Social Welfare Policy: A Safety Net or a Crutch?

1. Social Welfare Policy: A Safety Net or a Crutch? Theodoulou

2. Social Welfare Policy • Provision of appropriate levels of well-being—Safety Nets against poverty • Social Welfare Policy: programs destined • To assist the poor and the working class • To redress the gaps in society • Levels of expenditure vary according to whether a society believes the Gvt. Should be responsible (and responsive) to the needs of its citizens

3. Question: How should the State react before the dynamics of the market? Understandings of Welfare: • Relief ancillary to economic arrangements, because of the instability of capitalist economies • Welfare policy regulates labor, integrating people within the system and acting as a social pacifier • Welfare policy should encourage individuals to be independent

4. Types of Welfare Policy Solutions • Rights: services to which individuals are entitled as a part of their citizenship • Rules: specify conditions under which individuals are eligible for certain policies • Inducements: positive or negative, encourage or discourage individuals to become subjects of specific welfare policies

5. Tools • Policies that benefit the poor • General Assistance Programs (food, money, clothing) • Work Assistance • Categorical Assistance • Policies that benefit the general public • Social Insurance (against unemployment) • Social Regulation Programs

6. Approaches Used by Gvts. • Preventive (that individuals do not become poor) • Alleviate (Assistance to reduce poverty) • Punitive (Assumption: poverty is the poor’s fault/minimal assistance) • Curative: attempts to “cure” causes of poverty • Incomes: encourages individuals to work for Gvt. Assistance

7. Critics of Welfare Policies • Claim: Welfare encourages individuals to become dependent on government support and remain unemployed

8. Brazil: Imitation of the “Real Thing” • Restricted Welfare System • Military Rule prevented the country from developing a real public welfare system • Focus on rapid economic growth and not on social policies • Increasing Gaps • Late 1970s, rise of a state-centered movement claiming for welfare programs (middle and working class) • Social rights consecrated in the 1988 Constitution—Insufficient implementation

9. Policy Structure • About 50% of workers make no contributions to the system • Fiscal Gaps • Series of Programs and services based upon the Organic Social Security law promulgated in the 1930s and changed in the 70s and 90s. • November 1998, Social Security Reform (deters retirees from going back to work in the public sector, reduces or eliminates certain public pensions while fostering people’s transferring to the private system) • In countries as unequal as Brazil, an “equal for equals” policy is impossible to apply (in Brazil, universality means exclusion). Targeted policies

10. Recessive Cycle • Economic Recession • Huge Public Debt • Cuts in public expenditure—lack of resources to spend in education, health, etc. • Brazil’s industry hit by globalization (unemployment) • Policies to attract foreign investments through privileges • Many social reformers argue for a strong paternalistic state (Danger of authoritarianism) • Voluntary Associations

11. Economically, Brazil’s national debt, de-industrialization, and dependency have increased • Socially, the gap (one of the biggest in the world) is widening • Politically, loss of legitimacy of the system and pessimism • Lula has brought new hopes, with his goal of allowing all Brazilians to have three meals a day—Will he be able to achieve even this minimal goal?

12. Germany: Status Maintenance with Minor Cutbacks • Before Reunification • West Germany: Pluralism, Corporatism, Decentralization. High welfare provision hierarchically organized and distributed • East Germany: Centralized and Universalistic, wide-scale coverage, deficiencies of quality • After Reunification: organizational uniformity, with differences • Western social insurance was extended to the Eastern States with benefits calculated on the basis of their (Eastern) income

13. Germany, place of Birth of the Welfare State • First Statutory Social Insurance System • 1970, the Poor Law (basic assistance) • Bismarck, 1883, compulsory sickness insurance • 1889, Provisions concerning old age and invalidity insurance • 1923, the Empowering Act (local responsibility/ employer/employee financing of the system)

14. Under Hitler, welfare policies became restrictive • Restrictions continued under the Allies occupation till 1947 • 1945-1949-Reconstruction of the social welfare system while integrating war veterans, victims, and refugees. • 1949 Basic Law settles conditions for social welfare policy: Social State, inspired in Bismarck’s welfare state • Key elements applied throughout the nation with local differences in implementation • 1950-69 Ec. Growth and expansion of the welfare state • 1970s Welfare Reform (expansion) • Late 1970s-1980s Economic problems and reduction of programs (not as severe as elsewhere) • 1990s Problems of reunification

15. The German System • Social Market Economy • Welfare policy objectives are • Defined and articulated by the federal gvt. • Implemented at the local level/increasing role of the federal gvt. Since the 1980s (and with reunification) • Funded by both the state and the private sector (employers/employees)

16. The German System • Social Insurance • General Assistance program covering income losses caused by sickness, unemployment, old age, or disability. Semi-autonomous organization (employers/unions) locally administered and sponsored by the federal gvt. • Social Assistance (benefits for those who cannot apply for social insurance, calculated according to needs)—State institutions, benefits for refugees, social housing • Personal Social Services provided by the states (Lander)

17. Criticisms and Problems • The welfare system reproduces the inequalities of the labor market • Reunification brought about a crisis of the welfare system (huge unemployment, more individuals in need, lack of resources, inequality between the West and the East) • No roll back of the state

18. Great Britain:1996, “The End of the Welfare State”? • Antecedent: British Poor Laws (1601) • The British Welfare State developed out of the belief that “every individual has the right to support in times of need and emergency.” • 1942 Beveridge Report: social welfare seen as a right of citizenship. Expanded notion of liberty. Attack against the “five giants of modern society”—want, disease, ignorance, squalor, idleness. • Three decades of expansion of the Welfare State • 1979: Thatcher’s Structural Cutbacks (limits: health care & benefits for the elder) • 1997: New Labour’s “Welfare-to-Work” approach.

19. Main Social Welfare Instruments • From WWII to 1979/80: • Single weekly contribution for “cradle-to-grave” benefits (“all-in” insurance) • Five areas of benefits: cash benefits, health care, education, housing, personal & social services (about 70% British received at least one cash benefits, and health and education were available to everyone) • Since 1979, Thatcher’s drastic erosion of the Welfare State—Privatization (of pensions, health, education), weakening of the idea of universal access—Replaced with the notion of incentives and disincentives

20. New Labour Conservatives • Jobseeker’s Allowance (JSA) “Welfare-to-Work” (individuals must demonstrate their will to get any available job to continue perceiving the benefits • Agencies attempt to match unemployed with jobs • Since 2000 Proliferation of Controls (beepers, checks, etc) • Blair’s Green paper (3 types of welfare: as a channel for pursuing social well being as self-interest, as the exercise of authority compelling people to pursue the common good, and as a mechanism for moral regeneration) • Policies are designed nationally and implemented locally

21. Shift in the Debate • From • How much to expect, and how should the State provide for its citizens’ needs • To • How to make the choices concerning welfare services • Problem: lack of resources to fund a comprehensive welfare state (the British welfare state looks obsolete in comparison with the Swedish or the German)

22. Japan: Different and Unique • 1938 National Health Insurance • 1944 Employees’ Pension Insurance • Occupation—Western-style welfare reforms (1946 Daily Life Protection) Symbolic

23. 1960s: Prosperity & Social Welfare • National pension scheme • Late 60s: movement pro-Welfare State • 1973, the “First Year of Welfare” • Dramatic increase in social expenditure during the 1970s • 1980s Japan looked like Germany • Mid 1980s (economic crisis, cutbacks) Development of the idea of a Japanese Welfare State— “Reconsider Welfare” • Complex System: Family, Community, Corporation, and... The State (the State only supports people who are also supported by their relatives)

24. Mixture of welfare-state principles, insurance, and individual responsibility Four Main Areas • Public Assistance • Social Insurance • Basic Welfare • Public Health Main Actor: the Central government bureaucracy Main Problem: the aging population

25. Sweden: the Social Democratic Model? Gradualism • Early commitment with solidarity and universalism since the 18th century (because of the political power of the agrarian industry, the increasing power of the working class, and the existence of a centralized monarchy) • The Poor Law (1882) • The Pension Act (1913) • The National Unemployment Commission (1914) • 1932-1976 Social Democratic gvts—Welfare State based upon a Keynesian policy • 1980s Growing deficit & Inflation • 1990s Austerity measures (did not undermine the structure of the Welfare State, at least not yet)

26. Structure • Social Insurance: universal (sickness, unemployment, disability, old age, long-term care). No means-tested • Social Assistance Benefits: Means-tested (Housing and child benefits) • Social Services: Parental benefits package (12 months leave at 80% of gross earning, further 180 days of leave until the child enters primary school, up to 60 days per year to face emergencies); Daycare

27. United States • Reluctance towards social policy • Social welfare policies developed after the 1930s by the federal gvt. • Roosevelt’s New DealLimited (and always problematic) • Reason: American political culture and values, with an emphasis on self-reliance and individualism • Poverty is seen as the individual’s fault • Early 20th century punitive approach • After 1929: acceptance of the notion that crises may produce poverty that are not the poor’s fault • 1935 Social Security Act Preventive and alleviative

28. Phases • 1935 Social Security Act: social security and unemployment compensation • (AFDC) Aid to Families with Dependent Children • Post WWII, prosperity & suspension of social welfare • 1960-8 Kennedy-Johnson  the Great Society & the War on Poverty (Medicare, Medicaid, housing subsidies, school feeding programs, programs for pregnant women, Equal Opportunity Act/curative) • 1968 Nixon (Milton Friedman) inexpensive programs based on dis/incentives  Workfare • 1980/90s Reagan & Bush: hostility to welfare. Poverty seen as the individuals’ fault  punitive approach. Welfare seen as the root of all problems • 1996-Clinton, the Personal Responsibility and Work Opportunity Reconciliation Act End of Welfare?

29. Organization • Since 1996, recipients of welfare are required to work • AFDC was eliminated and replaced by TANF, limited temporary assistance to families • States administer funds and programs (no national unified programs anymore) • Elimination of benefits for immigrants • Punitive & Incomes approach • Different Programs • Direct Cash Assistance (Should I include tax discounts here?) • In-Kind Assistance Programs • Services (health care, childcare, help dealing with alcohol or drugs)