Sustaining the Welfare State

The three pillars of every social welfare system, arguably, are health, education, and productivity support. A prioritisation becomes necessary where required resources are, or will be limited: we say health above formal education and both these above productivity support.

Formal education, ideally, itself, promotes productivity; while health is a necessity for both. Health is important because life is for the living to live healthy, and good health supports survival. Education is useful to promote enlightenment: the basis of civilised and healthy living, reasonable frugality, peace and order. Productivity support provides a humanitarian oriented survival line for individuals who lack the basic resources of food, clothing, and shelter in such a way as to help reduce their need for the same support.

A simple financial inequation for a sustainable welfare system:

(IPY – SAS – YOC) > (0.8*RMW)*(WEP) + FED + MIC

IPY = Income from previous year
SAS = Strategic annual savings for reserves (say, 20% of IPY)
YOC = Contribution from 0.8*IPY to current (non-welfare) operations and capital budget
RMW = Reasonable minimum wage per year
WEP = Estimated welfare eligible population for income support
FED = Computed annual cost of free public education through high school
MIC = Medical insurance support cost estimate for WEP

Obviously, it proposes that the current budget be funded from the previous year’s income, and promotes the elimination (or reduction) of deficits. A useful way to use the inequation is to observe and pursue fulfilling the demand it places on the management of the nation to ensure that the left-hand-side is maximised, and the right side minimised. Notable, reducing the WEP increases the value of the right-hand-side. And a well design education system might reduce the MIC. The devil is in the details, so what this translates to practically has to be worked out.

The RMW should be able to support local transportation to/from work, reasonable portions of home cooked meals of reasonable cost, basic shelter and clothing and the ability to save 10% of what is left after these basic expenses.

If a nation’s economy does not support delivering 80% RMW as minimum wage (allowing for a bearable 20% stress due to inflation or other factors) then its economy is imbalanced to the degree that it doesn’t sustainably support the RMW.

The foremost aim of the strategic annual savings is to develop a national reserve that can support continued operations for seven years without any other income. It is essentially an emergency reserve that may be used to bring financial relief during force majeure and major economic structural adjustments. A portion of it may be used for strictly capital projects.

Issues with the above inequation include that its terms are dynamic, and estimating the values of the terms on the right-hand-side might be challenging if not problematic. In order to alleviate this, at the most, half of the previous years SAS my be used to support deficits due to incorrect estimation. This, though, places an upper limit on uncertainty-based errors.

From this, with a view towards sustainability, and given global competition and a finitude of national income and resources, we surmise that the basic objective of the welfare state may best be defined thus: to eliminate or minimise the need for the welfare it provides. A complex problem that appears harder with higher population size, but also alleviated by cultural norms of mutual sustenance within familial groups.

Is this utilitarian business?

… listening to the news with one ear, one report spoke of the record revenues from excise duties in a particular region paid largely by three companies. Two were in the alcohol business (brewery/distillery) and the third was BAT (with the last ‘T’ for tobacco). This report was, on the surface, okay until the next one which spoke of the need to enlighten the people, smokers in particular, about the downsides of smoking, and the need to stop (or never start).

First you keep them in production, mass production, with near unlimited distribution (convenience stores everywhere), and then you try to restrict their market(ing) and limit product take up by teens especially. What other examples are there?

It’s the manufacturing value chain that needed digital terrestrial TV first.
The government is always happy to do spectrum allocation and licensing.
Broadcasters and customers spend on new equipment.
We want more options.
We want more convenience.

Has it been more hype than substance?
What other examples are there?

In addition to the widely reseached health effects of smoking which acknowledges it as very contrary to the physical man, smoker and inhaler alike, it has severally been said to increase the governments’ healthcare burdens significantly. We choose to let them live. They/we/you keep them, and bear with them, at least for the tax that they pay, first. Second, for the fear of a fight against the ‘powerful’—and very rich— companies involved. (Don’t play with a man’s livelihood where he’s got clout that includes an addicted crowd and a happy supply chain.)

Economics sways emotion.
Emotion sways economics.
Who arbitrates?

Maintain the programs to deal with withdrawal symptoms and end addictions.
Control via legalization. Get some money on top of it.
You don’t want to have to find people new jobs for the ones that would be lost if the industry is shut down.

How powerful is the money motive?
But, they who are determined to be rich, fall into temptation, and a snare, and many foolish and hurtful covetings, the which, sink men into ruin and destruction,— For, a root of all the vices, is the love of money, which, some, being eager for, have been seduced from the faith, and have pierced, themselves, about with many pangs (Rotherhams Bible, 1 Tim. 6). Thinking motivations and contexts.

Who doesn’t like to look good.

You want to belong to a group and still maintain your independence and freedom to break the rules of the group.
One of the dilemmas of governments. And to think of it, some married folks too.
Is there necessarily a dilemma?

Finally, in the extreme (limit, in mathematics), if everyone were smokers then the problems we see with smoking would be amplified. If no one smoked, then what could be the loss or gain to individuals, communities and nations in the long run.