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individual savings as were practicable, by the benefits provided by certain voluntary associations and, in the last resort, by poor relief and private charity. The aim has been to provide this majority with other sources of income, which shall expand automatically at times of stress and difficulty, such as sickness, disablement, unemployment and old age. It cannot be said that this aim has yet been satisfactorily realised, but a notable beginning has been made.1

§3. Many proposals are in the air for advancing further along the same path, and a few of those, which have recently been put forward in this country, may be briefly noticed by way of illustration.

The present position of the Health and Unemployment Insurance Acts is obviously unstable. It is proposed by some to introduce funeral benefit into the Act, and by others to increase and extend the existing benefits in other directions. Some propose to increase the contributions levied on employers and workers; others propose to abolish these contributions altogether, especially in the case of health, and to throw the whole cost on public funds."

Extensions are proposed in the present Old Age Pension Acts in the direction of increasing the pension, lowering the qualifying age and raising, or even abolishing, the existing maximum income limit. Pensions are also

1 For a discussion of the extent to which modern insurance schemes may be regarded as providing a substitute for private property, see Ely, Property and Contract, I., pp. 332 ff.

* In the opposite direction is the proposal that, especially as regards unemployment, provision for maintenance should be made by organisations of employers and workers in the industry directly concerned, the State neither contributing to the cost, nor controlling the administration. This proposal would involve a restriction of income from civil rights, and the substitution of income from private gifts, or, under an extended form of contract, from work.

See the Report of the Departmental Committee on Old Age Pensions, 1919. (Cmd. 410). Universal pensions at a certain age are no new idea. Tom Paine, in his Agrarian Justice, in 1789 advocated pensions

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proposed for widows with young children," such pensions to be provided by the State and administered by a Committee of the municipal or county council wholly unconnected with the Poor Law." A still ampler scheme is that of Mr. Dennis Milner, who suggests that a pool " should be formed by a general levy of twenty per cent. on all incomes, and that out of this pool 9s. a week should be paid to every member of the community, children included. This idea has the merit of simplicity, if no other.

These proposals have been rapidly enumerated, for purposes of illustration. In deciding on their relative merits and demerits, it is necessary to bear in mind that their effects will vary, both according to the methods by which the necessary funds are raised and the way in which they are expended. As regards effects on production, it has been noted above3 that in principle a sharp distinction can be drawn between the provision of benefits, on the one hand, for those whose productive efficiency is incapable of appreciable increase, such as old age pensioners, and, on the other hand, for "adults in the early stages of sickness or unemployment and the young in general." In practice this distinction is sometimes apt to be blurred, owing to transfers within families. It may be presumed, for instance, that a large part of widows' pensions would be spent in ways that would

of £10 a year for all who reached fifty years of age," to enable them to live without wretchedness and go decently out of the world." He proposed also that a national fund should be established by taxation, out of which 15 should be paid to every person reaching the age of twenty-one. For an account of these schemes see Maitland Collected Papers, I., pp. 148-9.

i These are the terms of a resolution moved and widely supported in the House of Commons on April 9th, 1919. See also the publications on this subject of the National Union of Societies for Equal Citizenship. Schemes for a State Bonus. A Rational Method of Solving the Social Problem.

3 Part III., Ch. IV., § 3.

Pigou, Wealth and Welfare, p. 363.

improve the health and efficiency of their children. Similarly, old age pensions to some extent relieve younger relatives of contributions to the maintenance of the pensioners.

But, looking at the matter generally, there can be no doubt that there is scope for a judicious extension, upon a large scale, of income-bearing civil rights, which will both reduce inequality, proportion income more nearly to need, and react favourably on production.

§4. As regards the distribution of income from private gifts, it does not seem possible to generalise, beyond remarking the probability that the inequality of incomes from this source will usually rise and fall with the inequality of incomes in general, and that private gifts will do little, if anything, to reduce this general inequality.

CHAPTER III

INEQUALITY OF INCOMES FROM WORK.

A. Causes of Inequality.

§1. The causes of the inequality of incomes from work have been discussed by many economists, beginning with Cantillon and Adam Smith.1

The amount of any individual's income from work depends upon the amount, and the value per unit, of the work performed. The inequality of incomes from work depends, therefore, partly upon differences in the amount of work performed by different individuals and partly upon differences in the value of different kinds of work.

The differences in the amount of work performed by different individuals depend partly on the choice of the individuals concerned, and partly on other causes. Some persons, capable of a normal amount of work, choose to do little or none, because they have incomes sufficient to maintain them from other sources, whether property, civil rights, or private gifts. It was to this class that Mr. Lloyd George was picturesquely referring, when he

1 Compare, in chronological order, Cantillon, Essai Sur La Nature de Commerce, Part I., Chs. VIII.-IX., Adam Smith, Wealth of Nations, Book I., Ch. X., Mill, Principles of Political Economy, Book II., Ch. XIV., Marshall, Principles of Economics, Book IV., Ch. VI. and Book VI., Chs. III.-V., Taussig, Principles of Economics, Vol. II., Chs. 47 and 48, and Cannan, Wealth, Ch. XII. It is remarkable how early substantial truth was attained in this branch of economic theory, and how little later writers have had to modify the conclusions of their predecessors.

remarked some years ago that "we have too large a free list in this country." Again, during any given period there are several classes of persons who do little or no work, owing to causes independent of their own choice. Such causes include, in the first place, old age or extreme youth, sickness or physical or mental incapacity; in the second place, various imperfections in our economic organisation, which result in involuntary idleness in the form of unemployment; in the third place, in most civilised countries, various legal prohibitions, on grounds of public policy, of work by certain classes of the population, such as children below certain ages and mothers immediately after childbirth.

Further, among those who do a more or less normal amount of work, special legal enactments or collective agreements between employers and trade unions limit the hours of work in particular occupations. Under this head, there is a strong tendency to reduce the hours of work in modern industrial communities. The longest hours are now generally worked by the worst paid and least organised workers on the one hand, and on the other in various comparatively well paid occupations, where the worker is more or less his own master, but where leisure is apt to be undervalued in comparison with money. Again, different workers in the same occupation often perform very different amounts of work in the same time, especially when payment is based upon output rather than upon time occupied. It is more difficult to compare the amounts of work performed in a given time by workers in different occupations, or even in different branches of the same occupation, but, whatever method of comparison be chosen, there is no doubt that the amounts of work done by different individuals differ very greatly.

§2. The differences in the value, per unit, of different kinds of work depend upon differences in the demand for,

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