Jake's View

Universal retirement benefit would take money from those who need it and give it to those who don’t

Means test needed to decide who is needy and who is not

PUBLISHED : Monday, 07 March, 2016, 3:34pm
UPDATED : Monday, 07 March, 2016, 3:34pm

“The discussion is very superficial still. The financial aspects have been discussed many times ... The truth is, the government is against it because they think it too socialist.”

Professor Nelson Chow Wing-sang

SCMP, March 6

Never has any economic theory or system been tried out as often and as exhaustively as socialism was in the 20th century and never has any proved so complete a failure.

The common result of all the experiments is conclusive. Socialism quickly devolves into just another style of fascism, it widens rather than narrows income disparity, it waste resources, it keeps people in poverty, it destroys civil liberties, it undermines justice and it soon comes to serve only a small privileged elite.

Why this should be so when on every count socialism hopes or claims to achieve the exact opposite is worth a lifetime of reflection. But there can no doubting the facts any longer and no point in inflicting socialism again on any society. Only in the depths of academia, where the real world rarely penetrates, is there any longer a constituency for it.

This benefit should be reserved to those who need it

Thus if Professor Chow’s proposal for a universal HK$3,000 a month retirement protection benefit paid to everyone over the age of 65 is truly a socialist measure then I think there are indeed immediate grounds for being wary of it.

But in fact it does not qualify as socialism, which as defined at its fundamentals by the Marxist aphorism, “From each according to his ability to each according to his needs.”

Chow wants to do away with the bit about needs. He wants all of us over the age of 65 are to receive these payments, whether we need them or no, as he considers a means test of need to be degrading. One assumes Karl Marx thought otherwise or he would not have mentioned needs. We have gone past socialism here.

This affects me personally. If Chow gets his way I shall soon qualify for his monthly HK$3,000 and I don’t need the money. I shall take it if the government gives it to me, and squander it with great delight too, but it would be socially irresponsible on the government’s part to give it to me. This benefit should be reserved to those who need it.

And this necessarily implies a means test. How else are the bureaucrats who administer the scheme to decide who is needy and who is not. Imagine need being determined at the personal choice of the recipient.

“Yo, anyone round here want three thousand smackers?”

“Yeah, me.”

“You needy?”

“Yeah, sure, if you say so. Hand it over.”

READ MORE: SCMP Debate – Should a means test be applied to old age allowance?

I think one of Chow’s objections is that means tests are often much too restrictive and eliminate people who should be beneficiaries. This, however, is a technical question involving how stringent the tests should be. It does not say that means testing in itself is wrong.

The government’s objection to universality is that it would require an increase in taxes. This is not strictly true as it ignores the existence of HK$1.7 trillion in fiscal savings that could be devoted, at least in part, to a retirement fund rather than wasted on pointless infrastructure projects.

But it would certainly be expensive and supporters of universality evade this difficulty with their toss-away recommendation of, “Well, then tax the rich.”

It is easily said and it is morally upright but the rich are mighty footloose in Hong Kong. Any tax increase that would not immediately drive most of them to another tax domicile would not come close to covering the costs.

The truth of it is that just as the bottom stones always carry the greatest weight of the pyramid so the working people of any society always carry the greatest weight of public spending, however it comes to be placed on their shoulders.

Wishing it were not so will not make this pyramid stand upside down on its point. The only way to ease the burden is to be careful about how public money is spent and Chow’s proposals will not serve this purpose. Too much money will be taken from those who need it and given to those who do not.

But then this is what socialism is good at doing.