The myths about money that British voters should reject

Ha Joon Chang in The Guardian


Illustration: Nate Kitch


Befitting a surprise election, the manifestos from the main parties contained surprises. Labour is shaking off decades of shyness about nationalisation and tax increases for the rich and for the first time in decades has a policy agenda that is not Tory-lite. The Conservatives, meanwhile, say they are rejecting “the cult of selfish individualism” and “belief in untrammelled free markets”, while adopting the quasi-Marxist idea of an energy price cap.

Despite these significant shifts, myths about the economy refuse to go away and hamper a more productive debate. They concern how the government manages public finances – “tax and spend”, if you will.

The first is that there is an inherent virtue in balancing the books. Conservatives still cling to the idea of eliminating the budget deficit, even if it is with a 10-year delay (2025, as opposed to George Osborne’s original goal of 2015). The budget-balancing myth is so powerful that Labour feels it has to cost its new spending pledges down to the last penny, lest it be accused of fiscal irresponsibility.

However, as Keynes and his followers told us, whether a balanced budget is a good or a bad thing depends on the circumstances. In an overheating economy, deficit spending would be a serious folly. However, in today’s UK economy, whose underlying stagnation has been masked only by the release of excess liquidity on an oceanic scale, some deficit spending may be good – necessary, even.

The second myth is that the UK welfare state is especially large. Conservatives believe that it is bloated out of all proportion and needs to be drastically cut. Even the Labour party partly buys into this idea. Its extra spending pledge on this front is presented as an attempt to reverse the worst of the Tory cuts, rather than as an attempt to expand provision to rebuild the foundation for a decent society.

The reality is the UK welfare state is not large at all. As of 2016, the British welfare state (measured by public social spending) was, at 21.5% of GDP, barely three-quarters of welfare spending in comparably rich countries in Europe – France’s is 31.5% and Denmark’s is 28.7%, for example. The UK welfare state is barely larger than the OECD average (21%), which includes a dozen or so countries such as Mexico, Chile, Turkey and Estonia, which are much poorer and/or have less need for public welfare provision. They have younger populations and stronger extended family networks.

The third myth is that welfare spending is consumption – that it is a drain on the nation’s productive resources and thus has to be minimised. This myth is what Conservative supporters subscribe to when they say that, despite their negative impact, we have to accept cuts in such things as disability benefit, unemployment benefit, child care and free school meals, because we “can’t afford them”. This myth even tints, although doesn’t define, Labour’s view on the welfare state. For example, Labour argues for an expansion of welfare spending, but promises to finance it with current revenue, thereby implicitly admitting that the money that goes into it is consumption that does not add to future output.

 ‘It is a myth that, despite their negative impact, we have to accept cuts in such things as disability benefit, unemployment benefit, child care and free school meals.’ Photograph: monkeybusinessimages/Getty Images/iStockphoto

However, a lot of welfare spending is investment that pays back more than it costs, through increased productivity in the future. Expenditure on education (especially early learning programmes such as Sure Start), childcare and school meals programmes is an investment in the nation’s future productivity. Unemployment benefit, especially if combined with good publicly funded retraining and job-search programmes, such as in Scandinavia, preserve the human productive capabilities that would otherwise be lost, as we have seen in so many former industrial towns in the UK. Increased spending on disability benefits and care for older people helps carers to have more time and less stress, making them more productive workers.

The last myth is that tax is a burden, which therefore by definition needs to be minimised. The Conservatives are clear about this, proposing to cut corporation tax further to 17%, one of the lowest levels in the rich world. However, even Labour is using the language of “burden” about taxes. In proposing tax increases for the highest income earners and large corporations, Jeremy Corbyn spoke of his belief that “those with the broadest shoulders should bear the greatest burden”.

But would you call the money that you pay for your takeaway curry or Netflix subscription a burden? You wouldn’t, because you recognise that you are getting your curry and TV shows in return. Likewise, you shouldn’t call your taxes a burden because in return you get an array of public services, from education, health and old-age care, through to flood defence and roads to the police and military.

If tax really were a pure burden, all rich individuals and companies would move to Paraguay or Bulgaria, where the top rate of income tax is 10%. Of course, this does not happen because, in those countries, in return for low tax you get poor public services. Conversely, most rich Swedes don’t go into tax exile because of their 60% top income tax rate, because they get a good welfare state and excellent education in return. Japanese and German companies don’t move out of their countries in droves despite some of the highest corporate income tax rates in the world (31% and 30% respectively) because they get good infrastructure, well-educated workers, strong public support for research and development, and well-functioning administrative and legal systems.

Low tax is not in itself a virtue. The question should be whether the government is providing services of satisfactory quality, given the tax receipts, not what the level of tax is.

The British debate on economic policy is finally moving on from the bankrupt neoliberal consensus of the past few decades. But the departure won’t be complete until we do away with the persistent myths about tax and spend.

Family isn't dead – it's getting better

If people abandon the traditional model and forgo children or marriage it does not destroy societies, it can liberate them

• 
• • Jill Filipovic
  • guardian.co.uk, Tuesday 11 December 2012 13.30 GMT

'It is actually exceedingly difficult in much of the world for women to achieve highly in a career while also having a thriving family and personal life.' Photograph: Aping Vision/STS/Getty Images

 

Are we living in a post-familial age? According to a new report, The Rise of Post-Familialism: Humanity's Future?, the answer is yes: the traditional family unit is slowly dying out as more people choose to forgo children and even marriage. As a result, society is economically imperilled, lacking the necessary workforce to support older generations. We're also "values-challenged", entering a brave new world of materialistic indulgence, selfishness and protracted adolescence.

Sounds awful, doesn't it? Luckily, almost none of it is true.

People around the world are indeed delaying childbearing and marriage, and larger numbers of people never marry or reproduce at all. But that is not synonymous with a moral decline, or selfish decadence. It represents an uptick in women's rights, a commitment to creating the family one wants, and wider choices for everyone.

It's no shock that the drop in the number of children a woman has came along with the advent of the birth control pill. The countries with the highest birth rates aren't just highly religious; they're poor, have abominable human rights records and lack access to reliable birth control. Contrary to New York Times columnist Ross Douthat's position, it is not in fact the country with the most babies that wins: if that was the case, Nigeria would be running the show.

Despite the clear correlation between reproductive rights and prosperity, the report's author, joined by conservative commentators, laments the decline in childbearing because, as David Brooks says, it represents a rise of individualism and personal freedom – and that's a bad thing. Brooks writes:

"People are not better off when they are given maximum personal freedom to do what they want. They're better off when they are enshrouded in commitments that transcend personal choice – commitments to family, God, craft and country."

But the moral case against individualism and choice doesn't have legs. It's a moral good when people have a wide array of choices and increased personal freedom – not just for the individual, but also for children, family and society. And the evidence backs that up.

Valuing tradition, family and God doesn't automatically translate into healthy families or economic prosperity. Just look at the United States: the states that most idealise the conservative model do have higher birth rates, earlier marriage, higher levels of religiosity and more consistent church attendance. They make up consistent conservative voting blocks. They also have the highest levels of divorce in the country, the highest poverty rates, the highest teen pregnancy rates, the lowest child health ratings and the lowest education levels. On the other hand, the states that champion "liberal values" do have later marriage rates and lower birth rates. They're also richer and better educated, the children that reside in them are healthier and families split up less often.

And contrary to the assertions in both the report and the commentary surrounding it, a lower birth rate does not actually mean that individuals end up voting to support only the interests of affluent childless singles. Quite the opposite: the social safety net is much stronger in liberal, supposedly individualistic, lower-birthrate blue states. An array of choices seems to mean that people respect and support a variety of paths.

The rest of the world tells a similar story. There are obviously myriad complex factors that play into a nation's success, but the places where people are the healthiest and the most economically stable are the relatively liberal nations that provide for social welfare while allowing many different models of family to flourish.

Meanwhile, the arguments in favour of a return to the traditional family remain unconvincing, and even insulting. For example, NYT columnist Ross Douthat accuses single people of being "decadent" in their selfish singledom (an argument neatly taken down by Ann Friedman). In the report itself, the authors project a nobility on to staying at home and "sacrificing" for one's family, as opposed to young people who show "an almost defiant individualism" and "indulge themselves in hobbies, fashion or restaurants". Singapore pastor Andrew Ong says that the child-free media culture is "about not growing up".

Listening to these guys, you would think that kids are an awful drag, that raising a family requires (almost entirely female) sacrifice, and that such hardship simply must be endured for … something they don't quite specify. By contrast, they seem to think that single people are in a perpetual adolescence, out partying, eating and drinking until, I suppose, we get ours by dying alone with our cats.

That's not making much of a case for marriage and babies, is it?

In reality, most of these selfish singles are in fact eventually getting married and having babies. They're just doing it later. The result is that these selfish late procreators are wealthier, their marriages last longer and their kids are healthier. How awful.

Investing in future generations is crucial, but conservatives seem to value not so much investment as major personal sacrifice in the here-and-now that results in poorer outcomes for everyone involved. And for what? So that future generations can grow up to sacrifice themselves too? Feminists and other liberals aren't against supporting children and making the world a better place. We just realise that the best way to do that isn't by making ourselves collectively miserable, but by actually taking steps to improve society for everyone, now and later.

One of the ways we're doing that is by making it easier for women to choose to have children. Demanding that women sacrifice everything for child-rearing isn't exactly getting the young ladies to line up, but that's what our current employment model is based upon. It is actually exceedingly difficult in much of the world for women to achieve highly in a career while also having a thriving family and personal life. Our current employment model is based on a family economy with a male partner who is able to work full time, and a female partner who stays at home and tends to the children. Women are now in the workforce in unprecedented numbers – but the workforce hasn't adjusted to give people much time for anything other than work. And conservatives have championed this model, praising folks who do multiple jobs just to make ends meet or work 80 hours a week. High-achieving men still often have wives who stay home. What happens, then, is high-achieving women either "opt out" and let their husbands do the bread-winning, don't get married or decide that they want to have kids later or not at all. And the economy suffers for it.

But young single people don't just want to slave away at work all day, and we don't have someone at home taking care of the rest of our lives. We also want a work-life balance. We may not be going home to children, but we want to pursue our hobbies, spend time with the families we've created and engage with our communities. We realise there is much more to life than just work – but we also think there's much more to life than a traditional family.

That kind of push-back could be the key in making work-life balance a reality. Historically, women's work has been undervalued and disrespected. One reason "work-life balance" is discussed but not actually executed is because, I suspect, it's women – and the most disrespected and undervalued group of women, mothers – who that balance is perceived to benefit. So what if this new group of highly effective, highly motivated, hard-working young single people are now demanding more balance and reasonable work hours and leave policies? Everyone benefits.

Women today also want relationships that are mutually supportive and egalitarian, something they might struggle to find – but not for the reasons conservatives seem to think. Lots of men haven't caught up, and still want wives who will be subservient and financially dependent. For men, getting married and having kids comes with increased social status and emotional benefits, not to mention actual salary increases and workplace opportunities. For women it's the opposite: motherhood brings with it lost income and opportunity. There simply aren't enough subservient women who are willing to put themselves in financial, social and sometimes even physical peril to have a "traditional family".

Despite its reliance on rightwing values, there is much to be gleaned from this report. It identifies a place where liberal feminists worried about gender equality and conservatives worried about fertility rates can come together to promote both of our goals. Make reproductive freedom a priority, including the right to have healthy babies. We do this by promoting healthcare that covers the family planning tools that lead to healthy, wanted pregnancies. Federally mandated parental leave and other family-friendly policies like state-sponsored childcare would also make it easier for women and men to work and raise families. More affordable housing programmes would make it more plausible for parents to stay in the places where they choose to live, and where they have put down their social roots and earned their stripes at work. Real investment in public education would relieve much of the financial burden for parents who want their children to have the same opportunities they did.

Finally, support a variety of lifestyles and choices. When the traditional family model isn't something that everyone is expected to personally sacrifice to create, we can construct and implement policies that benefit actual families, in all of their incarnations. When they are not a crass economic contract where financial support is traded for housekeeping and child-rearing but instead a unit based on love, respect and mutual support, marriages last longer. The conservative and religious promise that there is only one best way to live, one that requires temporal sacrifice and is justified solely by obligation but will be rewarded by happiness in the afterlife, but it doesn't actually lead to good outcomes here on Earth.

Family isn't dead. It's just getting better. Expanding its definition and allowing people to choose their own happiness model is just making it more highly valued than ever.