I think that if you are working, be it a low wage, part time etc. they should only deduct a percentage of your wage over the welfare you get. such as 50p in every pound (or 50c in every dollar whatever). That means if you are working, you still get a benefit for working, does that make sense?
The problem is situations where working actually yields less (economic*) benefit than just living on social welfare, which of course is indication of a broken system and should not happen.
Probably the best way to address this, of course, is setting up some arbitrary standard of living that should be achievable on welfare only, and then making sure that minimum wage is higher than that, and at minimum wage level you don't get taxed at all.
I don't think a "negative tax rate" is the way to go. Even though it is an interesting concept, it would be difficult to monitor in practice and defining who lives "under poverty line" is a pretty difficult thing to do.
In actuality I believe the biggest problem with setting up a viable network of social security is that it may put stress on a country's economic system, and - borrowing the page from Battuta's book - other countries are fully capable of defecting if it benefits them.
China, for example, is a defector (along with several other East Asian countries). It is beneficial to their economy to keep their workers' rights and protections (a form of social security) at minimal level. There are either no minimum wage / maximum hours limitations, or enforcing them is very lax and breaking them has negligible consequences. This means the workforce is very cheap and it's an economically competitive place to produce stuff in. The companies that produce stuff there have a serious advantage over countries that produce stuff in more expensive countries (which enforce workers' rights and have a comparatively good social security). And, of course, these defector countries attract a lot of business which superficially benefits their economy.
People, however,
suffer from this immensely, both in the defector countries and the more expensive countries, because now these defector countries pull a lot of works from the more expensive countries and cause unemployment there.
Personally, I believe there should be a globally defined minimum wage and maximum hours (along with other workers' rights) and defecting from these rules should result in severe trade sanctions, to discourage this kind of exploitation of the "free market economy". Either the WTO or UN should be the ones to enforce these rules, and make them more detailed and defined. It would cause the Chinese and Vietnamese and Thai and Bangkok and many other governments to cry tears of blood as their economy would apparently suffer. It might meet resistance from the companies currently producing ****loads of stuff dirt cheap in these countries.
It might make things more expensive to produce. But, to counterbalance that, there would be more employment more evenly spread across the globe - so there would be more people with the funds to buy things. Especially, if the South-East Asian people were actually paid proper wages, can you imagine the buying power of those 3 billion people? It's not like salaries paid to people just disappear into a bottomless well - the more money moves, the better economy tends to work.
And those currently engaged in de facto slave labour would not be working themselves to early death - either by chronic industrial chemical poisoning or suicide - in really **** conditions.
It might even have an effect on the population growth rate, since standard of living tends to have inverse correlation to birth rates while death rate remains at 100% (although with longer and more productive lives).
It could seem catastrophic in short term, but in the end, it would benefit every person in the world.
Except maybe those few that benefit most from the current situation by exploiting as many others as possible.
*Talking about the sheer amount of money here. Having a work, even if social security would yield numerically more money, usually has a lot of positive, stabilizing psychological and social effects on a person's life, and I think most unemployed people would take that over "mooching on the society" in a heartbeat - but if their status changes to "employed" and the net effect on their income is negative compared to social securities only, they
may not even be able to do it. What would you do if you were unemployed but had a family to take care of, the social security barely keeps you fed and sheltered - then you're offered a job, but you do the math and find that accepting the job would make your family worse off in the whole?
