Daniel J. Mitchell
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I don’t like bloated government. It undermines economic performance by diverting resources from the productive sector of the economy and often leads to destructive tax policy.

But when trying to build support for good fiscal policy, it often helps to cite specific examples of wasteful and foolish government. That’s one of the reasons I’ve been comparing examples of government stupidity and political correctness in the United States and the United Kingdom.

After all, how many people would want to pay more taxes after reviewing these bizarre episodes of government in action?

From the United Kingdom

From the United States

I’ve even shared some instances of moronic behavior from the private sector, and I have another story that may belong in that category.

In this instance, we’re talking about the critical need to protect people from pudding. I’m not joking. Here are some of the details of a very odd report in the Daily Mail.

If you’re lucky enough to look about 18, there’s a good chance you’ll be asked to provide ID at the supermarket to buy alcohol, knives or glue. Now an addition has been made to that list of potentially hazardous items – chocolate pudding. Robert Nemeti was amazed when he was asked for ID while buying a microwaveable pudding at Tesco. Mr Nemeti, 24, was going through the self-service checkout when an on-screen warning announced that his purchase had to be ‘approved’. …‘The woman who was monitoring the self-service checkouts came over and asked me for identification showing I was 18. I asked her why and was stunned when she told me: “It gets hot when you cook it – and you may burn yourself”. Surely the same can be said of many of the products they sell in any supermarket? Health and safety has gone crazy if you now have to prove you can be trusted with a chocolate pudding.’ He added: ‘I explained that I didn’t have any ID. Thankfully she agreed that I looked over 18 and she scanned her staff pass to approve the sale.’ Mr Nemeti managed to cook and eat the dessert that evening without injury.

Gee, I’m glad that Mr. Nemeti managed to eat the pudding without causing a fire or suffering burns.

There’s not much I can add to this story. Is this an example of crazy government over-protectiveness, sort of nanny state run amok? Perhaps somewhat similar to Nurse Bloomberg’s attempt to ban large sodas? I don’t know. There aren’t enough details.

Or maybe it’s the fault of the private sector, with some corporate bureaucrat justifying his job by coming up with idiotic rules? Though, to be fair, that’s less destructive than American corporate bureaucrats who have special skills when it comes to getting bailout money.

No warning label?!? Such reckless corporate irresponsibility!

Could it be because the English are learning about America’s lawsuit culture and businesses are having to defend themselves from preposterous legal claims by imposing equally preposterous rules? That would be the indirect fault of government.

But whatever the cause, it’s a sorry sign for civilization. I’ve previously explained that I’m very pessimistic about the United Kingdom’s fiscal outlook. Based on this story, I also should worry about the nation’s mental outlook.

But I’m not throwing stones blindly. I’m fully aware that the United States is a glass house, whether the metric is reckless fiscal policy or a dearth of common sense.

How the Welfare State Traps the Poor in Dependency, the British Version

Back in 2011, I linked to a simple chart that illustrated how handouts and subsidies create very high implicit marginal tax rates for low-income people and explained how “generosity” from the government leads to a tar-paper effect that limits upward mobility.

Earlier this year, I shared an amazing chart that specifically measured how the welfare state imposes these high implicit tax rates. Unbelievably, some people would be better off earning $29,000 rather than $69,000.

Simply stated, the multitude of redistribution programs are worth a lot of money, but you begin to lose those goodies if you begin to live a productive and independent life.

And since we know that rich people respond to high tax rates by declaring less income to the government, we shouldn’t be surprised that poor people also respond to incentives.

We also shouldn’t be surprised to learn that other nations have these same perverse policies. Here are some excerpts from a powerful piece for the UK-based Spectator.

…today’s Sunday Times magazine has a long piece asking whether there is a “fundamental difference in our attitudes to work”. It’s still one of the most important questions in Britain today: what’s the use of economic growth if it doesn’t shorten British dole queues? And should we blame these industrious immigrants; aren’t the Brits just lazy? …The quality of the British debate is so poor that we almost never look at this from the point of view of the low-wage worker. Every budget, the IFS will dutifully work out if it has been “fair” – ie, gives the most to the poorest. The LibDems will judge a budget by this metric. That’s a nice, easy, simple graph. But what about destroying the work incentive? Each budget and each change to tax should be judged on how many people are then ensnared in the welfare trap. I adapted the below (nasty, complex) graphs from an internal government presentation, which still make the case powerfully. The bottom axis is money earned from employer and the side axis is income retained. The graphs are complex but worth studying, if only to get a feel for the horrific system confronting millions of the lowest-paid in Britain today.

Here are the two charts. the author is correct. They are quite complex. But they show that there’s no much incentive to work harder, whether you’re a young person or a single parent.

After showing these amazing charts, the author makes some very powerful additional observations.

…if I was in a position of a British single mother I have not the slightest doubt that I would choose welfare. Why break your back on the minimum wage for longer than you have to, if it doesn’t pay? Some people do have the resolve to do it. I know I wouldn’t. …So let’s not talk about “lazy” Brits. The problem is a cruel and purblind welfare system which still, to this day, strengthens the welfare trap with budgets passed without the slightest regard for its effect on the work incentives on the poorest. …Meanwhile, the cash-strapped British government is still creating still the most expensive poverty in the world.

The final sentence in the excerpt really sums it up, noting that the government is “creating the most expensive poverty in the world.” Sort of like a turbo-charged version of Mitchell’s Law. The politicians create a few redistribution programs. Poverty begins to get worse. So then they add a few more handouts to address the problems caused by the first set of programs. Lather, rinse, repeat.

In other words, this poster applies in all nations.

P.S. If you want some real-world examples of the horrible impact of the British welfare state, you can see how the welfare state destroys lives, creates perverse incentives, and turns people into despicable moochers.

P.P.S. We have the same problems in America, and even leftists are beginning to admit this is bad for poor people. Heck, just look at this chart showing that the poverty rate was falling until the War on Poverty began.

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Daniel J. Mitchell

Daniel J. Mitchell is a top expert on tax reform and supply-side tax policy at the Cato Institute.