The UK Government spends about 50% of the GDP (a proportion higher than the other countries in Europe and the USA) to provide welfare benefits, such as free or highly subsidized health care, education, unemployment and old age pension. This spending is funded by a high rate of taxation. While a certain proportion of the spending is abused by the recipients, this system has been well received by the population who prefer the security that comes from the welfare state.
The USA is in the other extreme among the developed nations. It spends less on the social benefits and collect less tax. However, the public have to pay a large part of their income on health care and education. The total cost to the public may be higher, if the private spending is added to the tax.
Many people considers the welfare state to be wasteful, due to abuses and inefficiency. This is only one side of the situation. The private spending system used in the US also have negative points, as is seen in their health care system. There is high administrative and marketing costs and the abuse of profit-driven enterprises, such as denying coverage to the people in poor health or denying legitimate claims.
It is better for a country to rely less on private spending system. Even the US is making reforms to its system.
However, we do not need to go to the other extreme of the welfare state that is practiced in the UK.
We can implement a form of welfare that is not abused and not wasteful. This approach recognizes the benefit of collective purchase by the state for essential services on behalf of the people. It allows the state to find the most efficient supply, at a determined level of quality, for the majority of the people and still allow the higher income to spend their own money to get a higher quality of service. It requires a public administration that is run by honest and competent people, who have a feel for the public that is being served. Singapore used to have this type of approach in the past. We can go back to this approach.
Tan Kin Lian
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