John Biffen on income problems
Income Redistribution and the Welfare State Adrian Webb and Jack Sieve (Bell £1.90) Income Distribution Jan Pen (Allen Lane The Penguin Press £3.50) A Conservative' has masked many faces. Seven years ago The Times anticipated The Spectator with a series of articles by this luminary. He then concluded : "it is in the relief of poverty that the biggest failures of Conservative policy in the past twelve years lie ". Few would dispute that the problem has persisted. Contemporary Conservatism should take special heed. It would be ill served by a public impression that its tax-reforming zeal was a heartless attempt to dynamize society by offering greater rewards to the managerial elite and perhaps to increase rather than diminish social tensions.
The danger is there. Professor C. V. Brown in his study of the Impact of Tax Changes on Income Distribution' (commissioned by Political and Economic Planning and the Institute for Fiscal Studies) has suggested that "almost all of the individual items in the Conservative tax strategy would tend to increase the differential between the higher and lower income groups, and to worsen the position of households with children relative to those without ". The saving grace is presumed to be the development of a negative income tax, the pioneering of which has been contained in the recent Family Income Supplement Bill. The objective, presumably, is to redeem past failures• at relieving poverty without being ensnared in ambitious social policies which are unacceptably egalitarian. It is salutary, therefore, for policy makers to know just how effectively egalitarian welfare policies have been in recent years, and they should be grateful to Messrs Webb and Sieve for the lively doubts they express about the accuracy of present statistical methods for measuring the effect of social policies on income inequalities and poverty.
The authors reinforce the views of those who have argued that many discretionary welfare benefits in kind are not fully taken up by those who are eligible. They claim that the social services, although redistributive in design, very much underfulfil this objective; and they reach the formidable conclusion that, in Britain, effective income is distributed at least as unequally now as in 1937 despite the fact that there has been a substantial increase in welfare public expenditure since then.
It is arguable that attempts to use welfare expenditure to promote a more egalitarian society have been frustrated by growing inequalities of earned income. That, however, need not prevent public expehditure from achieving the more limited and less contentious objective of relief of poverty. In this respect it is a pity that the authors did not expand their analysis to consider some of the administrative shortcomings of the present welfare system and to evaluate the attractions and shortcomings of embryonic forms of negative income tax which are now becoming a feature of the welfare state in Britain. Their conclusion that the future need is to "both increase public expenditure and increase levels of income redistribution" is daunting unless qualified by consideration of reform in present welfare philosophies and is almost contradicted by the authors' frank concession that "despite the slow rate of growth, public expenditure on the social services increased during the late 'sixties," but "cannot continue for long for socio-political reasons ".
Messrs Webb and Sieve have confined themselves to the limited but immensely valuable task of dissecting the impact of existing welfare policies: they have not really considered the wider implications of alternative forms of welfare administration. This task, and much else, has been undertaken by the Dutch professor, Jan Pen, in a wide-ranging treatise on income distribution. He gives little support to the British idea of introducing a heavily qualified negative income tax through the family income supplement. "It only has any point if it is introduced at one go," and his final judgement is harsh, though briefly argued : "we must keep an eye on this, and not waste our energy on fashionable tricks."
It would be unfair, however, to suggest that Professor Pen slides grandly from premise to conclusion. Whereas Webb and Sieve have taken one aspect of the problem and considered it in depth, much of his book is concerned with the pattern of incomes, confirming the familiar conclusion that "in modern society countless reallocations and massive transfers of income occur, but the ultimate distribution of income remains very skew and many of the poor remain visibly poor ". Professor Pen includes within his survey a consideration of 'incomes policy' as a means of redistributing wealth and eliminating poverty. This is timely in view of the renewed interest in the subject. He is convinced, however, that incomes policy will not be able to perform these functions. He concedes that the authors of such policies have often "a more just" distribution of incomes as one of their aims but, he adds, "anyone who places equity in the fore ground has his hopes disappointed." Indeed this is but the starting point for his strictures, for he concludes that the policy, even when judged by other less social criteria, must be a manifest success or disintegrate : Incomes policy must be an all-round success. If it starts to fail on some point or the other, it will also fail elsewhere. That is a characteristic of vicious circles.
It seems, then, that we are driven back to taxation as the primary means for relieving poverty, and to this end the analysis of 'A Conservative' in 1964 still remains uncomfortably topical, and the remedies perhaps just as elusive. power held the floor. Again were those grey-faced apparatchiks so hopelessly misguided as they appear to Mr Karol? The ' peaceful ' victory of Dr Allende was not too far round the corner.
Why did it all go sour? It is some personal consolation to find that Mr.
Karol's analysis is not so different from my own — it would be otiose to state that my criticisms come from the opposite band of the political spectrum — written down long before Mr Karol began to doubt.
It is not so much that the guerrillas who seized the Cuban state in 1959 had no political theory, no sense of the institutional void between government and people, as Mr Karol would argue. Rather, they did not recognize that the relationship which grew up immediately in 1959 between Dr Castro and the crowd already constituted a political theory sui generis. The leader talks to the people gathered before him in the Plaza de la RevoluciOn and intuits their desires; they ' represent ' the Cuban. people, they ' vote ' (votar) by acclamation. The semantics are revealing. Plaza democracy is extended by television and lightning provincial tours. Hence there is no need for representative institutions, for an institutional structure between the leader and the led which may encourage them to take some hand in determining their own fate. What looked like Greek city state democracy turned out to be a personalized form of Jacobin elitism.
Yet all might have turned out differently on one condition — economic success. Lenin once remarked that you cannot allow democracy when people are starving. The Cubans aren't starving, but a society where the few enjoyed American standards of living has been replaced by a society where all are rationed — and this book leaves no doubt about the general greyness of Cuban life.
The economic disasters that have entailed increasingly tight political control are not all Dr Castro's fault. The American blockade, Mr Karol argues, forced an economy dependent on high-class US techniques and technicians to dependence on second-rate socialist technicians and shoddy East European machinery. The 'spare parts crisis,' the retooling a whole economy, imposed terrible strains. Soviet motors smashed the transmissions of General Motors buses. When I was last in Cuba there was a story circulating of the two cranes. "Why," asks the curious tourist, "is that old American crane working side by side with the new Soviet crane that is out of order?" "We keep it there," runs the reply, "in the hope that the Soviet crane will learn."
Nor was it just machinery that was inefficient: so were the men who ran it. Stalin, who knew from experience, observed, "Cadres decide everything." Underdeveloped countries are rich in native and visiting economists ready to plan an economy at the drop of a hat, and poor in middle level technicians to implement them. Cuba has not yet replaced the talent now, alas, in Miami.
Dr Castro must take some share of the blame; he lurches from dreams of prosperity (as one of his ministers put it in 1960: Swedish living standards by 1970) to dark visions of a Stalinist breakthrough,
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