I have followed this discussion with interest from across the pond. I
must confess that the slightly less overwhelming number of contributions
than the previous debate has made it easier to follow. It's no bad thing
to go for a more focused and quality discussion - there is plenty enough
of the large volume, low quality variety.
I found Stuart White's contribution, as last time, extremely clear and
helpful, and I generally agree with its characterisation of a 3w
economics balanced between what is politically and practically
achievable and what (to me) is morally desirable.
But I'd like to make three comments / additions to it and the debate.
1. On objectives
A colleague (Bob Putnam) showed me some remarkable US data this summer.
It shows that, on a whole range of well-being indicators, americans
appear to have become significantly less happy over the last 20 years.
This trend is not only driven by those on low earnings, but also those
at median levels - and of course relates to a period and nation of
undoubtably great prosperity.
These type of data must spur us to a serious reflection on the economic
and other indicators that we hold up as our gold standards of success or
failure. I know that this has come up in general terms, but being
pragmatic, it is very important that we move to quantifiable indicators
that empiricaly relfect 'well-being' and that can be built into
otherwise essentially conventional econometric models.
I think we know enough to know what the incorporation of such indicators
will imply, for example, a greater weighting towards reducing inequality
and less on average growth rates. But nonetheless, for both political
and practical policy-making reasons, getting these indicators up and
running is very important.
[A P.S. on this point: surely we should be able to get data on economic
inequality faster than the 3 to 4 years that it currently takes? ...the
data coming through in the UK still relates to well before the last
election...]
2. Social capital. As Simon Szreter has strongly argued, I do think this
is an important part of the picture and something that we shall see and
hear much more of. Its an empirically driven concept that captures
something very important about the social and economic fabric that lies
between the state (or even White's 'soft corporatism') and the
individual. It is also noteworthy that a cross-national analysis of
economic growth by Whiteley of PERC (Sheffield Univ.) recently showed
that social capital was a more important predictor of economic growth
than investment in human capital.
However, I have some doubts about whether the very strong focus on the
type of educational investment that Simon passionately recommends will
deliver - at least to the extent that proponents believe. That isn't to
say it is't worth doing, but I think we may need to cast our net a
little wider and more imaginatively than UK economic debates tend to go.
For example, Diane Coyle mentioned the growing importance of electronic
trading and the uncertainty over the regulation of such networks. I
think that such activity could easily develop over a number of
alternative paths. One such path is a very unpleasant market that
destroys social capital, reduces public revenues and atomises
individuals and reduces their well-being (see forthcoming edition of
Science on this latter point for evidence from an interesting and
well-conducted US-based study).
However, an alternative path is that, probably with some state
involvment, electronic networks could become a force for increased
social capital, opening of markets and opportunities etc etc. A bi part
will be whether such networks evolve in such a way to facilitate
contacts between users as (social) communities of interest, and whether
a culture of trust can be built into this new electronic social world.
3. Basic income and the 'politics' of moral hazard.
I think that one of the clear themes of the economics of the 3w is an
attention to moral hazard - the problem that insuring for a risk makes
it much more likely to occur. Unconditional basic incomes therefore bite
the dust (and I don't think Stuart white does support a basic income, as
suggested by another contributor).
Part of the arguement here is economic, and I shall not repeat it. But I
think that a big part of it - and one to be taken seriously is both
political and moral. My reading of the data is that, on a basic
intuitive level, people are much more willing to support social programs
(including redistribution) if they feel that moral hazard isses have
been seriously attended to. In practice, the variation in policy that
this leads to - eg no option to be on benefit and refusing participation
- may be largely symbolic and apply to very few. Nonetheless, these
conditionalities must be seen to exist to maintain the programmes
popular support.
Moral hazard issues are uncomfortable for many of us, particularly at
the hard practical end of application - Stuart raises the example of
travellers - but I think they can't be brushed under the carpet. One
could say that they are the policy price liberals must pay for getting a
generally more equitable society. We can use mechanisms such as
citizen's juries to help decide on their difficult details and dilemmas
they raise.
David Halpern
(currently at Harvard Univ, USA)
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