The new politics of the WS Explaining recent changes in WS policy Lecture 9

1. The new politics of the WS Explaining recent changes in WS policy Lecture 9 Health Politics Ana Rico ana.rico@medisin.uio.no

2. STUDENT PRESENTATIONS

3. OUTLINE OF THE SESSION (1) • Research questions * (1) Which is the impact of WS expansion (T0) upon politics (T1)?  * (2) Which is the impact of new politics on WS retrenchment (T2)? * (3) WS resilence (=path dep.) or retrenchment/restructuring (=policy change)? II. Metatheory/Research design (P p143-7/155-6/179; C&P p 98) * Are the causes of WS expansion and retrenchment different? * To what extent can we use the same conceptual models? III. Concepts – * Policy, policy feedback = legacies, welfare expansion, retrenchment, resilence and re-structuring IV. Dependent variable & V. Findings (P, p156-73; C&P p69-95 ) * Evolution of WS policies (entitlements, expenditure) 1980-1995 (+ C & P per pop. in need, and by policy sectors and instruments)

4. OUTLINE OF THE SESSION (2) V. Independent variables (P, p.145-155, C & P p. 68, 71, 96-8) * Policy feedback as an institutional variable (or inst-led process): Pierson * The political process (actors’ resources & coalitions): Clayton & Pontuss. VI. Discussion (P. 173-179, C& P, pp. 67-71, 77-8, 84-6, 95-8) * Debate Pierson/Clayton & Pontusson VII. Policy implications * Retrenchment varies across different countries and policy sectors, as it advances by the lines of less political resistance and visibility

5. TYPES OF PUBLIC POLICY INSTITUTIONS 1. Constitutional & regulatory policy: • Allocate of powers and rights • Establish patterns of behaviour (duties) • Establish rules of the political game • Establish regulatory organizations * Constitution, Acts, Reglaments, Agencies  RHE Source: Lowi (1972), The Four Systems of Policy, Politics & Choice, Public Administration Review, July/August

6. TYPES OF PUBLIC POLICY RESOURCES 2. Production policies (indirect redistributive effects): • Production of goods and services • Public ownership and employers * % State provision of HC, education 3. (Re-) Distributive policies: • Collection, allocation and redistribution of financial resources * % Public HC financing, taxes,, pensions, salaries, copayments, prices

7. Social Context Sociopol. actors Politicalactors Process, interact. Policy (T1) Policy (T0) Institutions (& Resources) Causal effects at T0  Causal effects at T1 POLICY FEEDBACKS Policy as VD (T0) & VI (T1)

8. POLICY FEEDBACK EFFECTS • Examples: • - A mature WS decreases poverty, increases the legitimacy of state intervention, sustains qualified employment but may hinder exports (social context) • - Then old cleavages (class) blur, and new cleavages emerge (export industries vs. national market industries)  • - This makes new parties (conservative/liberal) and IGs (export bussiness; public employees) emerge; + public opinion support for WS increases  • - The state becomes more capable (taxes, ownership, knowledge)  more/less autonomous from transnational capital & WS supporters, depending on actor configurations • - The mature WS created different institutional configurations (NHS/SHI), that can only be reformed incrementally

9. CHANGES IN WELFARE POLICY • WS expansion Expansion of coverage, benefits and expenditure • WS retrenchment Decrease in coverage, benefits and expenditure • WS resilience Stable in coverage, benefits and expenditure. Resistant to change • WS re-structuring Change in distribution of benefits & expenditure across social groups

10. THE DV: WS POLICY CHANGE A. Actor-centred institutionalism. PIERSON: RESILIENCE • Some incremental retrenchment in less popular/less visible policy sectors (housing, unemployment benefits, sick pay) • A global picture of resilience of the core WS sectors (pensions, health) up to the early 1990s - “Retrenchment has been pursued cautiously; whenever possible, governments have sought all party consensus for significant reforms; and have chosen to trim existing policies rather than pursue...privatization” • Need to wait for lagged consequences of reforms + more details about policy subsectors and instruments before final judgement can be made

11. THE DV: WS POLICY CHANGE B. Power-centred theory. CLAYTON & P.: RETRENCHM. & RESTRUCT • Clear evidence of WS retrenchment & re-structuring...but “How to distinguish radical changes form incremental adjustment? And should not we allow for some outcomes that are neither “incremental adjustments” nor complete policy overhauls?”. • 1) Entitlements & rights. Constitutional and regulatory policies • “The population receiving some form of means-tested social assistance increased in 15 out of 18 OECD countries”  residualization • Decreased benefits per claimant (eg unemploym. 100% to 75%) • Shift from universal to employment-based policies, and from services to transfers increased conservative (vs. egalitarian) effects

12. THE DV: WS POLICY CHANGE • 2) Financing and resource allocation (Distributive policies) • When the automatic effects of the economic crisis upon WS expenditure (demand-driven, via expanded claimants/needs) are controlled for, there is a clear retrenchment in public WS expenditure during the 1990s in most advanced nations • There is some WS re-structuring, which favours old age pensions and social care at the expense of education, health, housing and unemployment + “Increasing share of social expenditure allocated to non-poor people in UK & US” • In direct public provision of services (Productive policies) - More retrenchment in services than transfers; and specially severe cuts in public employment - “To the extent that it involves non-profit production and allocation of output according to political criteria, it is this dimension of the WS that most directly contradicts the logic of capitalism”

13. THE IV:FROM OLD TO NEW POLITICS? THE OLD POLITICS: WS expansion (Pierson, pp. 147-156) • A. Socioeconomic modernitation/globalization. CONTEXT • B. Left parties & unions, elect. competition, voting, social protest. POLITICS (actors/action) • C. Political institutions, state capacity, and policy legacies. INSTITUTIONS.(“Institutions” now including also STATE ACTORS & PAST POLICY!) THE NEW POLITICS: WS retrenchment or resilience? • A. The expanded welfare state as a key policy legacy  the status-quo • B. Decline of parties and emergence of new pro-WS voters and IGs • C. Changed effects of institutions (power concentration favours WS expansion; dispersion favours WS retrenchment)  • C. Little retrenchment (cuts) in most WS in spite of reform attempts NOTE: Past policy (T0) changes not only institutions (rules) but also (T1) actors (no.,resources,preferences), context (eg equity) & action (eg consensual)

14. FROM OLD TO NEW POLITICS? A. Actor-centered institutionalismPierson 1996 (1999) • “Institutions establish the rules of the game for political struggles... Institutions also affect government capacities... A second central institutional argument concerns policy legacies or feedback - i.e. the[social & political!]consequences of previously introduced welfare state programmes” B. Power-centred action theories. Clayton &Pontusson 98. • “In our conception of politics, societal interests play a more important role than they do in Pierson’s...frame. The antiservice bias of the on-going restructuring of the WS can be seen at least in part... as a response to political pressure from a cross-class coalition of employers and workers in the export and multinational sectors[+ neoclassic economists + neoliberal politicians & voters, Hall 1993]...”

15. FROM OLD TO NEW POLITICS? • K Armingeon, M Beyeler, H Binnema2001. The Changing Politics of the Welfare State - A Comparative Analysis of Social SecurityExpenditures in 22 OECD countries, 1960-1998

16. THE NEW POLITICS (1): PIERSON • Impact of WS expansion (=impact of the mature WS): Interactions with new context: The mature WS (high social wage) can decrease foreign investment and exports under globalized markets Impact on new politics: “the WS now represents the status-quo” - Decline of old stake-challengers (left parties and unions) - Rise of new stake-holders (beneficiaries and providers of WS) - Expanded public opinion support for WS expansion • The new politics of WS retrenchment: - Unpopular policies  high political costs  require dispersed power/broader coalitions and less visible policy instruments - Concentrated institutional power no longer favours policy change; as dispersed power obscures accountabilities

17. THE NEW POLITICS (2): CLAYTON & P. • Global WS change • The impact of WS expansion on the new politics is reverted as the economic crisis, and WS retrenchment (which have opposite efffects) proceed onward  apparent lack of change • WS change and the social context • Interaction of new social contet with mature WS: - Conjunctural/cyclical:the impact of the economic crisisrapidly expands the size of the population in need of WS serives and transfers  unintended  in expenditure • The social impact of WS retrenchment - From the early 1990s onwards, this effectis only partly compensated by  WS effort (which grows less than GDP), due to  WS retrenchment - As a result current societies are increasingly unequal (impact of WS change on social structure)

18. THE NEW POLITICS (2): CLAYTON & P. • WS change & the new politics (2) Retrenchment is the result of the triumph of Capitalism stake-holders over WS stake-holders; and it further reinforces this balance of forces • Decline of old MKT stake-challengers (left parties and unions) as direct consequence of retrenchment policies • Weakened new WS stake-holders (beneficiaries and providers of WS policies) • Strong new WS stake-challengers: cross-class coalition of export-oriented employers and workers (and tax-payers)  (NOTE: Capitalism stake-holders) • Shifting public opinion support for WS expansion (counter-cyclical?)

19. Source: Bouget, 2003 (OECD).

20. POLICY IMPLICATIONS A. Actor-centred institutionalism. PIERSON 1996 (3) • “Overtime, all institutions undergone change. This is specially so for very large ones, which cannot be isolated from broad social developments. The welfare state is no exception. But there is little sign that the last two decades have been a transformative period for systems of social provision” • “The contemporary politics of the WS is the politics of blame avoidance. Governments confronting the electoral imperatives of modern democracies will undertake retrenchment only when they discover ways of minimizing the political costs involved” B. Power-centred theory. CLAYTON & PONTUSSON (3) • The 1990s WS retrenchment policies have not only decreased benefits and expenditure per population in need, but also have induced “long-term changes in the political environment that make the WS vulnerable to further attacks” * Weakened unions, providers and left parties and voters; strengthened anti-WS coalitions; increased inequalities/divisions among WS beneficiaries