The Hungry Spirit: New Thinking for a New World

by Charles Handy

  There are all sorts of practical difficulties with vouchers, but, because they encapsulate the idea of choice, they, or something like them, are a prerequisite of responsibility in these areas. There is, we must remember, no point in responsibility if there is no choice. To help the potentially excluded part of the population it is not enough to pour money over them, even by way of investment in schools, hospitals and the surrounding environment unless the recipients also have an opportunity to exercise some choice and therefore take some responsibility for their own future. As a start, in education, we might offer vouchers for the extra-curricular subjects which promote the forms of intelligence not developed in the classroom. We might even consider confining the formal curriculum to the mornings and allowing vouchers to dictate what was done for each young person in the afternoon.

  The real revolution comes, however, with the privatization of the welfare and pension systems, which account for nearly half of all government outgoings and can only grow larger as the populations grow older. If nothing changes, for instance, and taxes were kept as they are, the public debt of the USA in 2030 would be 250 per cent of the GDP, twice the level it reached at the end of the Second World War. That won’t happen, because it would cost too much money, in interest, to borrow all that, even if anyone were willing to lend it. The situation is no different in Europe, or in Japan. Something has to change. What has to change is our responsibility for our own future finances.

  Go back to those figures for Singapore. The state expenditure figures are low because there is almost nothing in there for pensions or unemployment. That doesn’t mean that no one has thought about those things. It is just handled differently. All who work in Singapore contribute to a Superannuation Fund, normally as much as 40% of income, paid jointly by employer and individual. It is the workers’ money, invested for them, even if it is mostly invested in Government stocks. Contrast Britain, where everyone pays so-called National Insurance Contributions. These sound the same as the superannuation payments in Singapore, but they aren’t. They are effectively an additional income tax which goes straight into the government income stream. Pensions are then paid out of current income.

  Most Britons don’t realize this. They think that they are building up a nice little pension nest for their old age. They aren’t. They will have to rely on the generosity of those who come later, because, as things are, with British pensions linked to the index of prices, not of earnings (earnings normally go up faster), the British state pension in 2030 will be equivalent to only 8% of average earnings. Not much to grow fat on. It will be worse for the Germans, and most other Europeans, who are used to looking forward to up to 66% of their average salary, paid out of current government income. When the income isn’t there any longer, the pension won’t be either.

  Government needs to provide the infrastructure for pensions, but not the superstructure. There needs to be a state regulated and compulsory system whereby a proportion of our earnings, paid partly by ourselves and partly by our employers or our customers, goes straight into a personal pension plan, underwritten by the state. I say customers because the growing number of ‘portfolio workers’ have no employer, only customers. For them, therefore, there has to be a system, like VAT, where a proportion of the sales invoice is automatically handed over to a pension plan, preferably by the customer, as happens in Italy, although, there, it goes straight into the state coffers. There should also be a compulsory insurance scheme to cover pay during any periods of unemployment. To this can be added the idea of a learning bank, with voluntary contributions matched by employer or government, to be spent on training and education at any stage of the individual’s life.

  For those who can’t pay because they have no earnings for a time or earnings that are too low, there might be a loan scheme, as there will have to be for students in universities, financed by government and to be repaid through the tax system when earnings reach an adequate level. For an unfortunate few, this level may never be reached. They will end their days indebted to the government, a debt written off when they die, or reach a certain age. That will be, in practice, no different from the present state of their affairs, but instead of seeing the money they receive as their entitlement they will see it as a loan – a reminder of their responsibility for their own life.

  There are no easy solutions to this universal problem. Getting there from here is always going to be technically difficult, expensive – and it will take something like forty years before it is working properly. Which is all the more reason for starting something now. In Britain, all the political parties have begun to think about the problem, which is heartening. In the rest of Europe, and in most of North America, politicians are still hoping that the problem will somehow fail to materialize – at least during their lifetime. Chile, alone of South American countries, has made a start, but their system benefits only those who can afford to pay. Too many are excluded for it to be an adequate answer.

  In a sense, all these schemes are merely massaging the statistics because the same amounts of money are involved. Why bother? one might ask. The cynic would say that it would make governments look leaner and fitter, more like Singapore, for example, which takes almost as much money out of its people’s pockets but ingeniously routes it differently. Others would argue that it forces the different bodies concerned to be more visible and therefore more likely to be efficient and, possibly, more effective as well. I favour a move in this direction because it emphasizes our personal responsibility for our own life. We get back what we put in, with interest, we hope. It remains the state’s responsibility to create the infrastructure and to see that we use it, and to insure us against system failure, for example the collapse of the world stock and bond markets in which our money is invested. The state remains the place of last resort when all else fails, but should never be the place of first resort if we are going to have any chance of earning our self-respect.

  The danger, however, of such privatized systems, is that we think only of ourselves and have no sense of commitment to the larger society. The tax bill is, of course, the outward symbol of that commitment and it is always encouraging to read surveys which record that a majority of people would be prepared to pay higher taxes, in Britain at least, if they could be sure that those taxes would go towards improved education or health care. It is because they can’t be sure of where the extra money would end up that they are reluctant to put their votes where their mouth is and vote for a political party that promises to spend more, although this has not recently been put to the test because no political party anywhere is standing on a platform of higher spending. Maybe they should. If the pensions money were taken out of the government expenditure figures there would be, by sleight of numbers, apparent room both to reduce taxes and to spend more. Our pension contributions, being our money saved for us, would not seem or count as a tax, leaving our taxes to be our contribution to the whole of society.

  RESTORING THE WORK

  The wealth to be distributed, however, is created by work. Work is also key to a sense of personal responsibility. It remains every country’s most serious problem. Lower unemployment figures are deceptive. The reduced numbers of those claiming benefit often mean that people have decided to leave the workforce early. This is not good news. People need to stay in the wage economy as long as possible, both to give them enough to live on, and to reduce the burden on the next generation. The work, therefore, has to be good work, paying a living wage and providing some sense of personal worth. If it does neither of these things society will continue to get more unequal and more people will feel cheated of a life.

  If governments could wave their wand and create jobs for all, many of their budgetary and other problems would be solved. If only it were that easy. Some of it might be. If governments were not so fixated by efficiency in the non-competitive areas of the infrastructure, and if they could define extra expenditure in, for example, schools and hospitals, as a form of investment not as a current cost, they could
create more jobs in and around those places, making the schools and hospitals less efficient in terms of costs, maybe, but more effective in output.

  I once suggested to the South Africans that they should consider adopting what was then the Japanese solution to employment. The Japanese differentiated, either by design or by historical precedent, between the competitive export businesses and the non-competitive sectors of the domestic economy which was heavily regulated. Their department stores were obviously overstaffed, with assistants to greet you at the door and to press the elevator buttons for you. When I was last there, buying a railway ticket in Tokyo’s central station required a sequence of transactions at different windows, behind each of which sat a person. As the Japanese deregulate their domestic economy in order to revive the general economy there will be fewer of these extra people, but the principle that it was better to pay people for working rather than for doing nothing, as long as it did not hurt one’s exports, seemed to me to be a sensible one.

  Where industries are internationally competitive, efficiency and effectiveness are both essential. Jobs should be kept to a minimum and only the best people should be on the payroll. But in the non-competitive areas of government, most of which are people-intensive, the South Africans could, I suggested, relax the criteria and employ more people than were technically needed. It would be no more expensive than paying them not to work, the extra people could improve the care and attention given to the users and would, themselves, learn by working, particularly if proper training was provided.

  Other countries could do the same. It would be a way of tilting the infrastructure towards those who need to be involved. The real scope for more work, however, lies in the infinitely expandable market for personal services, be they in the areas of caring for young and for old, of help in the house or the garden, of part-time work in stores and shops, or of part-time professional assistance to individuals or institutions. Nearly half of the workforce is already either part-time or self-employed, and it will be this section of the workforce that will provide the opportunities for more and more of us in the future. But this sector is, by its nature, insecure. It is also hard for many to penetrate because they have to sell themselves and their services – not something that most of us find easy.

  There is scope here for what Geoff Mulgan and Tom Bentley of the think tank Demos have termed Employee Mutuals. These are intermediate organizations which employ labour but sell it on. They are employee agencies of a sort, except that they work for the individual, who is a co-owner of the Mutual, as well as for the end customer. The Mutuals would offer the individual training, would act as his or her marketing agent, collect monies on their behalf and, in general, act as their home base, a refuge in a difficult world. The organization would be financed by a levy on the pay earned by each individual, but any overall surplus would belong to its members. Government help would be required to devise a new legal form for these Mutuals, a tax structure and some assistance with a few pilot models. That sort of help would be a modest investment in the infrastructure of work, directed towards those who need it most, but leaving them with the responsibility for their own lives.

  I have, in the past, suggested that these employee mutuals offered a possible new role for trade unions. Sadly, the unions are still locked in to their role as the protectors of permanent employees. The option is still open and would be welcomed by many. Organizations used to provide the means for most of us to connect ourselves with the market, to turn our skills and our time into useful goods and services. Nowadays, more and more of us are going to have to do it for ourselves. If work has, to a large degree, moved outside the large organizations so, I believe, should the organizations created to protect those workers.

  RE-INVENTING DEMOCRACY

  Thus far we have only suggested rearranging the tax structure so that fewer of our payments go through government hands, leaving us with more sense of responsibility for our own lives, even though we are paying out the same money. I now want to suggest that we should take seriously the expressed willingness of most people to pay more tax if it made a more civilized society, and if they had more confidence in the results of their expenditure.

  More taxes will be acceptable, I suggest, if they are locally voted and locally spent. If we can watch the local environment improving, can feel proud again of the schools and hospitals in our neighbourhood, then and only then will we feel that, our taxes have been spent as we wanted. And if things don’t improve, we know who was responsible and can remove them from office. Democracy can still work, if it is local.

  I am also a convert to the idea of hypothecated or earmarked taxes. No government likes such taxes because they bind their hands, requiring them to spend the tax on what it has been collected for, and to show how it has been spent. The reluctance is understandable but, once again, efficiency needs to be tempered by effectiveness. If we paid a separate health tax we would feel that it was more like an insurance than a tax and would understand better what health care costs (nearly 60% of the income tax in Britain). Similarly with education. There would inevitably be those who would want to opt out of the taxes, claiming that they wanted to make their own provision, or that they had no children to be educated, but their contributions could and should be presented as their stake in an inclusive society – the cost of citizenship in a decent world. It might happen, however, that we would turn out to be willing to spend more on health and education if we were sure that that was where the money was going to end up.

  These earmarked taxes would need to be graduated as income tax is now, but, by removing health, education and pensions from the general budget, governments would be able to eliminate income tax for all but the richest citizens. Income tax, seen as a tax on labour, has always been resented and has always added to the cost of that labour. Removing most of it and relying for general income on expenditure taxes of varying sorts would encourage people to work more, even for modest wages, and to save more because only expenditure would be taxed.

  Expenditure taxes are regressive. That is, they penalize the poor disproportionately. It would be important, therefore, either to introduce something like a basic income, given as of right to everyone, which would be complicated and expensive; or, more interestingly, to subsidize essential products, rather than their consumers. At first sight this would seem to be in contradiction to the best free market practices, but there is no reason why a competitive market should not operate underneath the subsidy levels.

  Were this principle to be applied to public housing, public transport, basic foodstuffs and utilities, it would mean that people on low pay could still get by, and that any extra money would be a sort of riches, because it would not be needed for essentials. In other words, the level of material ‘enough’ would come down, freeing more people to define their lives the way they wanted to. Since these services would also be available at reduced cost to the more affluent whose taxes had paid for the subsidies, there would be an obvious and direct relationship with their taxes. Instead of supplementing the income of the lower paid, as most countries do now, we could cut the cost of essentials, thereby making existence possible without apparent subsidy and giving people back their dignity.

  The subsidy may not be apparent, but, some will argue, it is already there, in places, and can distort the market mechanism. Yet we don’t call it subsidy when we offer health care or education apparently for free. When the British Museum announces that it will not impose entrance charges on anyone, no one talks of market distortion. Taxes spent on cost reduction for essentials can be precisely monitored, are visible to all, reduce the cost of living and therefore of wages, and reduce or even eliminate the poverty trap involved in subsidizing income.

  The best way to encourage more initiatives in looking for work has to be to increase the immediate rewards of finding that work. The elimination of income tax combined with the reduction in the cost of essentials would go a long way to doing just that. As importantly, individuals would retain the resp
onsibility for their own lives rather than being so obviously dependent on the state.

  THE STRUCTURES OF INVOLVEMENT

  In 1996 the roads of France were blocked by lorries. They brought that side of Europe to a halt. It was a very French form of public protest, copied from the farmers who have often taken their tractors to the streets to express their anger or frustration. This time it was the lorry drivers, looking, on the face of it, for more money, shorter working weeks and earlier retirement, but to Theodore Zeldin, the social historian, it was another sign of the changing face of politics in Europe. The lorry drivers, he said, were looking for dignity and respect as much as for better terms and conditions. This search for personal dignity will begin to transform politics as groups of people as diverse as students and doctors, teachers and judges complain that you cannot educate people to be free and responsible and then treat them as if they were passive instruments of the state, telling them what and how to teach, what drugs to prescribe, as in France, or what punishments to deal out in court, as in Britain.

  A generation ago the drivers would not have complained about their jobs the way they did in 1996. In those times the world of the industrial revolution still operated. What mattered was to keep the factory busy, and people were hired to do just that. If the work was boring, dirty or mundane, well, that was the way it was. People moaned but accepted. Jobs are different now. They are supposed to be interesting and varied, to allow people room to exercise their discretion and to grow their talents. Money is not enough, today. Personal dignity matters too. Jobs must first suit their people and then be profitable.

  A servant government has to be seen to be working for its citizens, with their consent and agreement, not ordering them about for its convenience. If we are to feel that it is our government serving us, we need to be kept informed, encouraged to participate where appropriate and be assured that we as individuals will be guaranteed our basic freedoms. While it may often be necessary to remind people that rights entail obligations, it is also pertinent to remind our rulers, who should be our servants, that obligations need to be balanced by rights, because it is rights that buttress dignity.