Rediscovering social investment in developmental welfare state ...
Rediscovering social investment in developmental welfare state ...
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 :<br />
B A C K T O T H E F U T U R E<br />
<strong><strong>in</strong>vestment</strong>- or ma<strong>in</strong>tenance-oriented on their own. Their effects are anticipated to occur as a result<br />
of the comb<strong>in</strong>ation of <strong>social</strong> policies.<br />
The central idea is that 1 + 1 is not always equal to 2 but may <strong>in</strong> fact be someth<strong>in</strong>g else greater than<br />
2. Policies may have both a discrete impact on poverty and labor market outcomes and a comb<strong>in</strong>ed<br />
nonadditive, nonl<strong>in</strong>ear impact that is greater for both aspects together than each separately. For<br />
<strong>in</strong>stance, cash transfers may be more likely to generate moral hazard when means tested or when<br />
overall expenditure is high, while moral hazard may be lessened if the program is universal or if<br />
expenditure levels are low. Alternatively, the total amount spent on <strong>in</strong>-k<strong>in</strong>d benefits may not be as<br />
salient as the relative proportion of <strong>in</strong>-k<strong>in</strong>d to universal benefits and where they are <strong>in</strong>vested.<br />
Comb<strong>in</strong><strong>in</strong>g cash benefits with means-tested benefits may result <strong>in</strong> lower uptake <strong>in</strong> <strong>developmental</strong>ly<br />
important areas. Reasons for low uptake <strong>in</strong>clude a lack of knowledge among potentially eligible<br />
people, reluctance to accept what may be perceived as charity, and the complex adm<strong>in</strong>istrative<br />
procedures <strong>in</strong>volved (Pestieau, 2006). If different benefits have different uptake or consumption<br />
characteristics, there may be costs associated with gaps <strong>in</strong> coverage or lost benefits attached to<br />
forgone future productivity. In this sense, certa<strong>in</strong> populations may be more likely to benefit from <strong>in</strong>k<strong>in</strong>d<br />
benefits than others.<br />
There are several <strong>in</strong>teractive effects that may be particularly important from a <strong>developmental</strong><br />
perspective. Just as the lowest rates of posttax/transfer poverty should be correlated with <strong>in</strong>dividual<br />
DWSPs, these policies are expected to positively <strong>in</strong>teract. Of central <strong>in</strong>terest is the <strong>in</strong>teraction<br />
between <strong>in</strong>-k<strong>in</strong>d and universal benefits. They are expected to have a stronger antipoverty effect<br />
together than either variable alone. The reason for suspect<strong>in</strong>g this <strong>in</strong>teraction is that they are<br />
believed to collectively have a stronger impact of guarantee<strong>in</strong>g consumption of resources that are<br />
<strong>in</strong>versely related to poverty (especially costly poverty) while m<strong>in</strong>imiz<strong>in</strong>g distortions. Of course, there<br />
could also be three-way <strong>in</strong>teractions among policy variables. For <strong>in</strong>stance, the negative effect of<br />
<strong>social</strong> expenditure on market poverty might be higher when comb<strong>in</strong>ed with universal and <strong>in</strong>-k<strong>in</strong>d<br />
benefits than alone.<br />
The assertion that distribution and production are <strong>in</strong>terrelated and that the former may positively<br />
impact the latter suggests that policy should be concerned about distribut<strong>in</strong>g more than <strong>in</strong>come (e.g.,<br />
forms of capital such as health, adaptability through education and tra<strong>in</strong><strong>in</strong>g, perceived mobility,<br />
opportunity via low <strong>in</strong>equality [e.g., Kaufmann, 2007], and the like). As suggested earlier, transfers<br />
<strong>in</strong>volve not only <strong>in</strong>come, resources, or commodities but also, if implicitly, wider capabilities, access,<br />
etc. <strong>in</strong> terms of the means by which they are delivered. It also suggests a focus on prevention. The<br />
conventional economic approach does not necessarily support these implications. Below, I briefly<br />
contrast assumptions of the standard economic approach with the <strong>social</strong> <strong>developmental</strong> approach<br />
and the types of policies each approach would support. I clarify the key economic underp<strong>in</strong>n<strong>in</strong>g<br />
observations that underlie DWSPs. (Refer to Johnson [2010] for a more extensive discussion of the<br />
economic logic of DWSPs.)<br />
The Economic Logic and Predictions of DWSPs<br />
I have argued that we need to expla<strong>in</strong> the paradoxical occurrences of countries that achieve low<br />
poverty, relatively high economic performance, and relatively high levels of government<br />
expenditures. I concluded that we need a new theoretical framework for th<strong>in</strong>k<strong>in</strong>g about <strong>social</strong><br />
policies that may be both protective and productive. I then proposed a notion of <strong>welfare</strong><br />
<strong>developmental</strong>ism to expla<strong>in</strong> the types of policies that may be responsible for these protectiveproductive<br />
outcomes. Based on a set of <strong>developmental</strong>ist pr<strong>in</strong>ciples these policies were referred to as<br />
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<br />
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<br />
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