CRISIS AND THE POSSIBILITY OF REDEFINING WELFARE STATE

Cartoon with people showing signs saying “without a job,” “without a house,” “without medicines,” “without education” and the last one says “without shame” while standing over the sign for Fiscal Heaven

 

In the context of great process of concentration of wealth and main decisions that prevails in the world, it is worth asking whether Welfare State has died, is no longer viable or sustainable or, on the contrary, new variants could be adopted today? Moreover, will it be a wellbeing for whom, a simple idealism or a referential utopia that can orientate trajectories in the countries?

At this point of the XXI century, we can observe multiple manifestations of socioeconomic and political crisis in many countries, and the emergence of “anti-system” leaderships[1] as well as autocratic forces. They appeal to nationalistic and xenophobic sentiments, to commit excesses—through violence—in the use of law, and to implement measures related with varieties of populisms, among the main ones.

Is there a “unique” cause for this situation? Certainly not, but if we were to privilege an answer, we could say that the link presented in the postwar scenario between economic growth and social equity has broken[2]. In the early 1970s, abandonment of the golden standard and agreements with China (with its later rise) by the Nixon government, later in the decade first and second oil shocks with consequent recycling of petro-dollars and boom of financialization of the economy (with a later peak and Lehman Brothers serious crisis in 2008), fall of the Berlin wall in 1989, configured a very different world. These events (particularly the last one) deteriorated the context in which the “welfare state” operated at a national level. Besides that, there were other issues mainly: the implementation and the oversizing of the state, difficulties for its financing, bureaucratization, population aging, and the reduction of the work force (particularly in the industry) in developed countries, growing individualism and increase in inequality, accelerated technological changes that displace existent jobs[3].

In addition to what was stated, the issue of immigrations (because of wars, misery, and famine) and illegal economy (mainly derived from commercial fraud, human and drug trafficking), have been deteriorating the life quality of middle and low-income sectors of society (such as crime), what has generated political reactions such as those lead by Trump, Bolsonaro, and other world leaders. Faced with that, what can we do?

Besides some individual and group answers, as well as cultural, directed towards a deep change, it will be important to establish a “floor of systemic reforms” translated into policies, institutions, and instruments that will gradually remove the diverse causalities. We will call these reforms the redefinition of a “new welfare state” at national, regional, and international levels. Question: Is it related with the old welfare state? Answer: only in spirit and approach of looking for a balanced and equitable development. This new welfare state, is it already working somewhere? Yes, it is working, for example, in Scandinavia or Nordic countries such as Denmark, Norway, Finland, Island and Sweden. Is it easy to export this model to other realities? Answer: No, it is not easy and—if agreeing that it is a desirable archetype—it will be necessary to do it gradually and adapting it to each reality.

Which are the forces that can boost it? Sectors of society, culture, worships, politics and economy with “sensibility and awareness that we cannot go on like this and a change is necessary that can tackle the main causes and gradually resolve them.” Will we need to find new instruments and institutions that allow for a redistribution of wealth and decrease in inequality? Yes, from those implemented at national level in Scandinavia to those at international level such as Tobin Tax, extinguish fiscal heavens, tax enterprises in the cloud or those that are considered viable and effective. In this sense, we will need to think about alternatives for a global governance as the ones presented in this article and, especially, new leaderships as appeared in many countries after WWII. Will there be sectors that might oppose this directly? Yes, from the political and socioeconomic leaderships that look for “the solution just for their countries (without being aware of the global and systemic component) to the financial capital that might look only for the maximization of their rate of return. It will be different from those sectors that can have a reasonable approach orientated towards increasing value added, developing the economy of knowledge, the ecological economy, the social and solidarity economy and the ethical bank, among others.

Awareness, goodwill, dialogue will be needed, as well as finding paths and new leaderships that little by little produce satisfactory results for all parts involved. If achieved we could leave a growing unease towards a better world.

 

* The author develops the blog: www.busquedamundomejor.com

 

[1] . In another article, we have talked about this matter with a reflection by Jorge Fontevecchia in an interview before Carlos Pagni (watch this video from minute 31 forward) where he refers the work of Thomas Piketty (Capital in the XXI Century, 2014 for the English version).

[2] . A more general debate would be capitalism and democracy, or varieties of capitalism, development and inclusion, among others.

[3] We should add the effects of climate change that are on the rising and the inaction of many governments about it.

 

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