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Thursday, September 30, 2010

Britain is Cautious About Cutting Benefits

There was an article in the New York Times entitled, "Britain is Cautious About Cutting Benefits," released today in regards to Britain's plan to cut subsidies paid to middle and upper class families with children. The government is worried that by cutting these subsidies it will in effect retract the voters of the middle and upper classes. The research provided shows that although the money is intended to support needy mothers and their children, nearly half of the money is going to families in the upper level of the income distribution. Further data reveals that in most cases parents aren't even using the money to provide better living conditions for their children, but rather for their own personal gain, with alcohol and tobacco among the leading purchases. The topic in question is how to eliminate subsidies from those who do not need them, while retaining their voting numbers. Maybe the question we should be asking isn't how to eliminate them, but rather how to ensure that they are being used by those who are trully in need. The problem created by this approach is that now, with no incentive to politically support such programs, the upper and middle classes will vote against them. Based on the theory of collective action, people don't operate or join when there is no direct incentive to do so. It seems to me that rather than completely baaning middle and upper class families from obtaining the subsidy, the British government needs to find some other way to retain the attention of the middle and upper classes when it comes to this issue.

For this course, I encourage you to also consider developing an analysis of whether the subsidies at issue are efficient or inefficient.
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