Forget means-testing ... just cut the size of government

John Redwood considers 'benefits' means-testing and makes the usual political assumption that:

The problem is in the tests we apply to see who should be eligible.

Why should the government decide who gets taxpayers' money? Why is a 'conservative' government engaging in wealth redistribution? This is the sort of thing you'd expect from Labour and which would not be out of place in the old Duma.

Instead, let people keep more of their own income and provide a flat-rate safety net, set at just above the poverty level (as defined by the government) and stop robbing them of the fruits of their own labour and intellect. Stop purchasing votes with our money and stop taking so damned much of it.  The level of taxation is so high that most of us are little more than serfs to the State.

Additionally, the Treasury should not be free to tax our savings and pensions – its kleptomania is precisely the reason most of us now have inadequate provision for our old age. Had the government kept out of our affairs, the great majority would have had adequate old age provision.  In short, the government has impoverished millions of responsible, self-reliant people by meddling.

JR then asks:

 ...how tough should the state be when assessing eligibility for benefits?

If the government must meddle, it should at least eliminate the absurdities from the system.  For example, those who are deemed by government criteria to be “in poverty” - are still paying taxes.  They include pensioners, low-paid workers, job seekers and the unemployed/disabled. Unfortunately, with VAT on everything, including services, the disposable income of these people is massacred by the 20% robbery that the Treasury inflicts.

The answer is surely for the government to refrain from taking with one hand and giving with the other. A wasteful and controlling exercise which merely serves to increase the cost of everything while impoverishing an increasing number of people.

In order to decide how much to extract/dole out, the government must make assumptions so as to define its modelling criteria, even though humankind is too diverse, adaptable and resourceful to be adequately represented by any static model. Any model merely represents the modeller’s perception of reality – not the actual reality. Every government system runs into trouble because reality eventually catches up with the model and destroys its credibility.

The best solution is for government to aim to get out of the way, over time. In the meantime, eliminate the absurdities in the the system so as to reduce its complexity; a sizeable chunk of the problem then simply ceases to exist.

The ‘problem’ is of the government’s making. The government is the problem.

Then JR poses the killer question:

Why should I be prudent? 

Indeed. Why bother, when the government will cut you off at the knees, at a moment's notice, in order to bestow favours on its latest client 'class'?

Government creates moral hazard where the free market does not. The trick is simply to seek out and destroy moral hazard where it exists – in every government policy, department and in every tax clause.

We also need to ask what incentives there are for people to make long-term provision for themselves, after:

• the MF Global scandal where it is alleged (and evidenced) that segregated accounts were plundered, 
• the government’s plundering of private pensions,
• massive government-originated inflation heaped on the populace to pay reckless bankers.

What confidence can anyone have in the financial sector, the pensions industry or banks - or the government's ability to manage it all?

Why would I put money into a pension scheme or a savings account, rather than into gold? Why would I invest for my future in this country at all, when I can better invest elsewhere?

The government should do less. Much less. It needs to let the free market work and be free for all – not just for palm-greasing corporations, hand-picked by the government.

And it needs to stop purchasing the votes of others with our money.

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