This article is adapted from my MPhil thesis, and focuses on the more practical and empirical side of the globel egalitarian's dilemma with respect to the welfare state
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Egalitarians often see the
welfare state as the obvious vehicle for their principles. But its
beneficiaries are relatively affluent by international standards.For example, an average household in the bottom
5% of the French income distribution will be among the richest 28% of humanity.
From a global perspective, the welfare state redistributes from the super-rich
to the upper middle class.
A number of egalitarians have
spotted this potential tension in their thought without exploring it fully. For
example, Stuart White believes that a “cluster of issues around global and
intergenerational justice is likely to become as important as the classical
debates between left and right on the justice of the welfare state”.
Similarly, Robert Goodin notes that “it is logically very difficult indeed not
to be drawn ‘beyond the welfare state’ and extend similar protections to the
needy worldwide”.
Meanwhile, different political
theorists have developed a strong defence of the idea that egalitarian concerns
should not be limited to nation states. This view, known as global
egalitarianism, holds that material inequalities between individuals in
different nations are morally problematic.
This opportunity to discomfit
egalitarians has not escaped the notice of those on the right. Sam Bowman, of
the libertarian think tank The Adam Smith Institute, exploits it to bait his
ideological opponents:
support for a welfare state in the UK is wrongheaded even
if you believe that a welfare state is a good way of combating poverty. If
throwing money at people improves their long-run living standards, the left
should oppose a welfare state in Britain and want to direct all social
spending to the developing world.
Bowman goes too far in suggesting
global egalitarians are committed to dismantling the entire welfare state –
this would inevitably lead to people in places like the UK becoming
impoverished even by global standards. The real question is whether global
egalitarians can support more generous welfare provision in affluent countries (like the UK) than elsewhere. If not,
this would certainly imply dramatic cuts to Western welfare states, such as Britain’s.
In this article, I want to argue
that even if global inequality renders welfare states as generous as those of
Western countries morally unjustifiable in principle, global egalitarians still
have pragmatic reasons to defend them.
Given certain contingent facts about public
opinion in developed countries, bigger welfare states are associated with
support for measures that benefit the global poor. I take three measures in
turn – aid, trade and migration – and explain (i) how each of these contributes
to mitigating global inequality, and (ii) how each of these is associated with
larger welfare states.
Aid
The question of whether foreign
aid helps the global poor is so disputed that the study of aid effectiveness
has become a field in itself within development economics. It is often hard for
outsiders to make sense of the mutually contradictory findings that regularly
emanate from it, but there are a few general points that can be
made against aid sceptics. Firstly, though many doubt whether aid has a
positive influence, there is hardly any evidence that aid, taken as a whole,
has been harmful.
Secondly, the aid effectiveness literature takes a particularly narrow view of
success – economic growth is the most common metric. That aid has had a
positive non-economic impact independent of its direct economic effects is relatively
clear. Aid has financed successful health interventions, such as the
eradication of smallpox.
It was
instrumental in supporting the ‘green revolution’ and so feeding the world’s
poorest. It has contributed to raising education levels.
Thirdly, though it remains controversial, there is reasonable evidence to
suggest that aid has, in fact, produced economic growth.
This result is especially strong when we account for the fact that not all aid
is intended to boost economic output.
Fourthly, there is the expectation that aid will become more effective as
practitioners gain a better understanding of what does and does not work.
Thus while much of the evidence remains inconclusive, we should still expect
global egalitarians to favour increased foreign aid.
A few political scientists have
explored the connection between a country’s welfare state and its contribution
to foreign aid. A common finding is that bigger welfare states tend to give
more aid.
Yet
this is insufficient to establish a causal connection – it does not show that
countries give more aid
because they
have a bigger welfare state.
There are a number of ways this
relationship might be explained. A third factor might cause both high welfare
expenditure and high aid donation. For example, a strong commitment to
egalitarianism would apply the same logic to domestic and international
inequality. Confidence in the effectiveness of state intervention would also
explain both. These underlying values may well be independent of existing
institutions. However, it has also been suggested that political values are
often conditioned by the norms embodied in existing institutions.
It could be that the welfare state develops an egalitarian ethos which spreads
from the domestic sphere to the international.
These static background factors
might help explain the relationship between the welfare state and foreign aid,
but there may also be dynamic factors, brought into play by changes to welfare
or aid spending. The idea that welfare and foreign aid spending could ‘crowd
each other out’ is implausible – aid never constitutes more than a tiny
proportion of government spending. Yet it is well established that citizens of
rich countries vastly overestimate how much their governments spend on foreign
aid.
If 25% of the US government’s budget really was spent on aid, as the average
American thinks, then greater welfare spending would be much more likely to
necessitate cuts to foreign aid. Thus cutting the welfare state may well make
foreign aid seem more affordable, and therefore more popular.
At the same time, many people
have the view that the government has obligations to look after its own people
first and foremost, and that foreign aid is only acceptable once a basic
standard of living is secured for all citizens. The global egalitarian may
disagree violently with these values, and seek to change them, but if they are
pragmatic, they must account for their existence. On this view, the less
discontent there is with the adequacy of the state’s provision for its own
citizens, the more support there will be for the state assisting foreigners.
The evidence offers most support
for this last hypothesis. Using survey data, Noel and Therien find that support
for international redistribution is strongest in those countries where there is
least demand for further domestic redistribution i.e. where people are most
satisfied with existing welfare institutions.
By contrast, the countries that most favoured more domestic redistribution
tended to be against increasing foreign aid, and were often the countries with
the least social protection. Noel and Therien suggest that this is because
inequality is less of a concern in more equal countries with a great deal of
state intervention in place.
The extreme cases of Denmark and
France illustrate the point. Denmark, with the most generous welfare state and
lowest inequality in the OECD, showed little appetite for further
redistribution. Only 67% of respondents thought something should be done about
Danish inequality – the lowest in the sample. At the same time, 89% of Danes
thought more should be done to help the global poor. By contrast, those
proportions were almost exactly reversed in France – 91% calling for greater
domestic redistribution compared to 67% wanting more international
redistribution.
The lesson that Noel and Therien
draw from this is that mass publics “support international redistribution more
strongly when principles of justice have been institutionalized domestically
and when poverty has been tackled at home, and less strongly in the absence of
such principles and achievements”.
Extensive domestic redistribution seems to be a popular precondition of
increasing foreign aid. Global egalitarians therefore have good reason to
defend the welfare state since it is necessary to maintaining public support
for foreign aid.
Trade
The role of trade in poverty
alleviation is another controversial issue, but most of the controversy relates
to the question of whether poor countries ought to open their economies to
world markets. However, this is not the relevant question for our purposes – we
are concerned with the policies of
rich countries. It is much less debatable that the
protectionism of developed countries harms the global poor. Tariffs and
subsidies keep the global poor out of lucrative markets. They depress world
prices, and increase market volatility. Worse, agriculture and textiles, where
poor countries have a comparative advantage, tend to be the most protected
markets. Moreover, these are particularly significant sectors for employment –
70% of Africans are farmers.
Various estimates have been made
of the concrete cost of maintaining these barriers. Cline suggests that the
removal of industrial country agricultural subsidies and protections could
reduce global poverty by 8%.
It is estimated that a similar move for textiles would be worth $23.8 billion a
year to developing countries.
Farmers of just one crop in one region – cotton growers in Francophone Africa –
are believed to have lost $700 million as a result of artificially depressed
prices caused by subsidies.
It has been suggested that “For every $3 that the EU gives Mozambique in aid,
it takes back $1 through restrictions on access to its sugar market”.
A few poor countries could be
harmed by the removal of certain trade barriers, at least in the short run. For
example, Mauritius benefits from its privileged access to the inflated prices
of the EU sugar market.
Net importers of food might be squeezed by the higher prices resulting from the
withdrawal of subsidies. However, those who stand to lose – those in cities and
relatively industrialised economies - are vastly outnumbered by, and generally
better off than, those who stand to gain.
It is fairly safe to say, then, that
trade liberalisation in rich countries would help reduce
global inequality.
Larger welfare states have been
associated with trade liberalisation for three reasons.
Firstly, they stabilise expectations. The more dependent a person is on the
market for their income – especially volatile global markets – the greater
their potential losses from free trade are likely to be, and so the more risk
averse they are likely to be. The safety net of the welfare state means that
international trade is no longer seen as a fundamental danger to our standard
of living, but as an opportunity. Secondly, the welfare state offers the
possibility of compensating the ‘losers’ of globalisation. Those whose incomes
fall can be assured of recouping some of their losses in the shape of state
benefits. Moreover, they can also be sure of receiving support, like education
and retraining. According to Peter Katzenstein, this was the conscious policy
of many European countries: Sweden, Austria and the Netherlands sought to
“complement their pursuit of liberalism in the international economy with a
strategy of domestic compensation”.
Finally, the welfare state ensures a greater role in the economy for the
government, allowing it to act as a counterweight to the vicissitudes of the
market. In a turbulent open economy, the state sector might be seen as ‘safe’,
a reliable source of employment and spending, which can step in should demand
and employment fall in the rest of the economy.
Dani Rodrik offers empirical
support for these theoretical claims.
He finds that more open economies have greater state expenditure, and that this
relationship is robust, independent of income, region, size, political values
and a number of other variables. Not only does the association hold
cross-sectionally, it also holds over time: countries that were more open in
1960 were likely to have a bigger state sector in the next three decades. State
spending is also related to the riskiness of trade: countries with more
volatile terms of trade tend to have bigger welfare states. Rodrik also finds
that while general government spending seemed to be the main tool in developing
countries, variation in welfare spending explained most of the variation in
openness among members of the OECD. According to his estimates, in the average
country, a 10% increase in trade volume as a proportion of GDP is associated
with an increase in welfare spending of 0.8% of GDP. There is also support for
the theory that the government acts as a safe sector of the economy – a small
increase in government spending tends to reduce income instability.
Rodrik only suggests that the
direction of causation runs from trade openness to welfare spending, and not
the other way around. In other words, he argues that more open countries are
likely to develop bigger welfare states, but not necessarily that bigger
welfare states are likely to become more open. However, this does not seem like
an unreasonable extension of his argument and data – it is not contradicted by
anything he says. The two processes certainly seem to occur close together. If
welfare spending is seen as compensation for greater openness to trade, then it
is not unreasonable to suggest that greater spending would leave people more
willing to accept lower trade barriers, or that less spending would lead to
demands to erect higher barriers. There is no reason why compensation cannot be
provided in anticipation of openness. Indeed, this is sequence of events found
in many countries surveyed by Molana et al: government growth precedes trade
growth.
There is good reason to suspect
that a bigger welfare state encourages rich countries to lower the trade
barriers, and so remove one of the major causes of global inequality. This
gives global egalitarians further motivation to support the welfare state.
Migration
Migration can be expected to
benefit the global poor in four ways. Firstly, there is the direct effect of
allowing relatively poor individuals access to the opportunities of rich
countries. Secondly, there are remittances - money earned by emigrants abroad and
sent back to their country of origin. These have been estimated to
be worth over $80 billion to developing countries, more
than they received in aid.
Thirdly, developing economies benefit from the return of migrants, having
developed skills abroad.
Finally, the prospect of emigration incentivises the acquisition of education
and skills, even among some who will not eventually get to migrate.
Against this, there is concern
about ‘brain drain’ – the idea that migration leaves poor countries worse off
because skilled professionals are lost at such a rate that it is impossible to
replace them. Some commentators have expressed scepticism about the problem of
brain drain. They argue that professionals only leave in large numbers because
there is no capacity in the economy to absorb them - they cannot find jobs at
home. Or that other factors, like religious persecution, motivate professionals
to leave.
Such a sanguine view underplays
the genuine disruption caused in many countries by skilled migration. Carrington
and Detragiache estimate that “the outflow of highly educated individuals
reaches above 30 per cent in a number of countries in the Caribbean, Central
America and Africa”.
Fortunately, such extreme levels of brain drain are relatively rare. Adams finds
evidence that brain drain is a major problem in only a handful of Latin
American countries: the Dominican Republic, El Salvador, Guatemala, Jamaica and
Mexico.
While the negative consequences of brain drain ought not to be underplayed, it
is a serious problem for only a minority of poor countries, and so this effect
should not be enough to outweigh the massive beneficial effects of migration
for the global poor: in terms of the direct advantages conferred on the
migrants, remittances and human capital formation.
Assuming then that greater
migration is desirable from a global egalitarian standpoint, does the welfare
state encourage or undermine the movement of people to rich countries? On the
one hand, the welfare state offers a safety net to workers who might see their
incomes compromised by foreign competition, and so encourages support for
immigration. Another salient factor is that a generous welfare state might be
seen as facilitating integration, making immigration more palatable. However,
in more generous welfare states it is possible that people will be more worried
about immigrants overburdening the system and bringing it down.
Escandell and Ceobanu have tested
these hypotheses by studying the relationship between social protection and
anti-immigrant sentiment.
Their findings suggest merit in both of them, but pro-migration attitudes seem
the more powerful. For the unemployed, living in a larger welfare state is
associated with greater antipathy towards immigrants. This might reflect the
fact that the unemployed are uniquely vulnerable, and are most likely to view
immigrants as competitors for their benefits. However, on aggregate countries
with bigger welfare states tend to be more welcoming to immigrants. This result
holds controlling for region, income and partisanship.
Migration is an important means
of global redistribution. There is evidence that stronger welfare states
encourage greater support for migration. Therefore, the global egalitarian has
another reason to support the welfare state.
Conclusion
This article has sought to argue
that global egalitarians have pragmatic reasons to defend the welfare state,
given that public opinion seems to demand a large welfare state as a
precondition of international redistribution. It should be emphasised that this
is only a tactical position, while support for global redistribution remains uncommon. All
it suggests is that global egalitarians ought to pursue two simultaneous
strategies: on the one hand, they should promote global redistribution; on the
other, they should defend domestic redistribution. The practical difficulties
of this fight on two fronts is a subject for another day.
This article was originally published in the Oxford Left Review Issue 7
