Читать книгу Exploring the World of Social Policy - Hill Michael - Страница 9
ОглавлениеInequalities and why they matter
This chapter expands on the themes in Chapter 1, exploring the particular importance of concerns about inequality and social justice for ideas of social policy. This represents a key theme for comparative analysis in that the salience of ideas about inequality in political debate influences differences between social policies across countries. The chapter will examine global and regional trends in inequality as well as the ways in which these spatial dimensions intersect with other forms of structural inequalities and social divisions in key areas of need satisfaction and measures of welfare. The chapter will consider the idea of inequality as it informs the range of policies in practice, and in policy discourse at national and supranational level, and will discuss the association of discourse and practice with the politics of welfare.
Discussions of the origins of social policies treat concerns about inequality and social justice as not necessarily tied to explanations of policy development. Interpretation of social policy origins is a matter of some intellectual controversy, often driven by ideology, in which it seems impossible to arrive at definitive conclusions. This point is revisited at the end of the chapter, as a link to the chapters that follow. Inequality is given primary attention here since one of the challenges to comprehensive social policy analysis involves the assertion that it is primarily concerned with exceptional casualties of society, in a context in which it is economic policy that is crucial for overall social progress. Such a view, of course, largely excludes the possibility that market systems have a role to play in the production of social casualties, and it is not the view that is taken in this book. On the contrary, discussions in this and following chapters are presented from the position that the need for social policy arises largely because of the inadequacies of market societies. Such a view takes social policy analysts deep into many aspects of economic policy, and in so doing widens rather than narrows the range of issues that social policy is expected to address.
However, it is appropriate to mention briefly the alternative point of view and to highlight its limitations. The view that social progress emerges from good economic policy ensuring a strong and growing economy tends to embrace two propositions. One of these is that economic institutions work best when constraints upon the market are minimized. The other is that economic progress produces social progress inasmuch as ‘a rising tide lifts all boats’. The first of these is contestable within economics in terms of the range of issues that markets do not handle very effectively. Welfare economics literature, for example, emphasizes externalities and monopolistic forces that are hard to restrain. Furthermore, it is contestable that it is any longer feasible to protect vigorously competitive markets in the face of powerful global monopolistic tendencies. With regard to the second proposition, there is now a great deal of evidence that it is not working. First, the boat-lifting image is misleading. When a real tide rises it does of course lift all boats indiscriminately, but in the context described here some boats are lifted much faster than others, and this is true both within individual countries and across world regions. This is demonstrated in Figure 2.1, which presents data on changes in the distribution of increasing global wealth between 2000 and 2016, indicating limited gains in wealth accumulation in Africa, India and Latin America in comparison to those in other regions.
In the starkest terms, wealth inequality has been calculated as ninety-two individual billionaires holding as much wealth as the poorest half of the world (Oxfam, 2015). Second, in reality, the rising of the tide is very slow in many of the so-called advanced economies, and this has been the case particularly since the global financial crisis when economic growth measured in GDP has barely reached its lowest pre-crisis points, and is predicted to slow even further up to 2020 (IMF, 2017a). This unequal distribution of world assets and opportunities, combined with limited capacity for any meaningful wealth creation, suggests not only difficult questions for economists but also a need to look more closely at the social fallout from the market economy.
Figure 2.1: Regional and selected country percentage of global total wealth (US$ trillion), 2000 and 2018
Note: Calculation from smoothed exchange rates, i.e. five-year moving average exchange rates.
Source: Authors’ calculation from Credit Suisse (2018, p. 154, table 6.3)
Embedded particularly in writings that generalize about the rise of ‘the welfare state’ is the idea that social policies emerged in the twentieth century to curb the rampant inequality produced by capitalism. This argument, it may be noted, is given currency as much in terms of the need to protect capitalism as in terms of the recognition of inequality as a social problem. Indeed, the role of social policy in the reinforcement of the status quo led socialist movements in the nineteenth and twentieth centuries to see reforms as distracting attention from the fight against capitalism. In that respect welfare provision may be seen as a means to ‘buy’ votes for the status quo in the context of universal democracy, a theme continued in scholarly presentations of the Marxist interpretation of social policy (O’Connor, 1973). Moreover, the strongest impetus towards the reduction in wealth inequality is shown to have occurred around the two world wars (Piketty, 2014).
Questions about social policy’s egalitarian goals have become particularly significant because of the evidence of increases in income and wealth inequality across the industrialized nations during the twentieth and early twenty-first centuries, often framed as a more combative question of whether this implies a failure of the so-called welfare state project (see discussions in Taylor-Gooby, 2013 and Gamble, 2016). Inasmuch as rising inequality embodies a fightback by economic elites against equalization, it implies a need to give attention to the structural factors determining achieved income before, as well as after, any direct state interventions with respect to taxes and benefits. It is here that a particular justification for a perspective on social policy that embraces much more than income-related interventions can be found. The weakening of redistributive action may need to be explained not merely in terms of policy ‘retrenchment’ but also by deindustrialization, globalization and demographic change. There are complex interactions here, which cannot be addressed satisfactorily in any analysis that separates issues about social policy from those about economic policy. These issues are explored further in the next two chapters.
Problems such as these have been highlighted especially by the advocates of ‘basic income’ or ‘citizens’ income’ schemes. Their arguments coalesce around a need to detach a concern with the relief of poverty from the labour market assumptions characteristic of social protection schemes established from the mid-twentieth century in advanced economies (see the discussion in Chapter 6). The rise of conditional cash transfer systems of social assistance as a means of poverty relief in low-income countries is indicative of how this policy problematic is emerging. In countries where administrative systems and formal labour markets are not so well established, the idea that income support may be made conditional on participation in other forms of welfare-related behaviour aiming to improve health and education outcomes and ultimately human capital development has been attractive to governments. But the arguments for resource transfers implicit in both these universal basic income and conditional cash transfer schemes cannot side-step the question of the relationship between those who pay their costs and those who receive their benefits, even though this division is in many ways artificial (Farnsworth and Irving, 2018a). The implicit ‘universalism’ (whether categorical, that is, based on membership of a particular social group, or not) has to rest upon some notion of deductions to support payments. In that sense the fundamental proposition of this chapter remains relevant: that social policy analysis needs to address the wider distribution of resources as a whole.
Finally, the recognition of intimate connections between social policy and inequality is given additional support from research that identifies the extent to which the most unequal societies have inherent problems even for those who are advantaged within them. That point is explicitly addressed in, for example, the work of Wilkinson and Pickett (2010), in which they show the relationship between, on the one hand, economic inequalities and health inequalities, and on the other, the relationship between the latter and other social problems. In summary, they argue that even the better off are disadvantaged (in terms of health and other problems) in unequal societies. Hence specific ameliorative interventions in societies (even the provision of universal health services) will be undermined where economic inequalities are not addressed.
Such a view has more recently found echoes in some unexpected places. Christine Lagarde, managing director of the IMF, for example, argued in a speech in May 2014 that rising income inequality was one of the ‘leading economic stories of our time’. After three decades where economic orthodoxy had embraced inequality as a motivating factor propelling growth, under Lagarde the IMF has been much more vocal on the negative consequences of inequality for economic development, for example in the October 2017 issue of its flagship publication Fiscal Monitor, entitled Tackling Inequality (IMF, 2017b). Other international organizations have also begun to publicly question the costs of inequality. The OECD has a Centre for Opportunity and Equality, and published an important report with a revealing subtitle, Why Less Inequality Benefits All, indicating the organization’s shift in thinking (OECD, 2015). After several years in development and negotiation (Deacon, 2013), the International Labour Organization (ILO) successfully adopted a universal Social Protection Floor in Recommendation (No. 202, 2012) and through Convention (No. 102, 1952). ‘Reduced Inequalities’ is also the tenth of the seventeen explicit SDGs adopted by the UN in 2015. With these issues in mind the next section goes on to address the evidence about inequality.
Inequality between and within nations
The two central topics for this discussion of inequality concern both inequality between nations and inequality within nations. There are various sources for data on incomes and wealth across the world,1 and the picture generated by these data sources is very predictable. With respect to wealth per head, Switzerland tops the list at $537,600, followed by Australia at $405,600 and the US at $388,600. The figure for the UK is $278,000 (Credit Suisse, 2018, p. 80). At the other end of the scale, wealth per head is below $5,000 in much of Africa and South Asia. Similar evidence emerges if the focus is on annual income rather than wealth. The term income refers to a flow of money across a specific period of time, while wealth refers to the holding of assets (including, for example, property) which may, or may not, contribute to that income. Of course, holdings of wealth affect inequalities, but it is important to be aware what sorts of data are being compared. Among the richer member states of the OECD, 2015 data on GDP (per head) range between $100,000 (Luxembourg) and $18,000 (Mexico), with the US at $56,000 and the UK at $41,000. The OECD average is $40,000. The figures for many countries are much lower, at less that $1,000 per head. Looking at the combination of between- and within-country inequality, Bourguignon summarizes that:
The gap between the standard of living of the richest 10% of the world and the poorest 10% was above 90 in 2008. In absolute values, the poorest 600 million have an average of $270 in disposable income per year, while the richest have a standard of living above $25,000. (2015, p. 22)
The best comparative measure for within-country inequality is the Gini coefficient, ‘a single-number summary index of inequality ranging from 0 to 100 per cent’, which converts a whole distribution to a single number (Atkinson, 2015, p. 17; see also there his further exploration of its use). Atkinson’s country comparison of coefficient scores shows inequality to be lowest in Sweden, Norway, Iceland and Denmark. A range of European and East Asian nations feature in the middle of his list, including Taiwan, Japan and South Korea. Higher inequality is found in the UK and the US, with scores comparable to that of Russia. The poorest OECD member country, Mexico, is also the most unequal in that group. Below Mexico in Atkinson’s list are various Latin American countries, China and South Africa. One obvious pattern, evident in Atkinson’s data, is that, as far as the richer nations are concerned, distinctions between countries have much in common with the ordering of ‘welfare regimes’ (discussed in Chapter 3). However, what is also significant are the high levels of inequality within many low-income countries, which is another factor in the recent adoption of ‘inclusive growth’ as a key element of policy discussion for international organizations. The precarious growth of a ‘middle class’ in African countries in particular (AfDB, 2011) has a direct impact on both median incomes and the shape of social policy development.
An alternative to examination of nations in terms of Gini scores is a comparison using a poverty measure. There has been a long-running debate about how to define poverty, in which absolute measures have been challenged by alternatives that take into account national contexts (Townsend, 1970, 1993; and more recently Anand et al., 2010). It is still feasible, at the extremes, to identify poverty so severe that a quantitative label can be used, and countries can be compared in that way (such as an updated version of the $1 a day standard adopted by the World Bank in 1990). However, this can be an inflexible approach that pays little attention to social and cultural variations. Moreover, it does not reflect the substantial disadvantages that are suffered by those on low incomes in many richer countries. The problem, however, about responding to this critique is that in applying a simple measure that can be deployed comparatively it has to be accepted that such a measure is open to the allegation that it is merely ‘relative’ – that to describe someone in Sweden as poor has a very different resonance to describing someone in Mozambique as poor. Comparative statistics tend to use a relative measure of poverty (a percentage of median income) which provides an indication of differences within nations. It is important, however, to move beyond this and the Gini coefficient approach which focus on the overall income distribution to consider the more revealing question of ‘whether countries can achieve low rates of poverty at the same time as having high top income shares’ (see Atkinson, 2015, p. 25).
A concern of much contemporary analysis of inequality has been with shifts over time. Again, there is a need to be aware of a combination of changes between nations as well as within them. As far as the between nation relationship is concerned, the large gap that characterizes much of the world today is a product of a divergence that began as the industrialization process ‘took off’ in Europe and other nations in the global North. This increasing divergence continued until near the end of the twentieth century (Bourguignon and Morrisson, 2002). At that point a sharp reversal became evident both in the data on the Gini coefficient and on poverty rates, but this was a product of population growth in several key countries, not a reduction in the total numbers of those in poverty (Bourguignon, 2015, pp. 26–8). Much of this change was a product of exceptional economic growth in East Asia.
A different perspective is possible on contemporary events if changes that have occurred within the industrialized nations in the twentieth and twenty-first centuries are considered. Here, two phenomena have been highlighted. One is the strong impact of the two world wars, and their immediate aftermaths, when equalization processes occurred both with respect to the distribution of gross incomes and in the impact of taxes and benefits to further that effect upon net incomes. This trend was reversed from the early 1980s (see Piketty, 2014, for a general analysis, particularly featuring developments in France, the US and the UK). For contemporary advanced economies, Atkinson (2015, pp. 66–7) specifically notes ‘the role played by the welfare state in reducing income inequality and preventing any rise in market income inequality from feeding into inequality in disposable income’ in the period after the Second World War, and the weakening of that effect after the end of the 1980s (see also Förster and Tóth, 2015).
A pertinent OECD study of differences in levels of inequality across its member nations in the 2000s indicated that tax and benefit systems have become less distributive, but noted that net incomes are distributed less unequally than market incomes. The report (OECD, 2011a, p. 36) suggested that:
Public cash transfers, as well as income taxes and social security contributions, played a major role in all OECD countries in reducing market-income inequality. Together, they were estimated to reduce inequality among the working-age population (measured by the Gini coefficient) by an average of about one-quarter across OECD countries. This redistributive effect was larger in the Nordic countries, Belgium and Germany, but well below average in Chile, Iceland, Korea, Switzerland and the United States.
This is particularly important in the context of another key point also accepted by the OECD, that when the lowest income deciles fail to gain any benefit from economic growth, ‘the social fabric frays and trust in institutions is weakened’ (2015, p. 21). At the broadest level, research on widening inequality leads to general agreement that not only does it reduce economic growth, measured for example by GDP, but that it also presents serious social and political challenges that are societally unsustainable.
In national studies of inequality, attention is often given to the interplay between economic inequality and inequalities of gender and ethnicity (as well as other social divisions such as age and sexuality, for example). In the case of ethnicity a key generalization is drawn from the massive gap that opened up between the early industrializing nations and the rest of the world, noting that the gainers were European countries plus a number of nations with strong connections to Europe – the US and those countries of the British Empire where large-scale colonization from the UK took place. The impact of imperialism on structuring contemporary divisions of ethnicity is an important factor in explaining the significant and sustained economic disadvantage of the countries excluded from this process in the eighteenth and nineteenth centuries. Echoes are also present in the emergence and operation of institutional racism experienced by minority ethnic populations in advanced economies such as the UK (EHRC, 2016), as well as in the policy discourse on migration which is driven by economic rather than humanitarian concerns (see Chapter 6).
In the case of gender, the fundamental fact is marked inequalities between men and women across the world in all dimensions of life, including income and wealth. Since the groundbreaking Fourth UN Conference on Women held in Beijing in 1995 (United Nations, 1995), discussion of women’s poverty has wrestled with methodological problems about measuring income and wealth and the disaggregation of more widely available household data to account for gender distributions within households. UN Women, the UN agency established to promote gender equality, highlights more revealing inequalities in access to economic resources that ‘keep women poor’. This includes less access to credit than men, restricted rights to hold land and more limited rights to social protection. This last form of inequality has been the subject of important social security and workplace reforms since the 1970s in advanced economies, but globally, although over the half of the world’s women are in waged employment, the gender gap in employment participation has hardly changed since 1995. Women continue to be more likely to be unemployed, more likely to be in vulnerable employment and consequently are overrepresented among those who lack pension and other social protection entitlements (ILO, 2016). Progress in reducing economic gender inequality has, in fact, stalled since the 2008 financial crisis (World Economic Forum, 2018), and in the intersection with race and ethnicity divisions have also been deepened through austerity measures (Bassel and Emejulu, 2018). There are, in addition, other dimensions of inequality that are often blurred or omitted in public debate, such as the notion of inequality of opportunity and inequalities between generations, but which are also central to policy outcomes. The next section will consider these issues sequentially, while acknowledging connections between them and the broader agenda about inequality.
Persistence and change in inequality
As far as inequality of opportunity is concerned, the fundamental question of whether and to what extent some degree of inequality is acceptable and/or justifiable is of more than philosophical interest in the social policy context. Inasmuch as there is widespread acceptance of the case against extreme inequality, this is often supplemented by a concern about inequality of opportunity. The position that tends to capture general agreement is that while some inequality of outcome as a consequence of differences in individual endeavour is tolerable, it is desirable that individuals start life equal. Nevertheless, even were this to be a generally agreed principle, there is substantial evidence that this ideal is not realized in practice. Piketty’s (2014) examination of the distribution of capital explores the importance of its transmission between generations. Studies in the US and the UK have provided extensive evidence that individual life chances are affected by parental wealth. A particular UK contribution to this has been cohort studies following people from birth (Pearson, 2015). It has been shown that upward social mobility is heavily dependent upon increases in job opportunities (Goldthorpe, 2013), although even where occupational mobility is possible it is argued that a ‘class ceiling’ linked to ‘cultural capital’ continues to operate (Friedman and Laurison, 2018). Deindustrialization, the automation and precarity of much work and the effects of the 2008 crisis on incomes, savings and debt have led to a considerable deterioration in the generation of new opportunities. Upward mobility is thus only feasible if there is equivalent downward mobility, which is limited given that family advantages among the better off are generally preserved.
The implications for social policy are that the most commonly accepted social mobility policy – increasing educational opportunity – only works at the margins and mostly simply increases the effort needed to reach the same point as one’s predecessors. More radical options then require a focus on limiting privileges. Here again, while educational privileges offer obvious targets, to go further implies the reduction of economic advantage. With respect to relationships between the generations, the taxation of the transfer of wealth such as inheritance tax is practised to a modest degree in various countries in the world. Scheve and Stasavage, in Taxing the Rich (2016), show that high rates of inheritance tax, like high rates of income tax on high incomes, were only developed across the period of very high state expenditure occasioned by war in the twentieth century. Since then there have been reductions in inheritance tax, including its abolition in Australia, New Zealand, Austria and (more surprisingly given its Gini coefficient) Sweden.
The discussion in this chapter has considered data on the distribution of both income (measured in terms of money accrued in a specific period) and wealth (measured in terms of the longer-run holding of assets). Clearly in any consideration of inherited advantage the latter is important. Perhaps the most important contribution of Piketty’s (2014) path-breaking study of inequality is that he shows that in the countries he studied – France, the UK and the US – in the nineteenth century there was a steady increase in inequality seen in terms of variations in the holding of wealth. The wars of the twentieth century, and some of the policies that followed after them (particularly immediately after 1945), led to some equalization. Then, as noted earlier with respect to income inequality, the last years of the twentieth century and all of the twenty-first (so far) saw a reversal of that equalization, and the contemporary economic climate is a period in which wealth inequalities are particularly likely to grow.
While the general implications of Piketty’s analysis are evident, it is useful to draw attention to an aspect of the growth of wealth with specific social policy implications. While the increasing wealth of the super-rich is most significant (the top 1 per cent or 0.1 per cent, for example), there has been some spread of wealth among a much larger number of the better off, taking the form of wealth invested in housing. Lowe (2011, p. 238) sees here a clear
stratification effect … a major intergenerational rift in most of the home owning nations. House price increases, the famine of mortgages arising from the credit crunch and the differential layering in of housing wealth have all impacted to create disparities and fractures in the housing landscape with major long-term impact.
The implication is that a ‘property owning democracy’ is also likely to be an inequality perpetuating society. Lowe’s analysis is particularly applicable to countries such as the UK and the US where home ownership is the dominant model, but is also increasingly relevant for countries such as Denmark where the ‘social ownership’ model is under threat. Ultimately an underlying policy problematic has been greatly intensified by the financialization of property accumulation through mortgages, which sets the benefits of housing asset ownership for those on the lowest incomes against the power of financial elites to maintain their position (see Chapter 8). The development has implications not just for social mobility but also for the other two topics to be discussed in this section.
The two issues – inequality between young and old and inequality between the generations – are linked in that a realistic analysis of the former requires a recognition of the significance of changes over time. In the nineteenth-century studies of poverty in the UK carried out by Seebohm Rowntree, much was made of a life cycle effect. Working-class adults able to participate in the labour force enjoyed a period of relatively good income (stressing the ‘relative’ aspect here) while single. Starting a family had a significant downward impact upon resources. Eventually, once children became earners, the late middle aged might again enter a period of relative prosperity before retirement brought a return to poverty (see Rowntree, 2000). The identification of this life cycle effect contributed to arguments for establishing child benefits and for state-guaranteed pensions in the early twentieth century. Its emphasis supports redistribution via social policies within the life course and echoes the important point made by Barr (2001) that, in general, the welfare state can be regarded as a ‘piggy bank’ in the sense that much of what is individually contributed while of working age is reclaimed over a whole lifetime.
There may be little to cause concern here unless processes of economic or demographic change occur that alter the impact of state interventions. It is these that have, not surprisingly, occurred, giving new complexions to the relationships between the generations. Generalizing developments requires caution, but across the nations of the world a long view reveals patterns of changing advantages and disadvantages. It may be noted, for example, that the nations of Western Europe experienced successively: high unemployment before the Second World War, low unemployment but with deprivations associated with conflict during the war, then a period of low unemployment accompanied by major advances in social policies for around forty years after the war, followed by a succession of economic problems involving high unemployment and/or insecure employment and the adoption of austerity measures by governments. This implies very different life experiences across that period, embodying advantages (opportunities to save and make house purchases, for example) and disadvantages (difficulties in getting into education and employment, for example) that have long-term effects.
War between or within nations is a significant factor in shaping life chances, since it is accompanied by general deprivation of welfare, and this is a feature that continues to characterize many countries in the global South in the 2020s. The current period of austerity too, is likely to have significant scarring effects on the life chances of young people whose education and school-to-work transitions have coincided with reductions in public investment. It may be possible therefore, and notwithstanding structural sources of inequality, that there are ‘lucky’ and ‘unlucky’ generations. These variations bring opportunities for political defenders of the status quo to emphasize life chance differences that distract attention from wider sources of social problems and undermine general solidarity.2
In the Western European context it is clear that the treatment of older people presents particular issues. As pension policies developed, the alleviation of widespread poverty among older people became a high political priority, and in the early implementation of austerity, the protection of pension incomes was prioritized as non-discretionary spending. In the context of a dramatic increase in longevity, and in societies where birth rates are low and therefore age ratios across society are changing, unfunded transfers make steadily increasing demands upon government budgets, and thus potentially on a falling number of taxpayers. The OECD, in its report Preventing Ageing Unequally (2017f), for example, sets out both the cumulative effects of inequality over the life course and the implications of contemporary trends of rising inequality and ageing populations, both in the advanced economies and in countries such as Brazil and China. While it is risky to make predictions of future patterns, given the evidence on cumulative inequalities and the scarring effects of unemployment and other social and economic disadvantages, it is safe to assume that younger generations now face greater risks of income, health and age-related inequality than their parents’ and grandparents’ generations, complicated by differences in asset ownership (particularly housing). This adds further dimensions to social analysis and policy challenges to which subsequent chapters return.
Returning to the question of unacceptable inequality, there is an extensive debate about poverty, a concept used to identify levels of income and structures of relations that are deemed to be unacceptable. These issues are subject to analysis using a variety of approaches, some of them rooted in philosophy and ethics, others identifying the consequences of excessive inequality. In considering policies to tackle inequality, discussion has been limited here for two reasons. One of these is that, while the argument here adopts a stance that social and economic policy issues cannot be simply disentangled, much of the thrust of policies to tackle inequality must involve economic developments. Economic development itself, as suggested earlier, does not result in reduced inequality. On the contrary, as international organizations from the World Economic Forum to the UN now explicitly recognize, economic growth is severely hampered by inequalities that restrict people’s opportunities to participate in and contribute to social, political and economic life. The social commentary we can provide here is confined to pointing out the benefits and/or consequences that follow from approaches to inequality reduction based upon stimulating growth. The second is simply that later chapters contain more detailed discussions of some of the key policy areas and specific interventions within these. In addressing policy issues a distinction is again made between policies to address inequalities within countries, and policies to address those between countries, while noting connections between the two.
When looking within individual nations, the distinction between ‘gross’ income (before the application of taxation or provision of benefits) and ‘net’ income is important. Much of the European social policy discourse on this was developed in the era of full employment and (often) relatively strong trade unions. This led to an approach summed up by the kinds of measures, advocated in the Beveridge Report, concerned with the needs of those temporarily or permanently outside the labour market. In the UK the path-breaking work of Abel-Smith and Townsend (1965), identifying poverty among families where there was employment on the part of at least one member, started to change the terms of discussion. Yet even then, the ensuing debate about poverty tended to focus on children, with ‘child benefit’ as the crucial remedial measure.
In the UK in the 1970s means-tested benefits for those in work began to be developed. A consensus dating from the 1832 poor law reforms, that it was undesirable for the state to subsidize wages, began to be challenged. This has led to the development of an extensive (and confusing) system of benefits to subsidize low wages. The latest radical alternative to existing measures to combat poverty, noted earlier in the chapter – universal basic income – does not really depart from an approach that sees public action as focusing on issues outside the labour market.
But there are other policies, in many advanced economies including the UK, that address the problem of low wages by focusing on gross income: laws that specify minimum wages. These have the weakness that they target the very bottom of the wage distribution, and do not address the equally problematic issue of excessive earnings at the top (for wider discussion see Orton and Rowlingson, 2007). There are other policies of wider application that address themselves to many aspects of the contractual deals between employers and workers. Significantly, they have featured strongly in European Union social policies. Approaches to the reduction of inequality concerned with gross incomes inevitably rest upon the extent to which unemployment (or the related issues of part-time and insecure employment) can be avoided. Notably here, variations exist in the extent to which social goals are identified in discussions of economic policy. In much of the debate between advocates of neoliberal ‘laissez faire’ and Keynesian ‘demand management’ policies in the last years of the twentieth century, a key difference was between the argument, by the former, that minimization of inflation should be the dominant policy goal and the argument that, as in the early post-Second World War years, the central concern should be to aim for full employment. In the twenty-first century so far, high inflation has not been experienced in most industrialized countries while the definition of ‘full employment’ seems to have been adjusted downward in orthodox economic analysis. However, since the global economic crisis of 2008 the dominant emphasis on ‘austerity’ with respect to government policies has replaced the concern about inflation as an argument against active policies to promote employment (see Farnsworth and Irving, 2015; McBride et al., 2015).
However, while there remains a political consensus that the right economic policies (whatever they may be) offer the best approach to tacking inequality by means of growth, there are voices suggesting that the combination of technological and global economic change make that an increasingly difficult ideal to realize in the advanced economies (see Baldwin, 2016, 2019). In that sense the reduction of inequalities between countries is seen as offering a challenge to the conventional approach to reducing inequality in individual countries. We now shift attention, therefore, to the issues about inequalities between countries.
Inevitably the emphasis in development economics has tended to be upon facilitating economic growth in the poorer countries of the world. We will not explore here the questions that can be raised about the ‘good faith’ of the exponents of this view, inasmuch as international capitalist enterprise tends to involve concern with the low cost rather than the welfare gains of its workforce (Artaraz and Hill, 2016, Chapter 3). Rather, the questions applicable to this chapter are about the notion that growth will necessarily reduce inequality. It was observed earlier that much of the recent economic growth has been in countries in the region of Asia. In contrast, most nations in the central and southern African region have seen very little.
Optimistic statements about growth in the global South are tempered by recognition that two very large nations – China and India – have done particularly well. But there is a key question about the extent to which national growth has been accompanied by increasing internal inequality. Bourguignon (2015, p. 53) observes that inequality tends to go up with market reforms in economies in ‘transition’, and that this was particularly evident in China between the 1980s and the 2000s ‘where the Gini coefficient for this period increased from 0.28 to 0.42’. Cook and Lam (2011, p. 139) report the Chinese response to the financial crisis post-2007 as involving a massive fiscal stimulus package, including ‘a range of social policy instruments, including interventions aimed at boosting consumption and protecting the vulnerable’.
With respect to the smaller countries of the global South, commentators on development (Anand et al., 2010; Surender and Walker, 2013; Bourguignon, 2015) tend to stress the need for aid policies that are linked to efforts to steer support towards less advantaged people. Much discussion of development emphasizes the need for the countries of the global South to develop governmental institutions that can support economic development with progressive social policies. The special cases of rapid modernization – particularly South Korea and Taiwan – have involved strong governmental controls (Kwon, 1997), but also exceptional support from the US. What has been widely criticized as the ‘Washington Consensus’ with respect to aid policies dominated by the notion of growth depending upon open free markets, though perhaps less influential in the 2010s (Serra and Stiglitz, 2008), has, where it has succeeded, set up a dynamic in which inegalitarian forces in the global North reinforce those in the South. The potential for the use of capital from the former and labour from the latter has threatened to generate a global ‘race to the bottom’ in labour standards and social protection, a threat which has re-emerged in the years since 2008 (Milanovic, 2012; Sørensen, 2012).
There is one other route towards the reduction of inequality that must be briefly mentioned, which is the movement of people (see Chapter 6). Migration presents opportunities to reduce inequalities between countries in the global North and those in the global South, for example through remittances (see Figure 6.1), as well as the capital (economic, human and social) accrued by migrants and contributed to countries of origin via return migration. However, it also represents the opposite given the benefits to countries of migration which receive largely prime working-age, highly skilled individuals whose educational and training costs have been borne elsewhere, or particularly in the case of women migrants, where demand for their health and welfare work may contribute to the gender equalization of care work in advanced economies but leaves a care gap filled informally, and at a cost, in their countries of origin. Collier’s (2013) analysis notes that the benefits of migration offered to countries of origin depend largely upon the permanence of the move. Restrictions on permanence, such as countries of destination making specific efforts to limit migrants to ‘guest worker’ status without security and without families, may thus benefit countries of origin while creating insecurity and diswelfare for those migrating. These examples highlight the complexity of global inequalities where policy may facilitate equalization in simple economic terms but does not represent social progress.
This chapter has considered a number of dimensions of inequality that are important to the concerns of the chapters that follow. However, there are many other dimensions that have not been captured here, as well as further nuances to the debates and questions that have been discussed which add further complexity to the policy challenges arising. As a general position taken here, the conclusion is that there are broad global forces at work encouraged by capitalist perspectives on how development should occur that give little attention to social issues.
Actual policy responses depend a great deal upon decisions by actors within individual nation states. In this respect there is, as mentioned in the introduction to this chapter, no simple uncontestable way of explaining how social policies have grown to such levels of importance in societies today. This account has concentrated upon the consequences of capitalist economic processes for the generation of inequalities. But, in passing, it has been noted that social policy development may also be explained by concerns to limit social unrest and win support for the status quo. These themes secure more attention in the next two chapters.
It has also been observed that the egalitarian thrust of some policies has been constrained by limitations that focus upon changes within individual life cycles (the welfare state as ‘piggy bank’). Moreover, when attention turns, as it will in Part II of this book, to specific policy areas, it will also be seen that, for example, health policies may be viewed as ways of dealing with risks for individuals rather than as generically redistributive. If treated as ‘universal’ in scope they cope with unexpected problems regardless of the original economic status of patients. Similarly, education policies can be seen as driven by economic concerns, and as noted they are unlikely, on their own, to have egalitarian outcomes. Finally, environment policies address societal risks alongside individual risks, and this is particularly illustrative of the limits of international equalization across unequal nations and the peoples within them. An important feature of the development of the study of social policy since the mid-twentieth century has been a recognition of the need to limit global generalizations (generally based on the experiences of the richest economies in the global North) and to recognize variations in national responses. This is particularly manifested in the development of comparative analysis, explored further in Chapter 3.
