The Welfare State


The welfare state was introduced on the basis that a benign state would look after you from cradle to grave.

There is no doubt that having sold this to the nation in the guise of a ‘National Insurance’ scheme, that the first beneficiaries, those who paid nothing into the ‘National Insurance’ but received benefits were the first and only beneficiaries of the Welfare State.

NI works very much like a Ponzi scheme in that it is future investors that pay for the benefits of the current beneficiaries.

This starts to unravel when the beneficiaries start to outstrip those paying in, as the baby boom bulge surges through the demographic. This is made even worse when the baby boomers are fit and well and are outliving the actuarial estimates.

If the National Insurance Scheme is not to eventually collapse, it must ensure that along with other insurance providers that it conforms to ‘Insolvency II’, that means the state must divest itself of assets to fill the hole or put up premiums (NI payments) to ensure that it can meet its liabilities.

Insolvency II is already driving Insurance companies out of the UK/EU because of the enhanced capital adequacy rules.

The Welfare State is an unsustainable undertaking. Continual borrowing from unborn generations is not the answer.

What the answer is we have no clear idea at present, but to ignore the fact that the scheme will eventually collapse is wrong.


The Welfare State (pdf)

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