Social Welfare Policy Analysis

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MODULE III THE WELFARE STATE READINGS PART I,
2-3 V 6/6 12
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SESSION 3 THE WELFARE STATE (WS)

• The totality of social welfare programs in a
  given national setting.
• Most elaborate in the most advanced
  countries---W. Europe, N.A., and Australia/New
  Zealand.
• W. European WSs tend towards the mature or
  cradle to grave type, whereas the US WS is
  usually classified as immatureand
  characteristic of our national exceptionality.
• American domestic politics is principally about
  two sets of issues---1) the so-called social
  questions, like abortion and family values 2)
  the contents of and eligibility for WS benefits.
  
• All these issues are linked the immaturity of
  our welfare state reflects our politics, which in
  turn reflects the exceptionality of American
  circumstances, as variously interpreted.
• Each of the above points will be addressed in
  this session.

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SESSION 3 TABLE OF CONTENTS

• Conflicting political perspectives on the WS.
• Types of WSs.
• Reasons for US exceptionality.
• Globalization and the Future of the WS.

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CONFLICTING PERSPECTIVES ON THE WELFARE STATE
VS.
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A LIBERAL PERSPECTIVE

• Im often asked if Im a liberal, and I say,
  Well, if Jack Kennedy was a liberal or
  Franklin Roosevelt was a liberal, then Im a
  liberal. This is not 1960, and its not 1932.
  Were in a completely different world than then.
  But I believe in opportunity, and I believe
  infairness. The only way this country prospers
  is if everybody is sharing in the prosperity. I
  think my party has uniquely stood for that,where
  government can be an active partner with the
  private sector in moving the country forward.
• RICHARD GEPHARDT
• DEMOCRATIC LEADER,
• US HOUSE OF REPRESENATIVES.

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THE LIBERAL PERSPECTIVE EXPLAINED

• Liberals support a moderately high level of
  social services, but tend to favor equality of
  opportunity more than equality of social
  condition. They do believe that society has a
  duty to help the poor and oppressed, and to make
  appropriate arrangements for the young and
  elderly, but they would not go as far as social
  democrats and other radicals in the pursuit of
  these goals.
• Many liberals also believe that the educated
  elite should lead society and that the power of
  rational persuasion (ideas again) are
  sufficient to convince voters of the moral
  correctness of their aims they are thus
  idealists in the strictly philosophical sense
  of the term.
• The dominant political ideology during certain
  periods of 20th century American history, classic
  reform liberalism reached its high tide during
  the Johnson years (1963 - 68). While still
  strongly supported by minorities, intellectuals,
  femininists, and various other groups, liberalism
  has essentially been on the defensive ever since.
  Indeed, the L word is now often shunned even by
  liberals themselves (although obviously not by
  Gephardt), who are afraid of alienating voters.
  Many liberals accordingly now prefer to be called
  progressives. That has not increased their
  electoral popularity, however.

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A RADICAL PERSPECTIVE

• THE CENTRAL QUESTIONIS WHETHER AND UNDER WHAT
  CIRCUMSTANCES THE CLASS DIVISIONS AND SOCIAL
  INEQUALITIES PRODUCED BY CAPITALISM CAN BE UNDONE
  BY LEGISLATIVE DEMOCRACY.
• GOSTA ESPING-ANDERSEN
• RADICAL WELFARE STATE ANALYST

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A RADICAL PERSPECTIVE THE BALANCE OF
CONTENDING FORCES

• To understand the WS, radicals contend you must
  first understand the relative political strength
  of the principal classes (forces) in capitalist
  society---on the one hand, the asset-owning rich
  (capitalists) and the top managers who work
  directly for them on the other, ordinary wage -
  dependent workers in potential political alliance
  with the new middle class of technical/professio
  nal workers.
• As we saw in Module 2, distinct social classes
  can have distinctly different perceptions of
  their interests and, hence, different attitudes
  towards swps and the WS. Blue-collar workers may
  well look to the WS for socially financed
  protections against the uncertainties of life
  under capitalism, whereas owners see the WS as
  blocking their quest for a free market system
  in which worker resistance government
  intervention are minimized. (See the following
  section on conservative perspectives for more
  on this last point.)
• Radicals thus view politics largely in terms of
  coalition-building, since failure to form such
  alliances means that, as in the US, the WS is
  likely to be limited.

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A RADICAL PERSPECTIVE THE ROAD TO SOMEWHERE?

• The very existence of the WS is evidence of class
  conflict each side seeks to control the size of
  the WS in order to gain leverage in its struggle
  with the other. Thus, capitalist political
  dominance (hegemony is the term used by radical
  intellectuals) is reflected in the extent to
  which WS programs are means-tested and modest in
  scale. By the same token, working class political
  muscle is on display if those same programs are
  generously funded and offer benefits to all
  citizens under the universality principle.
• But is a generous WS itself enough to satisfy
  working class needs? Or is it necessary for
  workers to take a fateful step further and seek
  direct control of the nations productive wealth
  (capital) in order to assure its rational use
  for the benefit of all? The more radical radicals
  have at least until recently argued that such
  control is indeed indispensable and can only be
  secured via overthrow of bourgeois democracy
  the more moderate, that a humane social order can
  be attained through gradual evolution from the
  existing WS base towards a more egalitarian
  society. As well see in the discussion of
  globalization, later in this session, this
  longstanding controversy has recently been
  superseded by a more immediate question Can the
  WS itself survive at all given recent changes in
  the overall balance of contending forces.

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A CONSERVATIVE PERSPECTIVE

• MY CONCLUSION IS THAT IN ADDITION TO ITS
  STRONG MORAL BASE IN PERSONAL FREEDOM, CAPITALISM
  AND COMPETITIVE MARKETS WORK TO DELIVER
  SUBSTANTIAL ECONOMIC PROGRESSBUREAUCRATIC
  WELFARE STATES DO NOT WORK. THEY SAP INDIVIDUAL
  INCENTIVE, INITIATIVE AND CREATIVITY AND
  ULTIMATELY CANNOT DELIVER SUFFICIENTLY RISING
  STANDARDS OF LIVING TO MEET THE EXPECTATIONS OF
  THEIR CITIZENS.
• MICHAEL BOSKIN
• CHAIRMAN OF THE COUNCIL OF ECONOMIC ADVISERS
  DURING THE BUSH ADMINISTRATION

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AN CONSERVATIVE PERSPECTIVE A DRAG ON THE MARKET

• Conservatives argue that, especially in its more
  advanced European forms, the WS has become a
  dangerous anachronism. By requiring high taxes,
  the WS deprives society of needed investment
  resources and saddles employers with workers who
  feel that the are owed a living---by the state
  if not by the boss!
• Conservatives concede that the WS may once have
  been fiscally tolerable (if never politically or
  economically desirable) but argue that it should
  now be dismantled because its extravagances are
  unsustainable in our age of intensified global
  competition. Indeed advanced nations that
  continue to adhere to old-style welfarism risk
  permanent inferiority within the emerging
  postindustrial division of labor.

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A CONSERVATIVE PERSPECTIVE AN IDEA WHOSE TIME
HAS GONE

• As we have just seen, conservatives view the WS
  as dangerously obsolescent. It represents the
  past, whereas the unimpeded free market is said
  to represent the future.
• More specifically, conservative intellectuals
  assert that the WS is a product of the so-called
  Fordist period, when huge corporate
  bureaucracies (e.g., as in the auto industry)
  employed hordes of manual and administrative
  workers. Government developed similarly insofar
  as it consisted of cumbersome bureaucracies
  seeking to expand their regulatory turf.
• Workers today, however, are necessarily far more
  self-reliant. Like their employers, they realize
  that they must be flexible and intensely
  competitive. The old-style Fordist WS has thus
  become an anachronism incompatible with
  postindustrial society. Conservatives claim that
  most Americans recognize this, which is why
  voters now regularly reject liberal attempts to
  revive the WS.

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A CONSERVATIVE PERSPECTIVE AN IDEA WHOSE TIME
HAS GONE
CLICK HERE FOR EDU-RAMA!
This 4 minute discussion features professors
Samuel Bowles and Milton Friedman, respectively,
leading social democratic and conservative
welfare state analysts. Although fragmentary the
segment is worth watching for discussion of the
so-called Third Way, which is the name often
given to the Swedish WS experiment, and intended
to distinguish it from the US and Soviet
communist models.
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WHAT DO YOU THINK?
Which of the just reviewed perspective makes the
most sense to you? (Doing the readings may help
you make up your mind!)
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U.S. AND EUROPEAN WS MODELS COMPARED

• As we shall see in the following section, U.S.
  and European wss are organized on very different
  assumptions, expectations, and principles.
• Our task will be to summarize what those
  difference are and what accounts for them.
• On the latter point, well look particularly at
  the issue of American exceptionalism---i.e. why
  the U.S. welfare state is so different from its
  European counterparts.
• Finally, well briefly survey the issue of
  globalization, most particularly, the impact that
  that phenomenon is having on all welfare states
  regardless of their operating assumptions.

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Mature and Immature Welfare States (1)

• US
• Relatively modest social insurance programs
  very limited means-tested protections against
  hardship or destitution.
• EUROPE
• Extensive social insurance other publicly
  funded non-means tested benefits and services
  designed to reduce relative inequalities and
  assure economic security for all citizens (i.e.,
  universalistic). These radical or social
  democratic objectives are characteristic of the
  most advanced European social welfare
  legislation, notably in Scandinavia.

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Mainstream US SWEDEN (2) Social
Democratic

• Social security
• Unemployment insurance (ui)
• Medicare/Medicaid
• Public housing
• Education through h.s
• Limited maternity leave

• Social security
• Extended ui and job retraining
• Health care for all
• Housing allowance
• Free education
• Family allowances
• Generous maternity leave
• Pensions for all
• Paid vacations
• Public child care
• Extensive recreation facilities

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US WS MODEL A MARKET FIRST APPROACH

• THE MARKET FIRST BIAS IS THE KEY TO
  UNDERSTANDING SPECIFIC COMPONENTS OF THE AMERICAN
  WS.

THE MARKET THE KEY U.S. INSTITUTION, WITH
WS PROGRAMS ESSENTIALLY SUBSIDIARY TO AND
SUPPORTIVE OF IT. PREVAILING ASSUMPTION IS THAT
VIRTUALLY EVERY NEED CAN AND SHOULD BE MET
THROUGH THE MARKET SYSTEM, EXCEPT AS NOTED BELOW.
SOCIAL INSURANCE SOCIAL SECURITY MEDICARE ENACTED
BECAUSE OF MARKET FAILURE, I.E., INABILITY OF
MARKET TO PROVIDE FOR BASIC NEEDS IN CERTAIN
SITUATIONS
MEANS-TESTED PROGRAMS TANF (welfare) SSI ASSISTANC
E TO INDIVIDUALS IF DEEMED DESERVING DUE
TO TEMPORARY OR PERMANENT INABILITY TO COMPETE IN
JOB MARKETS.
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THE UNDERLYING LOGIC OF THE US WS

• The dominant presumption in American society,
  especially strongly held among conservatives, is
  that all human needs can and should be met
  through the market, and that those unable to pay
  for commodities (i.e., goods and services
  purchased on the market) simply must forgo them.
• However, two exceptions to this rule are
  sometimes recognized
• Certain goods and services cannot be adequately
  provided exclusively through the market because
  of their very nature. For example, left to itself
  the market has been able of provide adequate
  health insurance only to those old people who are
  both rich and in reasonably good health---clearly
  a minority. At the very least, then, publicly
  organized, regulated, and partly subsidized
  health care social insurance is indispensable to
  ensure if the majority of old people are to be
  covered----hence, Medicare.
• Those who are destitute or near-destitute, and
  unable to work by definition cannot and do not
  participate in the market economy. Unless
  subsidized by the government, they might well
  starve, which (presumably) still remains morally
  unacceptable in a civilized society---hence,
  public assistance (TANF) and Supplemental
  Security Income (SSI) for those able to meet
  their stringent eligibility criteria.

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NEVERTHELESS

• as the preeminent American institution, the
  market is constantly encroaching, in various
  ways, on ws programs. Thus
• the American WS is in many respects a
  partnership between the public and private
  sectors the government buys WS goods and
  services from the private sector, because a)
  thats the only place they can be purchased b)
  of the political pressure exerted by vendors c)
  of the assumption that the private sector can
  provide such services more efficiently (i.e., at
  less cost) than the public sector.
• the private sector is dynamic and accordingly
  constantly seeks to expand into public sector
  territory if profitable opportunities exist
  there. Hence the privatization movement of
  recent years, in which various publicly funded
  programs---e.g., welfare assistance and health
  services---are increasingly provided by private
  vendors working under government contract.
• perhaps most importantly, there are prominent
  and even disastrous market failures that are
  not adequately rectified because of corporate
  political clout, which seeks to prevent
  government from trespassing, or even
  potentially usurping, existing profitable
  markets. The profit-driven health care system,
  despite its market failure to provide adequate
  coverage to millions, comes most readily to mind
  in this regard.

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SWEDEN AND DECOMMODIFICATION

• The Swedish WS, widely regarded as the world
  standard, is based on a radical---and hence
  markedly different---conception of what
  government can and should provide to its
  citizens.
• Most dramatically, the Swedes have sought to
  decommodify a wide variety of goods and
  services (see earlier comparative slide), i.e. to
  remove them from the market and instead make them
  readily available to all as a right of
  citizenship---what American social policy
  analysts call entitlements.
• In doing so, the Swedish social democratic
  government hoped to promote equality of results
  rather than simply equality of opportunity, on
  grounds people must have a wide variety of goods
  and services if they are to lead a decent life.
• The next few slides take a closer look at the
  Swedish model.

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THE SWEDISH WELFARE STATE A MULTIDIMENSIONAL
MODEL

• Remember this figure? It first appeared in Module
  2 to illustrate the different levels at which
  policy is formulated.
• The distinguishing characteristic in the Swedish
  case, however, is the high degree of planned
  integration among these three policy levels. That
  is, the key to Swedish success lay in assuring
  that each level operated so as to reinforce the
  other two.
• The next slide provides an example of how this
  social democratic strategy works in practice.

PUBLIC POLICIES
SOCIAL POLICIES
SOCIAL WELFARE POLICIES
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THE SWEDISH MODEL IN THEORY
Common Policy Objective
Creation of a what Swedes call a
peoples home humane,
egalitarian, yet also economically dynamic

• SOCIAL WELFARE
• POLICIES
• Generous unemployment,
• old age, and child
• care benefits
• Excellent health care
• recreational facilities

• PUBLIC POLICIES
• State tax and other
• support for new housing
• corporate investment
• Tight control over
• capital exports
• Low interest rates

• SOCIAL POLICIES
• Heavy investment
• in education and
• job training/retraining
• Strict prohibitions
• against gender
• discrimination

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THE SWEDISH MODEL IN PRACTICE THUS

• PUBLIC POLICIES
• State tax and other
• supports for new
• investment

• HELPS RESULTS IN
• Rapid job creation
• low
• unemployment

• WHICH IN TURN
• MAKES
• POSSIBLE
• Generous
• unemployment
• benefits job
• retraining

ALL ELEMENTS INTHE SWEDISH MODEL ARE DESIGNED
TO BALANCE AND REINFORCE ONE ANOTHER
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WHY THE DIFFERENCE?THE ISSUE OF AMERICAN
EXCEPTIONALISM

• Lack of a politically significant radical
  political movement, and the consequent
  backwardness of the American welfare state, are
  often cited as proof that the U.S. is an
  exceptional country---not necessarily in a
  positive sense (although most mainstreamers
  certainly see it that way), but in its stark
  divergence from the European pattern of
  relatively generous and extensive WS benefits.
  The following American traits are also sometimes
  cited as further manifestations of our
  exceptionality
• fear of and resistance to taxes and government
• willingness to resort to capital punishment
• lack of knowledge about other societies
• tightfistedness in dealing with the poor
• degree of racial prejudice
• self-righteous moralism

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WHAT ACCOUNTS FOR EXCEPTIONALISM?THE MAINSTREAM
VIEW

• There is no single mainstream interpretation of
  exceptionalism, but there are certain common
  themes that mainstreamers have identified over
  the years. As one would expect, these tend to
  emphasize ideas and institutions, rather than
  social class relations. Following are several of
  these explanations
• America fought a war of independence precisely
  to guarantee that government be limited, and
  subsequent national experience has only further
  deepened our rightful suspicion of centralized
  power. The nations commitment to local control
  and a checks and balance constitutional system
  are expressions of this same outlook.
• Americans still adhere to the individualistic
  ethos. They expect to participate in competitive
  markets, and likewise once expected that those
  who failed competitively would try their luck
  elsewhere. But that was before the welfare state.

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WHAT ACCOUNTS FOR EXCEPTIONALISM?THE RADICAL VIEW

• Radicals have sometimes seemed near obsessed
  with the exceptionalism question, perhaps
  because their failure to achieve a significant
  role in American life has indeed been a defining
  feature of exceptionalism. Here, then, are some
  radical interpretations
• American historical experience is significantly
  different from Europes, where a relatively
  homogeneous mass populations shared a common
  medieval past and a common working class way of
  life. For their part, the European ruling classes
  long sought to maintain an almost caste-like
  distance from the masses, and indeed democratic
  ideas did not really triumph in Europe until late
  in the 19th century---in some places, not even
  then. America, in contrast, was almost from the
  beginning a land of INDIVIDUAL opportunity that
  drew a heterogeneous immigrant population. The
  odds against forming an American radical
  political movement were thus formidable, and were
  made even more so by expansive prosperity that
  reinforced the individualistic ethos.
• Throughout American history the political agents
  of the ruling classes have persecuted radicals
  under the bogus banner of Americanism, so that
  those holding dissenting views have frequently
  been ostracized as un-American. This has been a
  devastatingly effective tactic in repressing
  radical dissent. Intra-working class racial
  divisions has been yet another factor in the
  exceptionalist political equation.

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INDIVIDUALISM A COMMON THREAD

• As we have seen, both radicals and mainstreamers
  lay stress on individualism as a deep seated
  American trait at odds with the collectivist
  logic of the WS. Yet here the similarity ends.
  Whereas radicals view individualism as an
  essentially negative factor, obstructing the
  unity needed to promote a more egalitarian
  society, conservatives regard individualism as
  the central defining element in American
  life---the thing that made this country great.

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THE IMPACT OF GLOBALIZATION
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THE WELFARE STATE ADVANCE (1)

• The welfare state is the product of many
  generations of popular struggle against injustice
  and oppression.
• Its golden age (1945-70) was thought by many to
  mark a fundamental turning point in human
  history henceforth the benefits of industrial
  civilization would be distributed more equitably
  thanks to increased productivity, popular
  political pressure, and the need to maintain a
  high standard of consumption if capitalism itself
  were going to survive.
• No one wanted to go back to the bad old days,
  when poverty was common and material insecurity
  the fate of most people.
• In short, optimism about the future, specifically
  the future of the welfare state, was fairly
  pervasive.

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WELFARE STATE ADVANCE (2)

• The positive mood of this period was exemplified
  by the so-called Marshallian theory of the
  welfare state that posited the following 3 stage
  historical evolutionary progression
• Social Rights (the ws/economic security)
• Political Rights (parliament/the vote)
• Legal Rights (courts/due process)

32
Welfare State Decline ORThe
Professors Confounded

• Political support and state funding have
  everywhere been declining around 1970.
• As we have seen, some now retrospectively claim
  that the welfare state was simply an industrial
  age phenomenon anachronistic in the
  post-industrial era of specialist labor and
  individual initiative.
• Globalization is, however, the most immediate
  causal factor in welfare state decline.

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WHAT IS GLOBALIZATION, ANYWAY?

• Globalization involves the rapid diffusion of
  investment and speculative capital, and, more
  generally, of the market economy, throughout the
  world. These processes are spearheaded by
  transnational corporations (industrial
  capital), seeking low cost labor and profitable
  markets regardless of national boundaries and
  investment banks and other agents of finance
  capital, looking for comparable speculative or
  investment opportunities with comparable
  indifference to old-style state boundaries.
• Some governments in the larger capitalist states,
  notably that of the U.S., have actively partnered
  with the private sector and such institutions as
  the World Bank and World Trade Organization to
  make the world safe for capital by removing all
  national-level obstructions to the free flow of
  capital, thus weakening the nation-states
  ability to regulate its own territory and, more
  particularly, sustain a high level of welfare
  state services.

34
GLOBALIZATION THE MASTER THEME OF OUR TIME

• It has promoted the
• power shift from labor to capital from social
  welfare programs to corporate profit priorities.
• downsizing of the welfare state and the
  non-profit sector
• privatization and increased political and
  economic inequality

ITS ALL MINE!
Please let go of me!
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WELFARE STATE DECLINE CAUSES, EVIDENCE, AND
CONSEQUENCES

• Disappearance (?) of popular expectations that
  activist government could solve our national
  problems. (Social transformation/demographic
  fading of the Depression/WWII generation.)
• Few new social welfare programs reduction or
  elimination of established ones
• Privatization of former state services e.g.,
  prisons, welfare, and maintenance.
• Growing economic inequality, racial tension, and
  political alienation.

36
GLOBALIZATION SUMMING UP

• The impact of globalization has indeed been
  global, insofar as it has affected all aspects
  of life, and not merely the WS. There are two
  general ways of summing up the impact of these
  changes.
• Radicals deplore globalization and instead
  continue to see government as a positive force
  capable of improving life through its capacity to
  plan, regulate, protect, and promote social and
  economic equality within traditional national
  settings.
• The opposing globalization thesis, supported by
  conservatives and by our own government (indeed,
  it is sometimes called the Washington
  consensus), holds that markets rather than
  governments are the indispensable motors of
  material progress, and that government economic
  regulation must therefore be reduced to an
  absolute minimum.
• The next slide summarizes two correspondingly
  divergent ways of envisioning the consequences of
  continued globalization.

37
ALTERNATIVE GLOBAL FUTURES

• HOMOGENIZATION
• Continuation of current trends resulting in
  creation of a globally integrated consumer
  culture, which replaces virtually all local
  cultures
• Formal retention of state sovereignty and
  political democracy as a façade for corporate
  power.

• RESISTANCE
• Growing resistance to current trends based on the
  following possible factors
• religious belief
• possible collapse of the world economy
• increased worker immiseration
• environmental collapse

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WHAT DO YOU THINK?
WHAT KIND OF WS WORKS BEST FOR SOCIETY? FOR THE
INDIVIDUAL CITIZEN? SHOUD QUESTIONS OF
SOCIAL JUSTICE BE DECIDED BY THE MARKET OR BY
LEGISLATIVE BODIES, LIKE CONGRESS? IS
GLOBALIZATION THE KEY TO PROGRESS, AS
CONSERVATIVES CLAIM, OR IS IT IN FACT THE SOCIAL
DISASTER, AS RADICALS CONTEND?