Rediscovering social investment in developmental welfare state ...

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R E D I S C O V E R I N G S O C I A L I N V E S T M E N T I N D E V E L O P M E N T A L W E L F A R E S T A T E P O L I C I E S : B A C K T O T H E F U T U R E developmentalist policy. These policy-relevant principles can be translated into DWSPs. I define these as relatively high expenditures on in-kind, universal, family-focused, and active labor market benefits. Figure 1. Characteristics of DWSPs Developmentalist principles Developmentalist welfare state policies Adequacy of provision to ensure high quality Generous expenditure Prevention of future social costs as part of a long-term perspective Family policy Activation that reduces disincentives and maximizes the ability/incentives to earn Active labor market policy Access to goods and services Health and early education Maximization of the utilization of resources In-kind benefits Guaranteed consumption of developmentally beneficial goods and services Universal benefits Entitlement based on relationship to economic development (not need, contribution, or citizenship) Inclusiveness based on increasingly stochastic risk/instability C E N T E R F O R S O C I A L D E V E L O P M E N T W A S H I N G T O N U N I V E R S I T Y I N S T . L O U I S 25
R E D I S C O V E R I N G S O C I A L I N V E S T M E N T I N D E V E L O P M E N T A L W E L F A R E S T A T E P O L I C I E S : B A C K T O T H E F U T U R E ―Adequacy of provision to ensure high quality‖ suggests that DWSPs should be generous (i.e., that the proportion of GDP spent on social expenditures should be relatively high), because only with generous policies can there be an increased likelihood of both quality and coverage. ―Prevention of future social costs as part of a long-term perspective‖ suggests that expenditures on family policy, especially policies that improve family functioning when children are young, are likely to yield greater returns over the long-term than policies directed at amelioration of problems after their onset. ―Activation that reduces disincentives and maximizes the ability/incentives to earn‖ argues in favor of family policies that enable market participation (e.g., provision of child care or assistance with purchasing it) and a set of policies typically called active labor market policies (ALMPs), which relies on incentives as opposed to sanctions to encourage employment. ―Access to goods and services,‖ especially those that guarantee future capability, suggests that in-kind benefits are more likely to ensure positive returns than cash benefits. ―Maximization of the utilization of resources‖ also argues in favor of in-kind benefits. If in-kind benefits are seen as being of high quality, they are likely to result in high benefit uptake. Relatedly, ―guaranteed consumption of developmentally beneficial goods and services‖ argues in favor of both in-kind and universal benefits. The universal concept should guarantee access, which should lead to increased consumption, while in-kind provision can ensure consumption of developmentally beneficial goods in a way that cash benefits cannot. ―Entitlement based on relationship to economic development (not need, contribution, or citizenship)‖ argues in favor of universal benefits and suggests there are resources that bear such a strong relationship to economic development that they should not be based on income or status. Note that this principle does allow for benefits being available only for those who fit particular categories, if those categories are related to economic development. 35 ―Inclusiveness based on increasingly stochastic risk/instability‖ also argues in favor of universal benefits on the grounds that in addition to the traditional risk factors for poverty, increased uncertainty or unpredictability across the life course relative to earlier historical periods (Bonoli, 2007; Hacker, 2008; Newman, 2008; Vandecasteele, 2011) makes insurance more cost-effective and suggests that in order to prevent problems, individuals should not have to already be low-income before being entitled to benefits. All in all, the policies suggested by developmentalist principles include a greater emphasis on in-kind and universal transfers, high overall levels of social expenditures, and families, children, and active labor market policy. One would expect to see minimal means testing in developmentally essential areas, policies that are nonstigmatizing and ensure uptake and access and incentives and indicator targeting as opposed to sanctions and minimalist transfers, which may be harmful to others (e.g., dependents) in a developmentalist sense. 36 35 Rather than being based on conventional social insurance programs, citizens should be entitled to a range of benefits not simply because they are citizens (again, see Johnson [2014a] for discussion of T. H. Marshall) but rather because many citizenship-based entitlements arguably have positive economic consequences by virtue of addressing nonactuarial and interrelated risks (interrelated in that prevention of costs and maximization of resources requires multiple investments). In other words, the provision of basic goods for all citizens is assumed to be effective because a wide range of social conditions may have economic consequences due to the coefficient of interrelation and the likelihood that many social conditions have economic consequences. 36 The social development perspective would seem to imply an ―indicator-targeting or back-to-Beveridge approach‖ (Barr, 1998, pp. 267–269). Whereas the neoclassical view would support income testing through negative income taxes (though limited as concerned with poverty trap), indicator targeting would suggest that making benefits conditional on other characteristics is less likely to entail efficiency costs and more likely to prevent poverty. Ideal indicators are highly correlated with poverty and exogenous to the individual (e.g., illness, old age, infancy, and—more controversially— unemployment) (see also Kahn and Kamerman [1987] for more on factors that put families at risk of poverty). In reality, as Barr suggests, some combination of these approaches (e.g., a small-scale negative income tax and categorical scheme) C E N T E R F O R S O C I A L D E V E L O P M E N T W A S H I N G T O N U N I V E R S I T Y I N S T . L O U I S 26
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