The welfare commons

Just as the left argues with carbon emissions, the welfare state is a kind of ‘commons’ where we all graze at the expense of everybody else (see Richard Wagner’s work). Pension and healthcare costs – probably the biggest two items of the welfare state – involve huge inter-generational transfers. Of course, as populations age, this leads to bigger obligations on proportionately smaller workforces. In the UK, the explicit national debt is of the order of 80 per cent of national income. But, the implicit welfare debts are about 400-500 per cent of national income. We are facing huge increases in taxes to finance these costs. Some countries may not survive the demographic transition. So, the government is in debt – the debt we all know about – because it cannot finance current welfare commitments. But, this is nothing compared with the future commitments which it has made.

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Source: http://www.iea.org.uk/blog/the-welfare-commons

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