Indeed. There is also an externality from people not receiving welfare – as they may need to steal to eat.

As a result, you will want to have a security net, but provide greater incentives to get people into work than you would in the absense of the externality right. However, we have to quantify what size we think this externality is and what way it works. For example one question we need to answer is, is it people who are most likely to start robbing people when on welfare who are also the most likely to be on welfare?

Exactly – WFF has to be taken as a way of promoting something that has a positive externality. Otherwise the policy is solely redistributive.

However, once we take this as given we have to ask – what is the size of the externality. You think the externality is large, but other people think it is small – as a result of these differing assumptions different people will think different things about the policy.

“However, I am sure that families who are weathly enough to not get WFF are on the whole better off in a community where other peoples kids grow up in a loving environment and (for example) beat up thier kids less”

If the externality is that “poor families beat up their kids” then we have to ask – why are families that are in no way “struggling” able to get WFF’s?

Furthermore we have to ask – do parents beat kids because they are poor, or is it the sort of people who beat kids that end up poor (because of a lack of social skills). If it is the second, then giving these people money won’t help anything – there is no positive externality from this channel then.

“Perhaps if as communities we cared for each other better there would be no need for things like WFF, or any benifits for that matter, but until we do, I for one am pleased that the government attempts to helps us do this”

But why would communities do this if a government is just going to do it for us? In that way, progressive taxation replace charity rather than supplementing it.

I am glad that you are happy with the policy. However, because I do not believe the positive externality is as large as you do I am not supportive of the policy.

However, you are exactly right that any justification of WFF has to be on the basis of a positive externality – or else it is just a redistribution based on an even more tenuous “moral” belief.

One thing (of many) that economic growth fails to measure, is the benifits of parents spending time with children. I see WFF attempting to recognise in a small way the huge positive externalities of families investing time into children. (I imagine that there are many cases where WFF doesn’t end up achieving this. Rather it just leads to greater consuption. But if economic growth is what we’re into then we need people growing there consumption to fuel it.) However, I am sure that families who are weathly enough to not get WFF are on the whole better off in a community where other peoples kids grow up in a loving environment and (for example) beat up thier kids less.

Its a shame that “working for other peoples families” is seen as such an terrible thing. Perhaps if as communities we cared for each other better there would be no need for things like WFF, or any benifits for that matter, but until we do, I for one am pleased that the government attempts to helps us do this.

More the cost, I reckon, but thinking about it just now it could be another factor obscuring the employers recognition of the counterproductivity of having a particularly congenial worker.

Ahhh, but Broadband at home has more direct substitutes than electricity – such as internet cafes and broadband at work.

It is hard to define what is “essential” – this stems back to defining what sort of absolute poverty line we think is appropriate:

http://tvhe.wordpress.com/2008/08/04/what-is-poverty/

Broadband isn’t a luxury it’s an essential service like electricity 🙂

For me this is the key point: WFF ( or as prefer it described Working For Other Peoples Families) reduces economic growth and therefore reduces everyones income. It is irrelevant to me if a few choose to live off a benefit: I personally would much rather work but I detest paying tax for it to be redistributed via Working For Families and in the process reduce economic growth and therefore my income. I am being pinged twice: once by the additional tax to fuind WFOPF and secondly by the reduce gross income as a consequence of WFOPF.

However, have to talk about this:

“I think essentially yes, labour is causing people to become long-term dependent (or in my view accustomed) to a standard of living that is provided by welfare.”

The thing to remember is that redistribution also retards economic growth – when we try to share around the pie, we end up making it a bit smaller. WFF is essentially redistribution – we are making people with families better off, to the detriment of people who have not had children.

However, there will also be people who would have been better off in the absense of WFF even though they receive WFF – as the policy reduces economic growth. These people could have had a better standard of living in the absense of the poicy.

As a result, I don’t put it down to people getting used to a standard of living that is the bad thing – however, I am stating in this post that the given redistribution is likely to reduce the amount of work people do in order to achieve a standard of living. Eg, you want a TV, and now you don’t have to work for it – and as a result you don’t work.

Yes, but here I see difference between welfare like the unemployment benefit and sickness benefit and WFF. The former benefits are their to provide a safety net to provide people with what most of society would deem an adequate standard of living when they can’t work – shelter, food, power, medical care etc. Where the WFF is different, in my view, is that a lot of people receiving it already receive an income that covers those previous things that are ‘givens’ in our society. The extra welfare from WFF is actually just a boost to increase standard of living in terms of class rather than providing commonly accepted necessities. WFF is often received by people who already work and can afford the essentials of life, which is why I was saying they don’t really depend on it. Not in the same way someone who is really unwell or disabled depends on the sickness benefit.

Coming back to the crux of this topic: “It is widely accepted now that long-term dependency on welfare benefits should be avoided where possible”

WFF is obviously going to create a long-term dependence because, unlike the unemployment benefit, there is no motivation or pressure to get a person off WFF. It’s is a given until either the government changes or the benficiaries income becomes incredibly high. So I think essentially yes, labour is causing people to become long-term dependent (or in my view accustomed) to a standard of living that is provided by welfare.