Labour have understandably decided to make “fairness” the test of government policy. The Coalition government has decided to dance to this tune. Everything that is done has to be fair – fair between different groups in society, fair as judged by a general goal of greater equality, even fair between Lib Dems and Conservatives. If we are to live through austerity, the politicians argue, we must show that policy is fair. Those with the broadest shoulders should take the heaviest load.
Let me disappoint some of you. I do not think a government should set out to make unfairness part of its policy. Far from it. I do however have two worries about this test or doctrine. The first is, there is no consensual or agreed view of fairness. The second is, the government should not do things in the name of fairness that might delay the recovery, stand in the way of sorting out the mess, or deny the reality that the state has run out of money. To do any of these will add to unfairness and unhappiness in the longer run, not reduce it.
Fairness is to some extent in the eyes of the beholder. Labour and the government argues that it would be unfair to increase benefits for the unemployed by less than price inflation. After all those benefit levels do not permit lots of luxuries. Many people going out to work for low incomes ask is it fair that out of work benefits go up by 5.2% when their wages may be frozen, or rising just 1-2%? Politicians tend to say that it would not be fair to impose strict conditions on receiving benefit concerning how strenuously people should be looking for work, and on what type of jobs they should be prepared to take. Others in society think there should be stiffer requirements, as they have to go to work and do not feel they have the option to stay at home.
Politicians think bankers are paid too much. They argue it is not fair that bankers get such large basic salaries and often large bonuses on top, simply for doing their job. Yet Labour wrote contracts for the top people at RBS which were generous by normal standards, and the Coalition accepted it needed to honour these commitments. This action resulted in the bonus row this year for the CEO of what remains a loss making bank, dependent on txpayer support. They do not seem to take the view that footballers are paid too much, even though some football Clubs end up bankrupt thanks in part to the very high salary bill.
The danger of fairness policies is they can end up requiring yet more tax revenue to pay more out in benefits and subsidies to those people and policies which the fairness judges think are worthy of such help. We have talked many times on this site about some of those decisions that get in the way of economic recovery or industrial revival. Whilst I agree fairness is important, in current circumstances I think successful recovery is even more so as it can deliver the jobs that fairness and solvency require. The best way to narrow income differentials is to raise the levels at the bottom, and that requires more to go to work.