Third Way Part Way

For some time I have regarded the "Third Way" as a crude attempt at badge engineering. I thought that the difference between the views of someone like Mark Latham and me, was no more real than that between a Ford Laser and a Mazda 323. After listening to Latham and Pearson speak at the Brisbane Institute I have been forced to change my mind. The Australian version of the Third Way is trying to put a Holden lion on a Leyland P76.

The differences between Third Way advocates and Liberals may appear to be small. We both believe in individual rights, markets and government intervention. But the way in which these are variously weighted and combined can lead to radically different societies.

I have no problem with the first step in Latham’s two part programme. He believes that a welfare system that gives material resources without demanding anything in return is a form of charity and demeans those who receive it. This is what he calls mutual responsibility. As part of this concept he also imposes a responsibility on government to provide additional resources like case management, training and employment schemes. I can buy that.

Even though it might cost more, there is undoubtedly a social pay-off from these sorts of measures through improved physical health, more social cohesion and a better mental attitude. The sorts of things that Latham wraps up in the term Social Capital.

Where I part company with Latham is in his second step - his concept of rebuilding communities. He gave three case studies of three different public housing estates. In each of these an individual started programmes which transformed the communities. Latham believes governments have a duty to provide resources to this sort of activity, and this is where he runs off the rails.

The solutions described by Latham focus on communities rather than individuals. There is an unspoken assumption that government can turn these individual efforts into a programme. But he has difficulty explaining how these initiatives will be sustained. It is easy to start a community programme, difficult to maintain it.

He also found it difficult to deal with the question of horizontal equity. If you are in a community where the conditions for rebuilding are right, you are O.K., but if your public housing estate does not have the necessary ingredients, where does that leave you?

Latham’s solution is much less than optimal because it looks at the wrong unit. You can only empower individuals, not communities, and individuals are empowered when they have a range of choice and the means to pursue it.

Housing estates are the antithesis of choice. They are the Soviet model for delivering welfare where one size has to fit all, and scarce resources are rationed using queues. These days we have abandoned soup kitchens as a means of providing the needy with food – we electronically transfer funds into their bank accounts and they go out and buy it for themselves. We deliver most welfare services in the same way, apart from housing.

If you qualify for public housing, why shouldn’t you be paid a subsidy so that you can go out and rent a property that suits you immediately? No waiting lists. No "Sorry, I know your mother lives here, you work there, the nearest suitable bus-stop is here, but the only available house we have is 20 miles away". You won’t be stigmatized because you won’t be wearing that stamp on your forehead reading "Welfare Recipient", the one that comes complimentary with every commission house.

Treat people like this and they will automatically have better access to social capital. They will live in communities with a varied social sediment and a mixture of role models. Better still they will be empowered because they will be doing for themselves.

Pearson’s message was similar. Social welfare coupled to an entitlement mentality is destroying remote aboriginal communities. Aborigines should work for these benefits. Again, fair enough. Like Latham, Pearson adopts a corporatist model. Some organization, or perhaps it is a new peak body, should receive the funds and dole them out. This is a fundamental flaw. But unlike Latham, Pearson does not even see welfare as being a step on the way to full participation in society, he sees it as a continuing prop.