Thesis Number: #2 (Page 2 of 8)

“The Basis of Civic Society”

For his first public speech following his election as Britain’s Prime Minister, Tony Blair chose as his audience a group of unemployed youngsters. Speaking on June 3, 1997, on a social housing estate in South London, he said:

“The basis of this modern civic society is an ethic of mutual responsibility or duty. It is something for something. A society where we play by the rules. You only take out if you put in. That’s the bargain.”

To what extent does Blair’s proposition represent reality? We may arrive at an answer by reflecting on the following cases, culled from the British media. What do they have in common?

  • Mark Hawthorn (alter-ego: Tilly) was gaoled for six months in June 2013 after claiming £84,000 in disability benefits while performing as a drag queen.
  • Julija Freiberga claimed £33,000 in state benefits while unemployed. As a landlady, she drew £60,000 a year in rent from her six properties. She was gaoled for 16 months (Rayner 2012).
  • Christine Fitzgibbon claimed £1,500 a month in state hand-outs while her husband ran a £7m drugs empire. She was gaoled for seven years after admitting money laundering (Shan 2013).
  • Tracey Shellard, claiming she was too fat to work, received £100,000 in benefits after shedding 19 stone. The judge called her a “lying scrounger” and sentenced her to a 12-month suspended prison sentence (Narain 2013).
  • The cash-strapped Earl of Cardigan, custodian of a 4,500 acre estate, received £71 a week Jobseekers Allowance while he was searching for work. The Earl (David Brudenell-Bruce) was in legal dispute with his trustees over the handling of the financial affairs of his ancient estate (Clarke 2013).
  • Tenants of the Duke of Northumberland complained that they were faced with increases in their rents in some cases of up to 98%. The Duke, reported to be worth £320m, owned about 132,000 acres, including the castle at Alnwick, which featured as Hogwarts in the Harry Potter films. A spokesman for the Duke argued that rents reflected market conditions (Harding 2013).

All these cases involve the transfer of incomes to those who claimed the right to be supported by the labour of others. The first four cases are of individuals who abused the law. The second two cases are of income transfers within the law.

The concept of income transfers is defined in the Dictionary of Free Market Economics as “A transfer of resources, usually funds to recipients of assistance or subsidies, not in exchange for any service”. This redistribution of money is mandated by government (Foldvary 1998: 281-2). Economic rent, which is claimed by the owners of land, is the primary example of a transfer payment. Land which commands an economic rent costs nothing to produce “and the whole of its earnings are economic surplus” (Seldon and Pennance 1976: 115).

To stress the point that rents, as pure income transfers, are not earned, John Kay (co-author of a textbook on taxation with Mervyn King, who was to become Governor of the Bank of England), summarised the economic reality in these terms in his article in the Financial Times on December 27, 2009:

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