A letter to a Tory

Dear Tory,

You ask, Would libertarians snoop on benefits cheats? (link) I'm not a libertarian, but I'm on that side of the aisle, and I think you conflate a number of things which ought not to be conflated.

Firstly, you conflate what libertarians would do with whether the policy of paying people to turn in benefits cheats is a good one. I cannot see why someone who is committed to the rule of law should be opposed to reporting criminals, and theft is a crime. Of course, one may take a more lenient view of someone who was slightly over-paid and chose not to report the discrepancy, over a harsher view of someone who systematically, knowingly and dishonestly milked the system over a number of years. Nevertheless, it is a crime, and turning in criminals is a social good.

Secondly, you conflate turning in criminals with snooping on them. It may be a breach of another's privacy to snoop on them, but what if this person is bragging locally about how they have defrauded the system? What if you come across this information without their knowledge, but nevertheless innocently? (For example, you are a welcome visitor to their house and notice an ill-health payment for someone you know to be fighting fit.) Turning in a benefits cheat is a different matter from snooping on them.

Thirdly, you conflate the civic duty to turn in criminals with the motivation by reward. People may take a different view on this, but I do not think I would change my behaviour on this matter because a reward was in the offing: I would probably claim the reward, but I hope I wouldn't be more likely to do the decent thing. Not everyone thinks this way of course, and some may well be motivated by a reward to offer up information they would otherwise have kept secret.

Fourthly, you conflate what a libertarian would do in the current circumstances with what a libertarian would do given control over the tax and benefits system. Here, people disagree a lot, but I am quite favourable towards the idea of a fairly flat rate of taxation coupled with as few basic payments as possible: preferably, only one. Every single benefit can then be rolled up in this tax-free, universal payment, and you will not get benefits traps and wildly varying marginal rates of withdrawal. The way a libertarian would behave within our current system is different from the way they would arrange the system.

You miss the fact that this is what our benefits systems will always lead to. If we have a system where people are paid on desert, then there will always be people who try to cheat that system, and there will always be a desire to stop the cheaters. Not least, those who cheat on benefits are imposing a cost on all those who work and pay taxes. Means-tested benefits systems will always lead to this kind of solution: if not people turning in their neighbours, then something like it.

Only a system which does not try to distinguish between people, such as a universal basic income, can avoid this kind of problem, as well as the high costs of administration which are brought about. For example, you don't hear much about people defrauding the basic state pension, because its administration is so easy. It consequently also costs very little to administer.

I recognise that it is very difficult to imagine moving an entire nation straight over to such a system, but I read a good speech by Sir Roger Douglas, Minister of Finance in 1980s New Zealand (wiki), in which he suggested something similar, with a dual system being run (link). (Douglas is an interesting character, having moved from being a Thatcherite Labour Finance minister to involvement in a classically liberal party, the ACT.) Then people could go from the old system, with its high taxes and high spending, into a new system, with a basic income and a lower rate of tax. (We would have to think carefully about how to let people back in again: perhaps they could opt back in but would have no entitlements for a certain period of time.) You would be expected to take more care of yourself and rely less on the State, but your taxes would be lower so it would be easier to arrange this. We can let each individual decide which system they want to live under, rather than forcing everyone to live according to the will of the majority.

Yours,

Phil