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Symposium 2008

Proposal - Contributions for Discussion

The Challenge

What are the implications for welfare state eform? What constellation of welfare state policies enables us to compensate the losers from globalization without harming incentives to work and acquire ...

What are the implications for welfare state eform? What constellation of welfare state policies enables us to compensate the losers from globalization without harming incentives to work and acquire skills? What are the appropriate roles of the state, firms, housholds and civic organizations in the provision of welfare services?

I. The background for these contributions

The advent of globalization has strongly influenced the paradigm of the historically based Welfare State, driving its objective and politic guidelines towards a new path. The characteristics of such a new path have much to do with the latitude of empowerment of sovereign states and with their ability to determine social cohesion and prevent adverse social effects of global competitiveness.

Therefore, whereas on the one hand the role of the State and the legitimacy and effectiveness of social programs is one of the central aspects when dealing with the relationship between Welfare State and globalization, on the other hand, one should also ask if the outline of a given social cohesion policy can be decided and implemented autonomously, taking only into consideration the particular momentum concerns and anxieties of a sovereign State.

Global competitiveness is also about competiveness of States (or Federations). Modern States develop serious efforts to attract corporations and investment (notably through definition of attractive tax policies and incentives to foreign investment); but are modern States capable of being socially competitive as well? Do they have the ability to effectively make a difference, implementing aggressive policies leading to social cohesion and, therefore, preventing the emergence of the globalization losers?

The European Union (EU) can effectively be set as a sample of the much wider aspects being dealt with in this discussion panel. The efforts of the EU in sharing the benefits of globalization ought to be seriously considered and we can all learn with the definition of minimum social standards to be implemented through foreign policies, having the citizens, states and corporation as active agents of the dissemination of a sustainable globalization.

Can we infirm, definitively, that global competitiveness hinders the social program of the states, or should one leverage this new opportunity to redefine the focus on social security contributions?

These set of considerations based the following contributions for the discussion on How Globalization transforms the Welfare State.


II. The contributions

  1. Definition of minimum social standards based on global trade

The definition of social policies and the implementation of social cohesion programs is not a stand-alone decision of a modern State. With the increasing perspective of the global citizen (the 21st century nomads), migration movements will tend to lead to harmonization at the level of social protection that the States are able to offer to their citizens. Either a very aggressive or a very loose set of social policies will lead to movements of citizens, trying to adjust to their particular needs, towards countries with more protective polices, which in term will create pressures leading to the failure of such a social model. The definition of a set of rules and principles that can achieve a balance between social protection demand and adapting to global competitiveness should be the route to follow. The experience of the EU can be the case-study, as it has dealt with the same problems (although in a smaller scale than the ones arising from this new paradigm), and should be the basis for discussion. The States and economic agents trading globally will play a major role as crusaders and vigilantes: promoting the harmonization and stressing the need to share globalization benefits, defining a minimum set of standards that may be applicable globally.

  1. The Welfare State versus The Welfare Sector – The emerging role of private corporations

The new path of the Welfare State can strengthen the role of the private sector in the contribution for the social cohesion. On the one hand, social spending of national states will need to be focused on the actual globalization losers: with the step-in of the private sector, the universality paradigm of the welfare state would be strongly reduced, as only citizens without the ability to use these new-coming private services (health, education, work assistance…) would be the subject of State policies and support. On the other hand, the takeover of traditional welfare services and sectors by the private sector, in cooperation with national governments, would create new business opportunities and new global traders, thus generating wealth for private agents. In this already on-going process, the role of national governments needs to be thoroughly assessed and redefined, as some particular hurdles to the step-in of the private sector are yet to be removed.

  1. Globalization hinders social programs and spending! Does it?

Can one undoubtedly argue that global competitiveness affects negatively the development of social policies and government spending in education, healthcare and social security? The sample taken in approximately 100 countries between 1980 and 1999* has shown that economic cycles and the advent of globalization has neither directly nor exclusively influenced social spending. In fact, that sample has demonstrated that the different aspects of social programs respond differently to long-term characteristics of the economy, and therefore a direct cause could not be undoubtedly found in the interaction of these two factors. Furthermore, other aspects were also contributing to the variations in social spending, such as financial and market integration and political power patterns.

Political fragmentation, the level and consistency of implemented democracy and historical factors of one given country are, altogether, able to modify and influence social spending.

These contributions reflect a personal view on the interaction between globalization and welfare state, and should not be considered, in any event, as solutions. The particulars of this analysis take the discussion to a wider level: how can we leverage globalization to redefine the Welfare Sector?

 

* Dion, Michelle. "Globalization, Political Institutions, and Social Policy Change in Middle Income Countries, 1980-1999" Paper presented at the annual meeting of the American Political Science Association, Hilton Chicago and the Palmer House Hilton, Chicago, IL, Sep 02, 2004

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