Arguably, nations are searching for alternative answers when considering how wealth should be redistributed in society. Russia and Cuba are recovering from an exit of socialism while Singapore, Hong Kong and the UAE are growing rapidly using creative capitalist models. The United Kingdom struggled under left-wing socialism in the 1960s and remains caught between utilising the welfare state or completely freeing society from the shackles of government. Young emerging economies such as Brazil and India are searching for creative ideas. The needs, however, are universal: (a) to incentivise entrepreneurs and produce a productive workforce that is no longer dependent on state income; (b) to protect the most vulnerable in our society; and (c) to ensure that there are sufficient funds in times of crisis. This article argues how dharmic principles can assist in formulating a more sustainable "third-way" model to meet our social and economic needs.
Vichaar Manthan (the "Churning of Thoughts") discussed this very issue at the Houses of Parliament on 9th September 2015 in front of honourable MP's, Peers and Dignitaries. The discussion involved Dr Sachin ji Nandha, Bob Blackman MP and Professor Satish ji Modh, who streamed live via video link from Mumbai. This article utilises the thoughts and discussions during this event.
Welfare is defined as social protection and doesn't include state pension. Welfare has accounted for 15% of total government spending this year (down from 18%) so 15% of £750 billion is welfare. State pension was 20%. The largest section of 8% of welfare is towards “Social Protection”, which includes child tax credits, social services, care, etc. Unemployment benefits make up 0.5% of total government spending. Our total tax revenues for this year were circa £650 billion. So we are £100 billion in the red. We are already as a country, 80% leveraged. In other words, our entire GDP is worth about £1.8 trillion but our total debt is about £1.5 trillion and if we keep going down this road, what will our lenders say? “No more”. At that stage, what do we do?
Employment and Enterprise v State Benefits (the "productive" function)
There is a distinct synergy between Pranayam and Arthayam. In Pranayam, we take a breath, hold it and release it. However, we only breathe whatever is needed to sustain and release the remaining breath back in the atmosphere. Arguably, the state should adopt its fiscal policy in the same manner - spend only what is required to sustain. This would allow the state to focus on real governance to create a prosperous society that is producing surplus wealth.
This surplus wealth can be an accumulation of surplus wealth generated by every family. When every family generates surplus wealth, the state has more money in its hand and the wealth of the nation increases.
If you look at the whole journey from individual to family, to society and to the government, in this whole journey, if the government is focusing purely on individuals and not looking at the society and the family then there is a missing link between the funds of government and its individuals.
There is no doubt that the concept of "welfare" is a testament to our civilisation. Morally, it is already a form of "Sewa" (selfless service), which is a key concept of dharma. However, in dharma, the charity concept is described in 3 parts or manners as Satvik charity, Rajasik charity, and Tamsic charity.
The Satvik charity is the one which is given to the deserving and when the person needs it.
Rajasik charity is given for popularity, for the sake of getting popularity and praise.
And Tamsic charity is given to those who don't deserve it.
So, when we are performing the acts of charity, our focus has to be on Satvik charity.
When the government has got funds in hand, it has to eliminate charity for popularity. It also has to identify people who don't need charity.
Once we eliminate Rajasik and Tamsic charity, there will be more funds available from the government to distribute it to those people who actually deserve it.
That process in the Hindu philosophy is called “Antyodaya”. The government has to focus on that segment of people who really need it.
Coming back to the role of government, how do you create a prosperous society? A prosperous society is built through those actions that create surplus wealth.
How do we create surplus wealth? We earn money. When we talk about Pranayam and Arthayam, the process of breathing in is the process of earning money.
Every one of us earns money and from that money, some part of it is collected through tax by the government.
Those taxes become the money which is earned by the government. Now some part of that money is consumed by us and the remaining money which we do not consume becomes wealth. We use that money for investment and industry.
Hindu philosophy states that if you want to create a prosperous society, the policies of the government has to disperse to create opportunities for 100 productive hands to 1.
Once you provide entrepreneurial opportunities from 100 hands, it should create sufficient opportunities to be distributed by 1000 hands. If the money is used in a manner that people in the society and in the family who have enough opportunities to earn money and create surplus wealth for youngsters, they will in return be able to create surplus wealth for the government.
The ratio of distribution of wealth between various activities of the government will be decided by the issues of that time.
If there are more people during an economic downturn who need help, the government should have enough wealth to take care of those people during those difficult times.
Let’s turn to Dharmanomics, which could replace the concept of capitalism and socialism. Capitalism has been the beacon of enterprise, creating innovation within the society and using surplus wealth to help capitalism. In socialism, money has actively been converted to welfare for the people with little benefit to a progressive and developing society, and a lost focus on those productive hands that can earn money for the state.
Policies of the government have to provide opportunities for entrepreneurs, those who want to work, to give them easy funds so that they are not looking for employment, but instead generating employment for others.
Surplus wealth can never be created by looking for employment. It is always generated by generating more employment.
The task, therefore, is to shift from an “Employment Generation” to an “Enterprising and Self-Sustaining Generation”. It’s not the government's task to generate employment through policies but rather an individual’s offering, her “sewa, to ensure that her business is productive through the power of her employees.
Protecting the most vulnerable (the "paternal" function)
When the government is spending over £60 billion just on helping people through social services, child tax credits, and social care for the aged, the state has effectively taken over the role of looking after a certain segment of society. The crucial question is whether or not it is the state's responsibility to take care of this segment of society?
A paternalism approach involves the state taking on the responsibility that once belonged to the family, to the individual of the family, to the community and society. As the vacuum of state fatherhood has grown, our bills have become bigger and bigger.
However, it is correct to say that if you eradicate welfare over a five year period and rightfully use it to balance the books, you will get greater inequality, even less social mobility than we have now and the most vulnerable becoming even more disadvantaged.
What we need to do instead is to empower individuals to take responsibility for the whole of our society and then gradually reduce welfare. So as a collective consciousness grows from our education system and through carefully constructed programmes, a collective consciousness will replace the state’s responsibility.
This means taking care of your grandmother and housing her when housing is required (Maatra Devo Bhaava, Pitru Devo Bhaava). This means picking up a brush and swiping the dust and dirt of our roads. This means spending one hour per week utilising your experience and skills to volunteer. This would be a society that is not heavily reliant but instead self-sustaining.
Through a greater emphasis and reliance on welfare, and rather than supporting those who can create wealth, we are actively converting productive money into unproductive money.
Somewhere, the balance has to be made between distributing wealth to poorer sections of the society and those sections that can actually work for the generation of wealth.
Until and unless we focus on that, the concept of the welfare state will inevitably come to a standstill.
To summarize, Dharmanomics from Pranayam to Arthayam, as oxygen is necessary for the sustenance of our life, similarly, money or wealth is necessary for the sustenance of society. The policy of the state has to be such that the entrepreneurial potential of productive people should always be well nurtured and supported, particularly when they are in a position to generate wealth and the idea is that we will have surplus wealth that will mean more funds being available to take care of the poorer section of the society.
Defence and Preventative Measures (the "preventive" function)
In order to strike a desirable balance between providing welfare for the genuinely vulnerable segments of our society and progress to a wealthy and more independently sustainable nation, regulation holds the key to ensure that this balance is well-preserved. Our education system must teach the benefits of a moral and compassionate society. It must teach the power of a higher consciousness, to protect the elderly without over-draining the state’s resources. At the same time, checks and balances must be put in place to ensure that individuals are not cheating society, that individuals and corporates are paying their taxes at the required level or that junior doctors are well-supported and financed to perform vital roles.
A genuine third-way is possible using Hindu principles and could be a way forward from the ideals of capitalism and socialism that have governed society for years.