IS THERE A FUTURE FOR

1
IS THERE A FUTURE FOR SOFT SOCIAL SENSITIVE
CAPITALISM IN THE POST-SOCIALIST EUROPE?

• by
• Pál TAMÁS Hungarian Academy of Sciences,
  Budapest

2
THE TAXONOMICAL QUESTION

• Is there an East European postsocialist welfare
  state model beyond the European classical 4
  welfare regimes?
• Yes, the early-born welfare state Janos
  Kornai of EE as a fundamental concept for
  legitimation of the social order.
• Survival ratio of that E-B welfare state? The
  strategic debate.
• How to reduce the social expenditure? Tactics and
  time-horizons
• What does happen with the European social model
  in that context? 2 Europes- with an internal
  periphery?

3
EVOLUTION OF THE SOVIET WELFARE REGIME as a
concept

• 20-30ies patchwork of differently modernized
  social segments, islands, pockets. Differentiated
  social services in different segments. Close to
  the classical Chinese communist system of
  social insurance of the 50-70ies
• From the late 50ies-early 60ies de facto
  universal Bismarcian instruments, but universal
  in its system via obligatory and permanent full
  employment.
• The system collapsed in the early 90ies.

4
THE TRANSITION DEBATE OF SOCIAL POLICIES IN THE
90ies

• Social expectations of the universal regime in
  the public opinion are there, the sources and
  tools of the service providers for the new
  situation are absent.
• Discoursive mode of the political-intellectual
  debate in the early 90ies dominated by the
  Americal model and and neoliberal hardliners.
• Social democratic alternatives emerge with the
  Eastern Enlargment of the EU- from the late 90ies

5
IS THERE ONLY ONE EAST-EUROPEAN REGIME?

• Argentinian, Mexican economy- with ambitions of
  the Swedish social policy programs
• different hybrids- more loyal to the past HU-
  more hostal to the past PL and between
• Basic elements
• Early gender mobilization pre 1989
• Strong pro-population policies pre 1989
• Forced integration of poverty pre 1989
• Weak civil society pre post 1989
• Neoliberal pro-growth policies fpost 1989
• transformation costs transfered to the lower
  social classes and strata post 1989

6
THE SCANDINAVIAN DREAM

• Scandinavia as an ideal case like the romantic
  concept of the pure love is there at least
  from 1968 the Prague Spring, but after 1989-90
  everybody is realistic, and tries to marry the
  first potential reach partner wife, husband
• Special cases a. the Finnish model in Hungary
• b. The ambivalence of the Baltics- Scandinavian
  modernization but without scandinavian social
  policies Estonia, Latvia- brutal neoliberal
  growth regimes with Scandinavian foreign policy
  umbrella and economic domination

7
STRATEGIC DILEMMAS

• optimal and acceptable social inequalities
  the Atlantic and the East Asian developmental
  states.
• The post-communist underclass and the social
  reproduction
• Changing social justice concepts as tools for
  legitimation of transition
• Limits for a new social contract political
  assets of transformation
• Re-integration of alienated generations after the
  transition

8
BIFURCATION OF THE EUROPEAN SOCIAL MODEL

• Eastern options- short- and medium-term there
  isnt free choice there
• Obligations of the eurozone, minization of budget
  deficits flat-tax competition in the region
  ECE
• Actual ECE social expenditures 19-21 of the GDP
  Scandinavia- 29-30, DE, AU -26-27
• The new Eastern model overgeneralization!
  16-18 of the GDP- strong public education
  growing share of private investment in health
  minimalistic social assistance deep poverty
  some population policies

9
A strategic example share of education and
health sectors in the of the Hungarian GDP,
2005-2007
Share of strategic sectors in the GDP, in Share of strategic sectors in the GDP, in Share of strategic sectors in the GDP, in Share of strategic sectors in the GDP, in
sector 2005 2006 2007
education 6,44 6,21 5,67
health 5,27 4,77 4,49
10
Gross National Income Per Capita (PPP)
12,000
Central Europe
10,000
Baltic States
8,000
Western CIS
Bulgaria and Romania
6,000
Other South-Eastern Europe
4,000
Central Asia
Caucasus
2,000
0
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
11
Income inequality, 1994 - 2001 (Gini
coefficients)
12
(No Transcript)
13
(No Transcript)
14
(No Transcript)
15
At-risk-of- poverty rate and needed social
transfers

• Source Eurostat Yearbook 2006-07118

16
Further life expectancy for men aged 65 (Eurostat
2005)
17
Further life expectancy for women aged 65
(Eurostat 2005)
18
Hypothesis on determinants of demographic
development in Western and Eastern Europe
Determinants Western Europe Eastern Europe
Life expectancy ? ?
Fertility ? / ? ? / ?
Migration patterns Immigration Emigration
19
Immigration/emigration patterns (Eurostat 2005)
20
Social risk indicators for EMU accession (2003)
21
Which Values? Evidence versus Ideology

• Social solidarity
• Focus on fairness and equity
• Explicit cross-subsidy
• Social protection
• Universal Access, not related to income
• Role of state usually important
• State capture?
• Most prevalent in OECD

• Individual responsibility
• Focus on efficiency
• Little cross-subsidy
• Limited Access
• Stratification by income
• Individual risk rating
• Limited risk pooling
• Consumer protection?
• US Model and attempts in FSU

22
Tax revenue is high for income level, especially
in Central Europe
Source IMF World Economic Outlook database IMF
Government Financial Statistics database
23
health spending is comparable to other European
countries, and may even be on the low side in
some new member states
Source WB SIMA IMF World Economic Outlook
database
24
.amongst a comparator group which includes
well-performing middle-income countries pension
spending looks high in Central Europe
Source International Patterns of Pension
Provision by Palacious and Parrales-Miralles,
2000 IMF World Economic Outlook database
EUROSTAT
25
.amongst a comparator group which includes
well-performing middle-income countries pension
spending looks high in Central Europe
Source International Patterns of Pension
Provision by Palacious and Parrales-Miralles,
2000 IMF World Economic Outlook database
EUROSTAT
26
Total health expenditure as of GDP
EU-15 8.9 (2001)
Central, South East Europe Baltics 5.8 (2001)
27
Impact of Early Reforms in the Last Decade

• Slowly improving health status but low user
  satisfaction
• Separation of funding from supply, Social
  Insurance
• High growth rates of (mostly private) providers
  and increase in providers revenue
• Devolution of ownership structure of hospitals
• From budget to fee-for-Service to budget caps
• Funding fragmentation creates considerable
  administrative costs (gt3)
• Comparatively low health care wages curtail even
  higher growth of expenditures
• Public Health collapse

28
The impacts on growth of public spending and
revenues also depend on the quality of
governance. Size of government and spending
mix matter most when governance is poor
Spending and revenue mix matters more when
governance is good.
SPENDING Good governance Poor governance
Unproductive expenditures No measurable impact Negative impact
Productive expenditures Positive impact No measurable impact
TAXATION
Distorting taxes Negative impact No measurable impact
Non distorting taxes Positive impact No measurable impact
29
(No Transcript)
30
(No Transcript)