THE GLOBAL CRISES AND THEIR IMPACT The Future of Welfare State

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THE GLOBAL CRISES AND THEIR IMPACT- The Future
of Welfare State

• Juho Saari
• Professor
• University of Kuopio, Finland
• juho.saari_at_uku.fi

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I. DIFFICULT TIMES

• The global recession is becoming more likely
  regardless of stimulus packages.
• It will last at least three to four years, and
  will result in major adjustment in employment and
  industries.
• Massive social costs of creative destruction and
  economic transformation .
• But the majority of individuals and companies
  will probably survive intact - the winners will
  be better-off.
• A few good news in the field of social
  development.

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2. THE CHALLENGES OF PUBLIC ECONOMIES

• Excessive public deficits in most advanced
  societies/economies - but not everywhere,
  indicating major shifts in a global system
• Public economies in additional heavy debts for
  10-20 years.
• The crowding out of social expenditure and ODA of
  public expenditure in many growth-oriented
  economies/societies.
• Fiscal stimulus, national innovation systems,
  growth and employment policies, education
• Tax cuts? (we are all Keynesians now)
• The collapse or cut-throat competition of the
  charities.

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3. THIS CAN BE A WINDOW OF OPPORTUNITY

• The recession also means opportunities. Q who
  shall be able to exploit this opportunity
  socio-politically?
• How to protect ODA and social expenditure?
• At least temporarily changing the balance of
  power in capitals and the BW institutions between
  different policy proposals.
• The state will invervene and regulate financial
  markets and some industrial sectors more
  efficiently, and will become a major shareholder
  in many industries.
• Historical evidence indicates that the rapid
  world systems, socio-economic and institututional
  transformations stimulate new thinking in social
  development.

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4. A CASE OF FINLANDA successful adjustment of
comprehensive social policy is possible.
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5. REINVENTING THE WHEEL I - A policy
paradigm for social development

• A semi-new paradigm in development thinking on
  the institutional design of the markets and
  public policies focus on adaptive efficiency.
• In advanced economies (at least) national models
  with policy complementaries are quite
  path-dependent structures - one size/policy
  package does not fit for all.
• Something to learn? Scandinavian models are
  (still) effective in combining competitiveness,
  sustainable development, employment, and social
  cohesion.

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6. REINVENTING THE WHEEL II - Agenda setting for
social development

• POLICY COORDINATION Flexicurity - labour
  relations, active labour market, life-long
  learning, social policy
• LONG TERM-THINKING Life cycle approach revisited
  - distribution over a life cycle with a stronger
  redistibution towards families with children.
• UNCERTAINTY - families, labour markets, housing,
  and indebtedness.
• PROPERTY RIGHTS Asset based social policies -
  New sources of resources to households.
• SUBJECTIVE WELL-BEING Focus on relative
  differences and competition.

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7. REINVENTING THE WHEEL III - Framing new
policies

• It matters how people and organisations interpret
  new policies.
• How policies are frames is crucial for positive
  feedback and trust.
• Common policies need coherent messages from the
  ministries of social affairs to the ministries of
  finance, and in-between the regional and global
  institutions.
• Strong connections to sustainable development
  policies.

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As an example, how to promote subjective
well-being

• More positive expectations to limit the impact of
  adaptive preferences.
• Smaller social differences to limit the rat race.
• More legitimacy of social policy institutions to
  allow flexibility.
• More trust towards the government to make
  reform-making possible.
• More voluntary work to support social connections.

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THANK YOU