Okay, okay: One last post before 2012 kicks in…
“Carinagate” may have been the political blunder of the year but if we think twice, Özlem Cekic’s badly chosen case actually raises some relevant questions about social policy. Unfortunately, Cekic’s framing meant that her initiative backfired so badly that it now risks completely to turn the political debate in the direction of envy (recipients are either lazy, rich or otherwise undeserving) than in the direction of considering the means and goals in social policy.
So, as a free lunch, here are my thoughts about the mess brought up by Özlem Cekic, Joachim B. Olsen and Ekstra Bladet.
Carina is not poor. Is that a problem?
Carina, the thirtysomething single mother on cash benefit, whom Özlem Cekic used as a case in her campaining for poor families turned out not not to be poor if the official OECD line of poverty was applied. Once we looked at the data, there were two reasons for this: 1. She has a child and 2. She receives a housing allowance due to the high rent of her apartment. Oh, and with one child Carina is hardly a case of a welfare queen.
Personally, I do not think that children should grow up in poverty in a country like Denmark (or any country, but this is another matter), so viewed from the child’s perspective, Carina’s economic and social situation is acceptable. If the child grows up in somewhat ordered circumstances, its chances of finishing school and getting an education is higher and this is good for all parties.
But then the problems begin. Housing policy has been a mess in Denmark for a long time and Carina is in fact among the losers. This is why she receives a housing benefit. One problem is that public housing was financed in an expensive way from the 1960s on while insiders on the housing market perfectly legally were able to rent cheap apartments. Others faced the choice between an expensive new apartment or buying a bigger, cheaper house. A no-brainer. In terms of housing, however, Carina as an outsider is stuck. And this is bad for all parties.
We should also ask why the authorities over a period of 20 years basically parked Carina on long-term benefits and apparently never seriously reviewed her case and offered her help with her condition. It is very difficult for anybody – even experts – to diagnose people from a distance but a number of people – from case-workers up – should ask themselves if the handling of psychiatric and somatic conditions is adequate. If people who would be able to work are left outside the workforce, everybody lose. And this is very bad for all parties.
I haven’t read Lisbeth Zornig Andersen‘s autobiography but it is obvious to me that Carina unlike Lisbeth Zornig never met somebody who had the power and engagement to push open the doors of the educational and social systems. This is bad and we might ask how we engage people in various kinds of social work and how social programmes can be organised to rehabilitate people who fail to get an education or enter the labour market.
One final thought: The level of social benefits always raises the issue of the relationship between benefits and wages. Ideally, we would want people to have a decent level of security while keeping an economic motive to work (there are other motives besides money, btw) and not putting public finances under too much stress. This is not an easy equation to solve. But we should remember that means-tested cash benefits are only available to people who have depleted their means. This means: No home-ownership and no savings. Not an enviable situation. The situation is different for unemployment benefits and similar programmes.
General benefits vs. means-testing
The other issue which has captured the public mind is the existence of a number of social policy programmes that cover the entire population, most notably the general old-age pension and the child allowance. The typical criticism against this type of programmes is that 1. benefits are paid to people who do not need them and consequently that 2. the programmes create a system where everybody pays money to everybody.
We might expect that voters would react by being more positive to programmes directed at people in need but the fact is that means-tested programmes are often viewed less favourably than general programmes and that people receiving means-tested benefits are often viewed with suspicion. Voters do not like paying for people who do not resemble them: The greater the distance between voters and the poor, the harder it is for politicians to mobilise support for social policy programmes. Someone once coined the phrase that “Welfare for the poor is poor welfare”.
This is not entirely correct: A country like Germany has targeted programmes but also quite generous health care and old-age pensions programmes, but it is true that we should not assume that money saved by not paying benefits or providing services to high-income earners can be used to make social policy programmes more effective.
Another issue is that means-testing creates marginal economic effects and while it may seem easy to create some kind of discretionary or rule-based deductions for one programme, things get really complicated when taxes and a number of transfers and services are added to the equation. So, politically, economically and administratively it may be easier and cheaper to make some programmes available to all citizens.
As they say on Facebook: “It’s complicated”. Anyone promising easy solutions is selling snake oil.