“Our instictive aversion to freeloaders was an evolutionary response to pre-industrial times. But it is a maladaption in our present environment, an atavistic anachronism. There is now – and there is likely to remain – a shortage of jobs. In this world, the fact that some (few?) people don’t want to work should be welcomed, as it increases the chances of getting work for those who want it. This is a good thing because involuntary unemployment is a big source of unhappiness.
What’s more, many of the few low-wage jobs that are available are of private benefit but little or even negative social value. Incentivizing people to work in call centres cold-calling people to sell them PPI compensation is not an obviously Pareto-efficient policy.
In this context, we can think of the tax and benefit system as being like an auction (pdf) in which people bid for the scarce right to work; taxes are the price we pay to buy that right.”