Monday, September 10, 2012

The Welfare State and Filial Duty

Something that I believe is not sufficiently acknowledged in public discourse but that is essential to understanding the function of the welfare state is that every welfare state was originally constructed when the voting block of the elderly was relatively weak. This means that large numbers of younger people necessarily had to have some incentive to be willing to pay more today, supposedly in return for some benefit. Now, it is possible that they had some future benefit in mind, but I find it hard to imagine most young people were that much more forward thinking in the 30s to 50s than they are today. Rather, there must have been some current benefit they had in mind (or they could have been far more altruistic, I find this implausible as well).

So what is this benefit? Two passages from this Economist article are instructive.

Some of the national leaders who unleashed those tiger economies would be shocked and disturbed by the development. To them the welfare state was a Western aberration that would serve only to undermine thrift, industry and filial duty. Those virtues, they argued, underpinned their economic miracles and won envious admiration abroad, not least in Western countries bent under the weight of their social obligations. That is not to say that Asia boomed in the complete absence of welfare provisions. But its arrangements took a distinctive form which Ian Holliday of Hong Kong University has termed “productivist”.
This welfare model assumed that Asia’s tightly knit families would take care of the social responsibilities its governments refused to shoulder. But asked to tutor their children, care for their parents and supplement their husband’s income, women have rebelled. The Singaporean women interviewed by Shirley Hsiao-Li Sun, a sociologist at Nanyang Technological University in Singapore, “want more direct and universal state subsidies, especially for education and health care,” she writes.
This is fine so far as it goes, but raises the question of why rebel now? These duties have been done by women as far back as we have recorded history, to stick with China, back when taxes were collected in kind (so before the Ming single whip reforms) there were separate tax requirements for the work men were engaged in, primarily grain, and women's work, such as silk. Child and elder care are central to the Confucian ethos, these are hardly new requirements.

In addition, the western social safety net came into being under similar pressures (Patterson's America's Struggle Against Poverty in the 20th Century is as good a place to start as any on the subject). Given the universality of these demands, that they occur even in system's such as China's that are not terribly responsive to public demands, and that they only seem effective at fairly high levels of development there must be something more going on here than the wealth effect.

I've suggested this before, but I think it is worth doing again. A big piece of this is the need for individuals to be able to specialize and to migrate to compete in the modern economy. At early phases of industrialization labor was fairly undifferentiated, what was really needed to industrialize was a big pile of money to buy machines and warm bodies to run them. There was little need to recruit the best employees, whoever happened to be in a position to go to the jobs was good enough. There was still migration, but it wasn't really selective. People just went where the jobs were.

As an economy develops and labor becomes more differentiated it begins to matter that people with particular talents be matched to particular jobs (I've been meaning to do a series of posts on "merit" for some time, a big obstacle to meaningful economic conversation in the US is we like to talk nonsense about the market awarding "merit" rather than talking about matching skill or talent to particular positions, merit is not on some kind of linear scale where rewards are this simple, that is part of what drives more advanced economies to need welfare states if they are to remain competitive). This is problematic for a country that wants welfare to be delivered by the family, there are no longer enough unattached people with the necessary traits to be matched to the particular jobs, too many of those necessarily skilled have family obligations. It becomes important to free this labor up, we need people that would make good doctors to become doctors, not work as field hands near where they were born so they can take care of their aging parents.

So I think there is more going on here than public demands. I think the welfare state is an absolute necessity as an economy develops to the point where what is needed is trained employees rather than undifferentiated labor. Social ties do too much to reduce efficient labor market allocations otherwise (and there have been studies examining the inefficiency of private welfare provision in the Philippines and other third world countries relying on these methods). Also, without an efficient welfare state too many people lack the security necessary to pursue specialized vocations or to move far in search of a position that is a good fit for them. Family social supports leave only the wealthiest part of the population able to pursue these goals. To succeed in the modern economy it is necessary for a nation to move past the ideals of thrift, industry, and filial duty to instead seek to provide as many of its citizens as possible with the opportunities that would otherwise be restricted to those blessed with good families. Those things that make a country successful while undergoing primary industrialization simply aren't those things that make for a successful country as it moves past smokestacks and steel.

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