Social Policy in Times of Crisis: Current Responses and Past

Experiences Peter Starke

University of Bremen Collaborative Research Center 597 Transformations of

the State peter.starke@sfb597.uni-bremen.de

Structure of the Talk

• Two research questions

• Research design

• Main results

– Critical junctures

– Political parties

• Implications for future policy

Background

• Book project with Alexandra Kaasch (Sheffield) & Franca van Hooren (Bremen Amsterdam)

• “Return of the state” vs. “New age of austerity”

Crisis as time of fundamental change

Crisis responses are uniform

Research question(s)

• Questions:

– Does crisis lead to fundamental change?

– What explains different crisis responses across countries and time?

Mapping crisis responses

Research design

• Comparative mapping of responses

• Qualitative process-tracing of crisis decision-making

• Pensions, health care, labor market policy, family policy

Case selection

• Australia

• Belgium

• Netherlands

• Sweden

• No extremes (à la Greece)

• Small countries

• Variation political system

• Variation welfare state

7

Case selection

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Source: OECD Economic Survey Database

Annual (real) GDP growth, in %

Question no. 1

• Does crisis lead to fundamental change?

“You never want a serious crisis to go to waste. […] It‘s an opportunity to do things that you

think you could not do before.” Rahm Emanuel, former White House Chief of Staff, November 2008.

Theory

• “critical juncture” (historical institutionalism)

• moments of “institutional flux” (Capoccia/Kelemen 2007) providing opportunity for fundamental change

• flipside of institutional path dependency

• = institutional path-departure as result of exogenous shock

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Mapping crisis responses

Findings I: positive cases

Fundamental crisis responses:

• Australia 1991-94: pension reform, active labor market policy

• Netherlands 2008-12??: fundamental retrenchment (e.g. pensions) on the agenda, but new elections 2012 no government

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Findings II: negative cases

Incremental crisis reactions:

• Belgium 1970s, 1990s, 2008

• Netherlands 1970s

• Sweden 1970s, 2008

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Findings III: ‘false positives’

Fundamental, but coincidence, not caused by crisis:

• Australia 1970s: universal health insurance, expansion

• Australia 2008: paid parental leave, health reforms

• Sweden 1990s: across-the-board cutbacks and pension reform

• Netherlands 1990s: disability benefit reform 15

Empirical pattern

1973 1979 1990 2008

Australia negative* negative POSITIVE negative*

Belgium negative negative negative negative

Netherlands negative negative negative* (POSITIVE)

Sweden negative negative negative* negative

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* False positives

Findings IV: necessary condition?

Fundamental change without crisis:

• Netherlands late 1990s/early 2000s: health care, family policy

• Belgium early 2000s: pensions

• + some of the false positives

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Summing up

• Exogenous shock neither sufficient nor necessary condition for fundamental change.

• Why incremental responses?

• ‘Threat-rigidity hypothesis’ rather than crisis-induced learning

• More research on crisis decision-making needed

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Question no. 2

• What explains whether social policy responses were expansionary or restrictive?

• Do parties matter (for crisis responses)?

Mapping crisis responses

Crisis reactions (direction)

• Diversity of policy responses!

• Broad expansion (e.g. Australia 1990s, 2008)

• Selective expansion (e.g. Belgium, Netherlands 1970s)

• Selective retrenchment (e.g. Belgium 2011)

• Broad retrenchment (e.g. Sweden 1990s, Netherlands 2010-12?)

• ( sometimes sequence of responses)

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Parties & crisis responses

• “Yes and no”

• Clear partisan pattern in Australia:

– Expansion under Labor in (early 1970s), early 1980s, early 1990s, 2008

– Conservative retrenchment in late 1970s (Fraser govt)

– Conservative criticism of expansion throughout

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Parties & crisis responses

• Pattern much less clear in European countries:

– No clear partisan post-election shifts in Sweden

– Very limited in Belgium and Netherlands

– Centre-left parties involved in (incremental) retrenchment (all three countries)

– Centre-right parties involved in expansionary responses (Belgium, Sweden)

• Partisan conflict over the extent of response, not overall direction

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Social expenditure in % of GDP, 2007

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Source: OECD Social Expenditure Database, 2012

Parties & crisis responses

• Conditioning factor: size of the welfare state (generosity & structure of cyclical schemes)

– Large welfare states: automatic fiscal stimulus + minor adjustments ‘depoliticization’

– Small welfare states: discretionary fiscal stimulus welfare state on the agenda, partisan divide

• How generalizable? (UK, US, NZ, D, F…)

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Conclusions

• Crisis no time for fundamental reform

• Crisis reaction depend on interaction of size of automatic response & partisan politics

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Policy implications?

• Expectations of big-bang reform overdrawn Politics = “slow, strong drilling through hard boards, with a combination of passion and a sense of judgment” (M. Weber)

• Diversity, not uniformity of responses

• Automatic fiscal stimulus depoliticizing effect (+ macroeconomic effect)

Commercial break

*Coming soon!*

Peter Starke, Alexandra Kaasch, Franca van Hooren: The Welfare State as Crisis Manager, Palgrave Macmillan (forthcoming, early 2013).