China leads in major trial to finance their welfare state.
The West started providing Welfare to their citizens in the 1860’s when Bismarck led the way in Germany.
The majority of western nations followed at the end of the Second World War. The NHS started under the new Labour Government in 1948.
It is a key part of sharing national wealth and providing basic human needs to the people of a nation.
Hitherto it has been paid for out of taxes on the people, whereas some feel it should be paid by companies as part of their responsibility for their staff, former staff and families.
It has created a major funding crisis in Western state budgets, accounting for 30-50pc of total state expenditure.There is also two other problems.
Firstly they are run by government ministries and not as social enterprises.
Secondly, politicians seek re-election by promising new benefits which are unfunded and create extra demand on national debt.
China’s “scientific method” has spent over 30 years, to my knowledge, studying western models and planning their own.
Below is a very important first step in their new form of the welfare state, substantially funded outside their state.
The formula is simple. The middle classes will buy their own welfare, where they are self employed.
The employed, their families, and retirees and their families, will be provided by their employers mainly by insurance.
The unemployed and “vulnerable” by state welfare funds substantially funded by stakes in state owned enterprises.
The split is estimated to be one third, one third, one third of total cost in each of above.
Imagine if instead of privatisation we had transferred the assets, or a substantial part, to fund our welfare state. The value of the shares and the dividends would have risen remarkably over the last 30 years.
The story below is of major moves in a large trial for their welfare funds, for the vulnerable.
The soe’s role is extended to funding part of the welfare state.
The Financial Times may not welcome the questions it asks of the privatisation we embarked upon.
But we can see a new model of socialism developing from China.
Perhaps we shall learn from this as the benefit to lower taxes is very substantial. Maybe Mrs Thatcher missed a trick.