Public ideas
How to cushion risk: public charity or public insurance?
Although they vary tremendously in generosity, all “developed” countries have mechanisms to help those who fall on hard times through illness, infirmity or loss of employment.
Besides questions about the amount of redistribution a society should apply, there are also questions about how redistribution should apply – through specific programs aimed at those who are in need (the “indigent” to use America’s censorious term) or through social insurance? And what should be the mechanisms of distribution – government agencies, community not-for-profits, or specialized commercial entities?
On Late Night Live Phillip Adams discusses these questions with Kristin O'Connell from the Anti-Poverty Centre, Labor MP Daniel Mulino and Mark Considine from the University of Melbourne: How well is our welfare system? (39 minutes).
They discuss the issues from many perspectives, coming to a general consensus that universal public insurance models are preferable to “charity” models. People’s fortunes can change rapidly, and public insurance ensures there is more community buy-in than in charity models. Contracting out services has generally not been satisfactory – neither in terms of matching users’ needs or in delivering services in ways that are cost-efficient: the principal-agent problems are too complex to be handled by any realistic form of contract management.
Mulino is author of Safety net: the future of welfare in Australia and Considine is author of The careless state: reforming Australia’s social service.
The long twentieth century
Historian Eric Hobsbawn wrote about the “short twentieth century” – 1914 to 1991. Economic historian and former Clinton adviser Brad DeLong writes about the “long twentieth century”, from 1870 to 2010, in his book Slouching towards utopia: an economic history of the twentieth century. On last week’s Saturday ExtraGeraldine Doogue interviewed him about his work.
He takes 1870 as the approximate starting point of an era that managed to apply technologies to advance the living standards for the masses. Humankind has always been inventive, but it took three institutional developments to turn technologies into benefits for all. These institutions are the modern corporation with its ability to amass capital, globalization allowing the distribution of goods and ideas, and the industrial research laboratory allowing for the commercialization of invention.
He refers not only to physical technologies, but also to biological and public health applications. His historical figures on child deaths and deaths in giving birth are most revealing about the level of progress that has been made. Until not very long ago women endured a lifetime of hardship and mortal danger in ensuring that at least one child would make it through to an adult age.
These developments have helped solve the problem of production, but we are now grappling with the problem of distribution. There are limits to the power of markets and to the social acceptability of the harsh and unfair outcomes that markets deliver.
In the interview with Geraldine Doogue he doesn’t really explain why his twentieth century ends in 2010, but in an article on the ABC website – Is capitalism killing democracy? Some world leaders are benefiting from wealth – Stan Grant draws on DeLong’s book, suggesting that 2010 is significant because the GFC had demonstrated the failure of neoliberalism. All that the neoliberal order had delivered was an ever-widening and apparently intractable gap in the distribution of wealth. (Why do so many commentators spend their effort looking at the distribution of income, while ignoring the more seriously consequential distribution of wealth?) Grant warns that inequality in wealth “is fuelling racism and xenophobia”, and that “political demagogues are exploiting anger and anxiety”. It is little wonder that the far right is enjoying a resurgence in Europe and in other regions.
(See the roundup of 17 September for Peter Martin’s review of DeLong’s book.)