The family and the State

It has become fashionable for politicians to extol the virtues of the family. Yet, in this economic analysis of family policy, Patricia Morgan shows how politicians have been at war with the family over at least the last 25 years. The family is an important vehicle for welfare provision and for income transfers to the most needy and dependent members of society. Yet the state, by providing extensive welfare provision, by financing child-care services and by taxing families on an ever-greater proportion of their income, provides strong incentives for families to break up rather than to hold together, and to form family relationships that are hidden from the authorities. Government policy has crowded out voluntary welfare within families and caused otherwise law-abiding people to commit fraud on a very extensive scale.

The author begins by showing the economic benefit of self-sustaining families. She then shows how government policy has increasingly taken over the role of the family in supporting children. It is clear from the evidence presented here that government policy has caused the breakdown of families: policy has not simply responded to autonomous changes in social behaviour. Patricia Morgan then examines changes to divorce laws and to tax and benefit systems that should help reverse the trend and once again make the family the building block of a welfare society.

The willingness of the state to take on the responsibilities of paying for the upbringing of children where parents choose not to take on those responsibilities themselves is at least partly responsible for undermining self-supporting family structures.

The tax and benefits systems have helped to determine family behaviour â?? the tax and benefits systems do not simply respond benignly to changes in social trends. Individuals within families are rational agents and have responded predictably to the tax and benefits systems in the UK, which are particularly hostile to families by international standards.

ï? Because individuals and families are rational agents who have adjusted their behaviour to perverse government policies, it is clear that policy changes can bring about a reduction in welfare dependency and a strengthening of the family as the primary vehicle for the provision of welfare. The family does not have to be favoured but discrimination against it must end.

Patricia Morgan The War Between the State and the Family – Summary

Since the 1950s most tax increases have fallen upon married couples with children, effectively driving women out of the home and into the work force. In the 1950s income tax would not be levied until a manâ??s income had reached half the average income, the assumption being that this was a â??family wageâ??. Now income tax is levied at a third of average income. A man can receive only one tax allowance even if his wife is at home full time caring for their children, while a couple, both of whom work outside the home, will receive two tax allowances.

thanks to Greg Gardner, Jane de Villalobos, Jackie Parkes and the Hermeneutic of Continuity