Letter: Beware the US system of welfare

Sir: It may be true, as Andrew Marr suggests ("We can help ourselves", 19 January), that as "Essex Man" and the "Nanny State" decline, communitarianism is on the rise. But to use as evidence for this thesis the recent proposals by Peter Lilley to reform the social security system in order to permit local determination of welfare benefit levels, is stretching things a bit.

It is true that centralised social security systems can be inflexible, and that we live in an era when progressive experimentation is necessary. It is also true that such experimentation might lead, as in Switzerland, to better services, higher benefits and less dependence. But we ought to take Mr Lilley's Thatcherite credentials seriously, and recognise the likelihood that it is the American model of welfare determination that is being sold here, not the Swiss.

In the US, local determination of eligibility rules and benefit levels for a variety of welfare state programmes was built in to the system at the start, mostly to obtain support from the congressional defenders of a low-wage, highly exploitative and racially segregated southern regional economy. National standards would have constituted a serious threat to a variety of industries (most prominently textiles) whose profitability depended on cheap southern labour.

More recently, such variations in benefits, and in the taxes that pay for them, have become a central factor in the frenzied inter-regional competition for capital that has helped produce both the "Sunbelt" and the "Rustbelt". In this competition, local determination of welfare levels, along with laws that impede unionisation and support southern development in a variety of other ways, play an important role in maintaining low production costs, the core of community publicity campaigns.

Even in areas where the unemployment rate is no more than 2 or 3 per cent, the hold of this destructive logic is so strong that millions of dollars in incentives packages are offered to potential corporate investors, while the working and non-working poor are left to rely on an increasingly inadequate welfare state or on charitable organisations. Though some equalisation in state benefit levels has occurred recently, it has been equalisation down, as federal retrenchment, along with deindustrialisationand fiscal crisis in the Rustbelt states have forced cutbacks in regions that have traditionally been more generous. And the South, which is now the country's most dynamic region, still has far more than its fair share of the poor, precisely because this is the sine qua non of its development, Andrew Marr asks whether we would like the results of a localised welfare system. Perhaps, if we could guarantee progressive experimentation and real community participation. But if, as seems likely, it is the highly competitive, "economically efficient" and socially destructive American model that energises Mr Lilley, the tendencies that might be produced by the changes under discussion will be anything but communitarian in nature.

Your faithfully, PHILLIP J. WOOD International Study Centre Herstmonceux Castle Hailsham, East Sussex