Perils of the welfare state - 10 April 1992

We can, I can, say something now about the state of things in two countries, in Britain and America, that I could not say during the past month, for fear, as I mentioned last time, of being thought to try and influence, in however tiny a way, the preferences of the British voter. Listeners who did not hear last week's talk may justifiably ask who I think I am, to have the slightest effect – impact is the modern buzz word – on a foreign election.

Have I ever requested that a talk not be played in India or New Zealand when they are having an election? No, but they don't have the long record of mutual suspicion that countries like Britain and America enjoy in the intervals of their mutual admiration. Apart from recalling the lamentable story of how a British Minister in Washington was sent back home for suggesting who ought to win an American election, I also had on my mind, last time, the striking similarities between the mood of the British voters and the American voters that have been reported this time around. Lassitude, indifference on the part of some voters, there's always that. But this time, a restlessness, an anxious feeling that none of the parties seems to be able to meet and overcome the really crucial troubles of our democratic societies in their present state.

And what state is that? Well I'm thinking in the main of the seemingly insoluble problem of the periodical and ruinous slumps in the economy. I mentioned some time ago that for the past several months, maybe a year, my bedtime reading has been in the, I think, 40 volumes – six months to volume – the 40 volumes of Punch between the two great wars, a nightly ritual all the more poignant now that that once great institution is on its death bed.

I got into the habit of following a regular feature called Essence of Parliament, reports on the daily doings in Westminster in the '20s and the '30s. What sadly was brought home to me was the absolutely dependable emergence, under any government, of the same conflicts. Free trade versus protection, labour versus the employer, but more, the same promise, sworn by a Conservative government, by a Socialist government, by a coalition government, to achieve full employment and low inflation. And apparently it cannot be done, not in a democratic system, only by dictators, who if they don't manage to put everybody to work and absolutely control prices can, if there are too many people and too few resources, as we say – too many people chasing too few goods – then the dictator can stifle and has stifled inflation, by reducing the numbers of people, liquidating, that is murdering several million surplus consumers.

I suppose these fundamental problems will always remain. There is however another big one which is new. Since the Second War and the rise of the welfare state, there has spread throughout the nations of Europe and through North America, a general concern for a whole range of what you might call compassionate services, which before the Second War either didn't exist or were far more limited. I'm talking, of course, of services by way of help, if not money, for the old, the sick, the disabled, the unemployed, the student, young children, the homeless, services provided by the state in the European sense of the nation.

Put as simply as possible, what in this matter Britain and America and the industrial nations of Europe and Australia and New Zealand have in common, is this problem: how to be able to afford all these services which the people have come to take to granted. In every national budget today, there is a big irreducible chunk that no party dare cut down, call it social services or welfare or social security, pensions. Entitlements is a good word that Americans use. It's those forms of social help once left to the workhouse, the Salvation Army, the local charity, the generous passer-by, to which people now feel entitled.

How these things, along with everything else in the budget come to be paid for, has been masked, in Britain and the United States, certainly, by endless dogmatic arguments about taxes. Whether the way to continuous prosperity is by setting such low taxes that business will have lots of extra money to invest in new plants, new tools, new methods and so stimulate new jobs and continuous prosperity, which by the way, we've never had. The other school says nonsense. What happened when Reagan's Congress drastically lowered income taxes was the big business became bigger, big corporations merged into monoliths. On one truth everybody agrees but never in public. How did we afford all the old services and the new? And the answer was, by borrowing abroad.

I think it was Jerry Brown, the one-time, two-time governor of California, one of the two mavericks of this presidential campaign, he said the other day: you want eight years of growth and low unemployment and lots of Medicare and Medicaid? Easy, I'll give to you the way Reagan did, borrow $300,000 million a year. And yet, with all our spending of somebody else's capital, the real income of the average family is lower than it was 10 years ago, one American child in five lives in poverty, one black child in two lives with one parent, more millions of American children than ever are illiterate or semi-educated, the several hundred bankrupt thrifts have tossed an insupportable burden on the taxpayer and so on.

I believe that the mood of a great many of the American electorate is more frustration than anything else. When I said last time that a little more than half the electorate has lost faith in Congress, I was wrong. The figure in a more recent poll is 83%. The ironic thing is that the people seem to see the essential things that have to be done more than the politicians who are not doing them and none of the candidates from Mr Bush on one side to any or all of the Democrats on the other, offers any programme, radical or conservative, for cutting the deficit and somehow making the compassionate social services affordable.

All except one man, one extraordinary figure that this campaign, this frustration, has thrown up. Name of H Ross Perot, Perot, he's a Texas businessman. He scorns a party label. A poor boy who borrowed a thousand dollars 30 years ago to found an electronic data system which turned out to be a godsend to the government, for the first time copying all the records and printing all the literature of the welfare system. Eight years ago he sold it for over $2.5 billion. He's a wiry, red-eyed, flap-eared little man who decided one day early last month to run for the presidency, or rather to see if enough people wanted him, by getting his name on the ballots of all 50 states. The way he did this was to set up a telephone bank with a hundred lines and an 800 number, that's a number that the caller gets free, Mr Perot has paid for this bank and everything else to further his campaign. He has set no limit, he's ready to spend, he says, 28, 38, 40, more million dollars. He has no paid help of any kind. There won't be, he said, a handler anywhere within a thousand miles of me.

Sounds like a crackpot imitative but within 24 hours of the opening of the phone bank in Dallas, Mr Perot had over a million supporting calls. What is the appeal of this active, downright squeaky-voiced, not very prepossessing man It's the appeal of one of those populist heroes in an old Frank Capra film, except Mr Perot looks nothing like Gary Cooper or James Stewart. He's fed to the teeth with the government, he calls the Congress gutless and pampered with perks. He would cut most of them – free medical care, free parking, he'd cut also their salaries. He has a peculiar notion of taking away from Congress the power to imposes taxes. Since that is its chief power, given to it in the Constitution, the Congress, the House anyway, which has the first and last word on all money bills, the House might just as well cease to exist.

But apart from his disgust at the establishment, at the president, the Democrats, the Republicans, his two big promises are the ones that touch the two big problems that most Americans say have to be met and solved. Namely, Mr Perot would begin by dramatically slashing the deficit, saying it's only going to go so high and then cutting services that have been for the past 20 years or more, sacrosanct – social security, pensions, so on – and he would make rich old Americans, the wealthiest top third of the over 65s, forfeit their right to Medicare, under which the government pays most of the sickness costs of everybody over 65, rich or poor.

Now every test of these two reforms in local and national elections has guaranteed the political suicide of every man and woman who proposed them. The message may be sweetened a little by the fact that Mr Perot is financing his own campaign to the tune of, I don't know, maybe $100 million. It's a crazy sort of version of Mr Perot Goes to Washington and it may not get him the presidency but he has scared the White House and maybe fired the Democrats with the thought that the country this time is ready, not for a Bush opponent at the centre, but for a more radical one, on the left, liberal, you might say, provided he's one who would not – of course – not raise taxes and not cut, in any way, all the welfare entitlements we have come to regard as our due, for better for worse, for richer, for poorer, in sickness and in health.

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