Jan 19, 2014

Welfare is a pacifier for the poor

A pacifier for the poor
Britain is scared to face the real issue – it's all about inequalityWill Hutton
"It's inequality, stupid. It's inequality that is behind poverty, ill-health and the growth of the welfare bill."
Yes, huge inequality itself creates poverty. Huge inequality creates even more inequality. The very rich compete among themselves to drive up prices of everything. The middle rich may enjoy a momentary happiness when they see their worth goes up. Then they find that they are priced out of other things. The poor of course end up paying more for everything.

Inequality is especially bad when two conditions are present.

One. When you are in a small country, e.g., Singapore, inequality is especially bad. When you are priced out, you are kicked out of your country. Or you spend your whole life working just to own a tiny apartment, if you are lucky enough to be working. If you are in a big country, you have the option of moving to less expensive cities.

Two. When your country has a very open border, you face global inequality. Global inequality, not national inequality, is the real threat that people in many countries are facing.

At one end, you have the super rich from around the world who buy up your properties and price you out. A recent fire in a luxurious apartment block in Singapore confirms this. 90% of the multi-million apartment units are sold, but only 10% are occupied. That is the result of the global super rich who park their multi-millions in empty apartments in Singapore.

At the other end, you have the dirt poor from around the world who flock to your country and drive the wages under survival rates. If you are poor, your wages will be suppressed, if you are lucky enough to keep your jobs.

When global inequality drives people to the edge, the government pushes welfare as a pacifier for the poor, to prevent an open revolt or uprising. As people get wiser, they will not be satisfied with a pacifier. That's when people will demand an unconditional basic income, or an uprising.

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