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					Neoliberalism and Incrementalism

Since the late 1970s, thereneo-liberalism, has been an ascendancy of neo-liberalism a

school in social policy that shares common tenets with the orthodox development

economics, has been in the ascendant. According to the proponents of neo-liberalism

proponents, economic growth should be given high priority on the assumption that high

growth, resulting in increased prosperity through all sections of society, will

automatically solve the society's social problems and result in widespread prosperity. In

the social policy arena, the proponents of neo-liberalism proponents call foraccord a

pre-eminent position to the forces of the market, assign a subsidiary role ofto the state,

and the pre-eminence of the market. They should be accompanied by and advocate

placing a high degree ofa transformed expectation of the responsibilityies onf the

individual. Welfare and well-being, in their view, are should become “private” concerns,

to be devolved to the households andor individuals. In other words, individuals are

expected to secure their own welfare by dealing in the market, largely independently of

any subsidies or supports from the state. The state has only a very minimal role to play as

the provider of a safety nets for the least well off, and the state needs to be ever . It should

also be wary of the risk of facilitatingprevalence of a “culture of dependency.”

Various of the ideas of neo-liberalism (small government, retrenchment of social

programs, cost containment, economic efficiency, to name a few) have won

acceptancesupport from Asian states including Hong Kong. Fiscal difficulties, economic

uncertainties and disillusionment with conventional social programs fuel the spread of

neo-liberal ideas. In the aftermath of the Asian financial crisis (1997), for instance, many

Asian states believed that renewed economic growth alone would eliminate most if not

all of the social problems and needs that had resultedemanated from the crisis.

Given its unique cultural background, Hong Kong canis not in a position to take

theembark on the road of free market route, minimizing theits government to the point of

irrelevancy. Moreover, the neo-liberal position is untenable and is not appropriate to

Hong Kong. First of all, there is hardly any evidence to show that the benefits of

economic development have been evenly and justly distributed. On the contrary, social

needs remain unmet and social problems persist on a large scale. Human misery in Hong

Kong is rampant. Latest research reports in Hong Kong tell of suffering among specific

groups of vulnerable people (women, poor children and new immigrants). Above all,

neo-liberal ideas have failed to address the problems that arise from the distortions inof

economic development.

In the context of Hong KongOver the past decade, social welfare development in Hong

Kongthe last decade has been marked by a lack of program coherence and an absence of

vision. While tThe “last” social welfare policy paper could be datesd back to 1991 (i.e.,

the White Paper on Social Welfare) that was formulated by the then colonial

government)., t The Hong Kong SAR government has not been able to come up with a

welfare blueprint.

Currently, tThere is at present another important force at work that impinges on welfare

development: budgetary incrementalism. LackingIn the absence of a clearly articulated

welfare blueprint, social welfare provisions in Hong Kong hasve been drifting along in an

ad hoc, step by stepincremental fashion. In a recent study on the impact of

democratization on social welfare spending inof Hong Kong (1975-2002) (See CUHK

Social Welfare Practice and Research Center Working paper Number one, “Does

Democratization Spur Social Welfare Spending? The Case of Hong Kong, China” 2004),

one of theit is noted as an incidental findings is that the social welfare system of Hong

Kong has been developing along “incremental.” lines. In this study, we find that the size

of last year’s welfare budget, alongtaken with such explanatory factors such as price and

real GDP per capita, all have significant impacts on the size of this year’s welfare budget.

Based on this finding, we argue that the planning and monitoring mechanisms of the

social welfare system are mainly controlled by officials in the Government Bureau and

the respective departments rather than by the elected politicians in the Legislative

Council. These officials have a tendency to adopt an incremental budgetary approach in

social policy.

The weaknesses of an incremental approach in social policy are all too apparent,

particularly at a time when social contexts are changing rapidly and new challenges are

emerginge every day. In particular, an incremental approach is under stressThese

weaknesses are especially obvious when budgetary constraints are stringent and the gap

between social needs and social service delivery iscould be wide.

New efforts must be madeare needed to find an alternative basis for welfare provisions.

In this respect, four normative positions are reviewed in this report: neo-institutional

social protection, rights-based welfare, reciprocal welfare and developmental welfare. We

hope these emerging welfare blueprints willould serve to inform and stimulate discussion

among practitioners and academics.

(1) Neo-Institutional Social Protection (Attachment I)

An approach that is committed to social protection and institutional social welfare would

cherish values such as equity, social justice, need-based welfare, humanitarianism and

social equality. There are many contemporary proponents of this approach, including

large international organizations like the International Labour Organization and the

OECD. A traditional social protection approach pays attention toaims at social policies

that emphasize security of employment and adequate social protection for needy and

vulnerable groups in society. It also emphasizes the need for government intervention in

social policy and the importance of comprehensive social programs that will provide an

adequate comprehensive safety net and actively promote the welfare of all citizens.

Another assumption of tThis approach is to allocates greater resources to social programs.

In the aftermath of the Asian financial crisis, the ILO urged more dialogue between the

social partners in Asian societiesy to address the challenges theyAsian states were facing.

Some of these principles are affirmed Iin the context of Hong Kong, by Dr Wong Hung’s

social protection analysis, affirms some of these principles. This analysis which draws

heavily upon the main tenets of the social administration school in Britain. The idea of

“social engineering” and “welfare as social reform” cannot be missed inis central to Dr

Hung's his proposal. AndIn his view, thegovernment needs to play a strong role of the

government in social welfare provision,s and in playing this role government cannot be

replacedsupplanted by that of the market. The Hong Kong government should be

working toward the introduction of a proper social welfare planning mechanism as well

as a contributory social insurance program, along withand a commitment to a program of

universal protection.grams are some of the goals that the Hong Kong government should

strive for.

Yet, hisDr Hung's analysis alsononetheless acknowledges the peculiar context in whichof

social welfare provision in Hong Kong,’s social welfare is situated ( given, for example,

e.g.,the budgetary constraint within which it must operate, and the nature of the territory's

economy). His analysis recognizesis based on the acknowledgement of the development

of a dualismt economy in Hong Kong's economy, and the resultingthe social

needs/problems that accompany this dualism. He then advocates for an asset-based,

community governance welfare model and the strengthening of civil society, with a

renewed focus on community economic development. While not optimistic that the

business sector wouldis prepared to provide the much needed funding for welfare, there

arehe nevertheless somesees a roles for the business sector in social welfare development,

in terms of its capacity to offer voluntary serviceseering, in the form, for instance, of

professional consultation, and, of course, its importance as a provider of jobs provisions,

and as a repository of management knowledge.

(2) Rights-based Welfare (Attachment II)

In Tthis perspective on welfare, paysthe paramount driver is the concept ofattention to

social rights. As articulated by oOur colleague, Dr. Fung, it sees the social welfare system

as serving the following functions:   the provision of a social security system to fulfill the

function of basic income protection (the social protection/insurance function); the

provision of caring and protection services to handleprovide against personal deficiency,

social adversity and uncertainty (the function of social nurturance); and the strengthening

of enabling and empowering mechanisms for social development and personal

actualization (the functions of personal and social development). The underlying message

in Dr. Fung’s proposal is that there exists a range of social needs that are so basic that

everyone should have them fulfilledbe provided, as a matter of rights. The important role

of the government is underlined: to ensure that the basic human rights of citizens are

respected and protected as the community and business sectors carry out their welfare


Social rights are powerful normative imperatives in the advanced industrialized countries.

Dr. Fung’s ideas are reminiscent of the social rights approach that iwas first expounded

by T. H. Marshall (See Sociology at the Crossroads and Other Essays, 1963). Marshall

was a supporter of an egalitarian notion of social provision, but he was concerned with

the potential conflict between a regime of social rights and a social order governed by the

rules of a capitalist market. In all, hHis citizenship theory canould be seen as a way to

advance and legitimize welfare provisions within a liberal democratic context. His

citizenship theoryIt attempts to overcome the inequalities of free market capitalism

through an emphasis on community-oriented political and social rights that stresses

citizen participation in shared communities.

There is no doubt that the idea of citizenship rights (in particular, social rights) is

catching up in thehas taken hold in Hong Kong, society but the notion of social rights is

still not embraced by a widely accepted in the territory audience. It is still imperfectly

developed, occasionally entering intoand only becomes a subject of national debate only

occasionally, through social work academics or activists pushing for social changes.

Theus in the final analysis, the important question is thereforeremains whether (and how)

the idea of citizenship rights canould draw the same level of support here as it does in

other advanced industrialized countries.

Reciprocal Welfare (Attachment III)

LookingIn the search for a pragmatic, sustainable welfare model that fits well into the

SAR context, our colleague, Dr. C. K. Wong proposes the idea of “reciprocal welfare” as

the cornerstone for a welfare blueprint. Social welfare ofin the SAR Hong Kong is facing

a challenge: its residual-oriented social welfare system seems unable to simultaneously

cope with the rising demands of the middle class and to meet the growing needs arisingen

from demographic changes, poverty, and the widening rich-poor gap of ain this dual

economy. HoweverOn the other hand, it is also impugned foraccused of encouraging


Bearing in mind such public concerns (welfarism, and the accompanying erosion in the

values of family and self-reliance, a tight fiscal budget and a competitive global

economy), Dr Wong argues that a new approach to social welfare is urgently

requiredimperative. The theoretical base for “reciprocal welfare” is active citizenship and

welfare contractualism. The principal tenet of active citizenship is “an emphasis onf the

responsibility-side of citizenship, and the need to provide adequate resources for the

vulnerable to exercise their ethical duties to the community.” He argues that active

citizenship could rectify the earlier problem of ‘duty-deficit’ in social welfare, whilst

retainings the traditional pledge to assist the vulnerable, which is essential in a dual

economy. Whilest welfare contractualism embraces the tenet of fair reciprocity, fair

reciprocity is founded on the thesis that the good society is, fundamentally, a community

of mutual concern and respect, fair economic practices and social reciprocity. On the

benefits side, it relies upon conditional benefits as the expression of the fair-due

conception in reciprocity; benefits are less general in some cases as an institutional

mechanism to avoid moral hazard. There are aA number of policy tools emanateing from

this approach: a flexible differential fee-and-charge structure and social insurance for

pooling social risks.

Some specifics of this reciprocal welfare approach are summarized here:
1. The need for change - the SAR social welfare system in crisis
1.1 Greater demands for social welfare in an unfriendly ideological and fiscal environment.
1.2 A residual-oriented social welfare system, a colonial legacy, which is supposed to cater for
the needs of the poor and the vulnerable groups, but is increasingly incompatible with the
demands of a 21st century Asian international city.

2. What is reciprocal welfare?
2.1 The underlying principle of reciprocity welfare is the fair-due conception of right and
2.2 People who have the ability should have an obligation to make a decent productive
contribution, proportionate to their abilities, to the community in return. People who do not have
the means or the ability should have the right tofor the protection of a modicum of benefits and

services for exercising their moral obligation to the community.

3. What are the major policy arrangements for reciprocal welfare?
3.1 Social services should have a flexible differential fee-and-charge structure, which allows the
fair-dues of stakeholders with different abilities.
3.2 It uses social insurance to pool social risks in such areas as health care, income and
unemployment protection.
3.3 It aims at universal coverage, and differential contribution rates, but standard benefits.
3.4 The middle classes are included, the poor and vulnerable are not marginalized; so, social
integration can thus be achieved.
3.5 Conditional benefits and social services as an expression of the fair reciprocity. Enforces
differential treatments in accordance with citizenship, residence, contributions and behavior, e.g.,
work-test and participation-test.
3.6 Benefits levels for the poor and vulnerable are decent but less than generous, e.g., tied to
basic needs rather than a wage. This arrangement allows system flexibility, especially related to
the competitive economy, facilitates personal incentive, promotes non-statutory participation and
avoids moral hazard.

4. Reciprocal welfare is sustainable and compatible with the SAR context
4.1 The major parties in the SAR, the government, the business and the general public, are more
in favor of a self-reliance ethos and a restrictive social policy for their disposal.
4.2 The Asian Financial Crisis and the 2001 economic downturn have exposed the narrow fiscal
base of the prevalent structure for financing social welfare, a legacy of the colonial era.
4.3 Narrow in tThe existingprevalent financial structure of social services is too narrow - there is
insufficient use of social insurance for pooling social risks and a rigid fee-and-charge structure.
People with the ability are not allowed, under the present system, to contribute in proportionate
to their ability.

(4) Developmental Welfare (Attachment IV)

In response to the neo-liberal critique of state welfare, progressive policy analysts have

been searching for an appropriate and effective approach to social provision. Academics

such as James Midgley amd Michael Sherraden have called for the adoption of a

developmental approach that will promote social development and be consonant with the

need for continued economic development. Proponents of this approach believe that it

provides an appropriate normative basis for social welfare in all parts of the world. The

approach originated in the developing nations in the middle decades of the 20th century

when many newly independent states sought to adopt economic policies that would

promote rapid industrialization, employment and improvements in living standards but, at

the same time, to address pressing social problems. Recently, the United Nations made a

determined effort to reinvigorate its key ideals by convening the World Social Summit in

Copenhagen in 1995.

Social development emphasizes the social aspects of the development agenda by

harmonizing social interventions and economic development efforts within a wider

commitment to social change and progress. It calls on governments to emphasize social

programmes that are compatible with development.

There are several underlying principles: first, social development cannot take place

without economic development and economic development is meaningless if it fails to

bring about significant improvements in the well-being of the population as a whole.

Second, economic development should be integrated and sustainable, bringing benefits to

all citizens; and third, social welfare should be investment-oriented, seeking to enhance

human capacities to participate in the economy. The productivist welfare approach in

social development emphasizes the adoption of social policies that strive to enhance

human functioning and capabilities.

There are a number of empirical realities that give support to this approach. Proponents

of this approach point out that there have been enormous improvements in standards of

living for many people around the world over the last fifty years due to an emphasis on

social development. Importantly, social development is able to offer an opportunity to

challenge the neo-liberal claim that social expenditures harm the economy and that

economic development requires social retrenchments. In a normative sense, social

development promotes a pluralistic and consensual approach to social welfare that

transcends the historic welfare statism of the European nations, advocating for the

integration of state, market and community involvement. It proposes that governments

direct the process of social development in ways that maximize the participation of

communities, the markets, and individuals in both economic and social development.

The developmental experience of Asian states is illustrative of the importance of social

investment, thatwhich serves as an important support to the economy. Singapore, Taiwan

and South Korea are all authoritarian developmental states and are pro-growth in

orientation. Yet, these developmental states tend to have extensive social services in such

areas as housing, education, and health.; such These social services are considered as

social investment. In other wordssum, social welfare was madedeveloped to further their

national economic development goals.

An ofarticle written by Midgley and Tang (2001) gives some of the flavors of this



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