THE NEW SOCIAL POLICY Social Policy in a Global KnowledgeBased Economy

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THE NEW SOCIAL POLICYSocial Policy in a Global
Knowledge-Based Economy

• Keith Banting
• Queens University, Canada
• CSS, Amman 11 August 2007

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Today's Itinerary

• Postwar social policy
• The new social policy in theory
• The new social policy in practice
• Getting the balance right

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The Postwar Social Policy

• Economic liberalization/social policy expansion
• Reduction in economic controls
• Expansion of social security protections
• Economic security for citizens
• "Governments asked their publics to embrace the
  change and dislocation that comes with
  liberalization in return for the promise of help
  in containing and socializing the adjustment
  costs."
• (Ruggie)

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The New Social Policy in Theory

• A new wave of economic liberalization
• Globalization
• Technological change/ knowledge-based economy
• Retrenchment in public sector fiscal and
  political pressures
• Changing conceptions of economic security
• Protection from the market ? Participation in
  the market
• Income protection ? Employment policy
• Income redistribution ? Investment of human
  capital
• Focus on workers ? Focus on children
• Inequality ? Social exclusion

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The New Social PolicyFrom the Left and the Right

• "In the place of the welfare state we should put
  in place the social investment state The
  cultivation of human potential should as far as
  possible replace 'after the event
  redistribution'... (Anthony Giddens)
• A commitment to a human capital future is
  emerging as the principal avenue by which to
  succeed on both the economic competitiveness and
  social cohesion fronts."
  (Tom Courchene)

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The New Social Policy in PracticeRace to the
Bottom?

• Globalization ? Harmonization ?
• Fears of competitive pressures generated by
  globalization
• Race to the bottom?
• Convergence?
• Canada as a Test Case
• Different social models in Canada and US in
  postwar era
• Deep integration into the US economy FTA and
  NAFTA
• Flexible exchange rate
• Fears in 1988 Canadian election

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Public Social Expenditures in Canada and the
U.S., 1980 - 2001
Source OECD SocX
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New Social Policy in PracticeAdjusting policy
design to the pressures

• Change in policy design and instruments
• Income Protection
• Investment in Human Capital

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Restructuring Social Policy Part IIncome
Protection

• Deregulation of labour markets
• Flexibility in labour markets
• Employment policy
• Reductions in Passive Benefits
• Employment Insurance / Social Assistance
• Activation programs
• Making work pay
• Child benefits
• Earned Income Tax Benefit
• Minimum wages

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Fading Redistributive ImpactInequality Among
Families, 1980 - 2004
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Canada in Comparative Perspective -2000 or Near
Year
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Restructuring Social Policy Part IIInvesting
in Human Capital
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Level of Investment in Human Capital

• Canada devotes a relatively large of GDP to
  education
• Strong PISA results compared to many other
  countries, including the U.S.
• High post-secondary completion Comparatively
  large role of colleges
• Important advances in post-secondary
  participation Gender, language, and immigration
  status
• "Canada has one of the most highly educated
  populations among industrial countries."
• (OECD)

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Leveling the Social Gradient
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The Social Gradient New Risks

• Challenges to equal participation
• Priorities in investment
• Priority to K-12 and PSE
• Underinvestment in Early Childhood Education /
  Adult Training
• Public/private balance in investment
• PSE
• Adult training
• Implications for the social gradient in
  educational attainment?

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Weak Investment in Early Childhood Education
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Shifting the Public-Private Balance in PSE
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Weak Investment in Adult Training
Source OECD (2004), Social Expenditure
database, 1980 to 2001
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Economic Inequality and Literacy Inequality

• Relationship between economic inequality (Gini
  coefficient) and inequality in the distribution
  of literacy (ninth decile/first decile) within
  countries, prose scale, 1994 to 1998

Source International Adult Literacy Survey,
1994 to 1998 OECD, Trends in Income Distribution
and Poverty in OECD Area, 1999
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Generational Cycles of Low Income

• Almost one-half of sons born to low income
  fathers in the U.S. become low income adults
• In the U.K., about four in ten
• In Canada, about a third

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Overall Assessment

• Talking the talk ? walking the walk?
• We are better at restructuring income security
  than renewing social investments
• We are not sufficiently committed to reducing the
  social gradient in educational attainment
• Need for balance between redistribution and human
  capital
• What level of equality of condition among adults
  is needed to ensure equality of opportunity among
  children?

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Total Health Spending in Canada and the U.S.,
1960 - 2004
Source OECD Health Data, 2006
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Public Social Spending on Pensions for the
Elderly, Canada, and the U.S., 1980 - 2001
Source OECD SocX
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Poverty among the Elderly, Canada, and the U.S.,
1975 - 2000
Note Poverty threshold is set at 50 of median
income
Source LIS Poverty Data, 2006