $4,000 in EITC cash and $2,000 in food stamps, bringing her income to around $16,000. In addition, she and her children are guaranteed Medicaid [health insurance] for at least a year; after that the children would be guaranteed coverage under either Medicaid or SCHIP until the mother's earnings are over $30,000.
A key reason for the success of the US reforms in removing people from non-working welfare benefits was that this task was delegated to privately-owned companies which were paid by results; the companies were given money by the state only on condition that they succeeded in kicking people off the 'welfare rolls'. A similar scheme is proposed for Britain in the Purnell White Paper. However, such inducements were not applied to the task of ensuring that those whose non-working benefits were cut off manage to obtain and maintain the in-work benefits which they should be receiving. Haskins admitted that, in practice, the majority of the people affected had not actually managed to secure the benefits to which they were entitled:
A recent study of food stamp enrollment among a national sample of families that left welfare, for example, showed that only about 40 percent of eligible families were receiving food stamps. Similar evidence shows that many qualified families are not receiving Medicaid.
Mr Haskins did not speculate on how these families, who by his admission have insufficient income for housing, transportation, food and health insurance, are managing to survive.
Notably, Ron Haskins also conceded that the availability of jobs, even the very low-paid jobs which the women who were affected by the reforms managed to find, was only possible because the US economy was going through a major boom phase in the late 1990s:
The level of work by former welfare mothers has astounded almost everyone. Of course, by generating lots of new jobs, a hot economy has been of great importance to the explosion of work among mothers previously dependent on welfare.
By merging the supposedly positive effects of the welfare reforms with the effects of the debt-fuelled economic boom, Haskins was able to claim that the reforms had achieved great improvements for the poor:
After five years of aggressive implementation of welfare reform by states and localities, it is clear that the hopes of its supporters have been vindicated and the fears of its critics stilled. Assisted by an excellent economy, welfare reform has been accompanied by the biggest decline ever in the welfare rolls, the largest increases in employment by mothers on record, and the biggest declines in child poverty since the 1960s.
Despite the booming economy, the best that Ron Haskins could say of the impact of the reforms on the level of child abuse and other serious social problems is that they had not got substantially worse. Also, the women who had been pushed into very low-paying jobs had not succeeded in advancing to higher-wage positions:
Moreover, child abuse and neglect, homelessness, and hunger have not increased substantially during this period. To be sure, there are rough edges that should be addressed by Congress [...] Some families are falling between the cracks, there is little evidence that women leaving welfare are climbing the ladder to better jobs...
Six years later, as the boom began to peter out but before it had begun to turn into a catastrophic slump, it was already clear that the boast of the welfare reform proponents that the reforms had caused a significant reduction in child poverty was, at best, an exaggeration. According to a US Population Reference Bureau report by Mark Mather, the child poverty rate was 18% in 1980, increased to 21% by 1990, fell to 16% in 2000 and rose again to 17% in 2006. Mark Mather observed:
...there is at least one group—children under age 18—for whom poverty rates have not declined in a generation or more. The new census estimates show that the poverty rates for children and working-age adults are roughly the same as they were in 1980.
Within that 17% of children who are living below the US definition of a poverty income, there is the large number whose parents are working, but due to the failure to ensure that they have been able to obtain the in-work benefits to which they are entitled, are in families which are financially worse off than they would have been as welfare recipients before 1996.
The measure of poverty used by official bodies in the USA is an absolute measure, based on a minimum subsistence income adjusted by the Consumer Price Index. In the period from 1990 to 2005, while the economy was growing rapidly, overall US GDP rose by 55%; but hardly any of this big increase in overall income went to the children and working-age adults in the lowest echelon; while those in the highest income brackets received a stupendous rise in their incomes. Thus, if poverty in the USA was measured on a relative basis, it would show a that a very substantial rise in the rates of poverty among children and working-age adults has taken place.
Something else is notable about the recent boom years in the USA. It was not only those at the very bottom of US society who failed to gain significant improvements in income during the period of rapid economic growth. The normal pattern during the upswing phase of a capitalist economy is that wages rise as jobs are created and the demand for labour grows. Yet between 1990 and 2005, median average rates of pay in the United States increased by merely 1% per year, far behind the rate of productivity increase per worker, which was 2.6% per year. Corporate profits, meanwhile, rose by 10% annually.
The lack of growth in median wages in the USA during the recent economic boom was caused, of course, by an array of interacting forces. Like all tradeable items under capitalism, the price of the labour power of the workers, ie the level of wages, is affected by supply and demand, and we therefore take into account the factors affecting these aspects when considering why median wages hardly rose while the US economy rapidly expanded- for instance the level of immigration, the outsourcing of manufacturing and service jobs, and the ongoing decline in trade union power.
There is another factor whose effect on keeping down wages should also be considered: the injection into the labour market from 1996 onwards of many of the previously non-working poor, forced to compete for extremely low paying jobs as a result of the benefit reforms.
Despite or irrespective of the welfare reforms, the official US unemployment rate is currently 6.7% of the workforce. When 'marginally attached workers' (those who want a job but have temporarily given up looking for work), plus those who have only been able to find part-time work but really want a proper full-time job are added to the figures, the actual rate of unemployment in the United States is 12.5%.
The socialist work ethic
The experience of socialism, the economic and political system which was applied in Eastern Europe and elsewhere for several decades during the Twentieth Century, provides a remarkable contrast to the way in which the USA, the UK and other rich capitalist countries attempt to deal with the problems of employment and welfare. Due in large part to the US-imposed economic sanctions which restricted them from benefiting from Western technological advances (the effects of this problem are considered in some detail here) the socialist countries had a lower average per capita GDP than the advanced capitalist nations. Many car owners in West Germany could drive around in a BMW; in East Germany, those who had a car usually owned a Trabant, which bore no comparison in terms of comfort or acceleration. However, the socialist countries made very significant progress on social issues.
Dr Michaela Kreyenfeld, in a research paper for the Max Planck Institute for Demographic Research, notes that in the German Democratic Republic (GDR), the pre-reunification East Germany, citizens had not only a constitutional right but also a duty to work:
Article 24 of the former East German constitution guaranteed the ‘right to work’ which was replaced in 1961 by the ‘right and duty’ to gainful employment. A moral pressure to work and the lack of institutions giving support to non-workers, such as social benefits or unemployment insurance, drew people into the labor market.
There was no need for unemployment benefit because there was no unemployment. There was no unemployment because, as in the other socialist countries, the economy was centrally planned rather than being composed of competing firms subject to the over-riding need for profitability and the vagaries of the market. Thus the welfare role of the state was fulfilled in the context of the availability of jobs for every adult of working age; and, in conditions of the public ownership of the main industries, the society was able to provide in a way which was unseen in most of the West, comparable only with the wealthy countries of Scandinavia. Dr Kreyenfeld observes:
While Scandinavian countries are largely regarded as the forerunners of ‘family-friendly work-policies’ which support women’s employment and the modernization of gender roles, it has virtually remained unnoticed that most Eastern European states had introduced similar policies during the time of state socialism.
Despite the relatively low technical level of the GDR economy compared to the most advanced Western countries, society was nevertheless able to afford a provision known as the Babyjahr, a full year of paid leave following the birth of a child:
Apart from the economic pressure to be employed and an ideology that glorified the working woman, various public policies supported the compatibility between work and family life. One of the most important measures was the ‘Babyjahr’, which was introduced in 1976. After the birth of a second or higher order birth (and since 1986 also after the birth of a first child), women were offered to take a year of paid leave. In contrast to West German parental leave regulations, the ‘Babyjahr’ offered a relatively high level of income replacement. It would surely be oversimplifying to assume that public policies resolved all incompatibilities between work and family life. However, an encompassing public day care system which included highly flexible opening hours of the day care centers crucially relieved the tension between work and family life. Considering that there was a strong pressure to be employed, a relative abundance of vacant positions, a high compatibility between work and family life, East German women were basically drawn into full-time employment.
As every working parent knows, and whatever the availability of childcare, the illness of a child can cause serious problems with ones employer. In 1972, the GDR introduced paid leave for single mothers who had to look after a sick child. In 1984 this right, which provided up to six weeks paid absence from the workplace, was extended to all mothers of three or more children and, from 1986, to all mothers of two or more children.
There is a further contrast with the advanced capitalist societies. In the 21st Century USA, despite that country's enormous wealth, even people who are working full time can be on such low wages that, in the words of Ron Haskins of the Brookings Institution, they are unable to "afford to purchase housing, transportation, food, and health insurance", and with the exception of health cover that is also the case in Britain. In the GDR during the 1970s and 1980s, this was not an issue: the prices of housing, public transport and food were determined by the state, and subsidised to the extent that everybody could afford them. Healthcare was of course provided free of charge.
19 years after the reinstallation of capitalism, the official unemployment rate in East Germany is 13% and rising.
Since 1989, socialism has almost universally been dismissed as an aberration, a failed experiment against human nature and the natural order of things. Yet when compared with the bizarre contradictions of capitalism- not the least of which is the capitalist system's propensity to both create mass unemployment and poverty and to condemn the unemployed and the poor- aspects of the socialist experience stand out in their humanism and straightforwardness.
The latest crisis of global capitalism is deepening, dragging more and more people into hardship and insecurity, and thus it becomes ever more essential that the successes of the socialist experience are erased. As the twentieth anniversary of the fall of the Berlin Wall approaches, the media will be full of accounts of the activities of the Stasi and of the unsatisfactory performance of the Trabant. There will be no mention of the Babyjahr.