Book Review: The Right and the Welfare State

Carsten Jensen (2014) The Right and the Welfare State. Oxford: Oxford University Press, 176 pp., ISBN 978-0-19-967841-9

Book review forthcoming in Czech Sociological Review

The Right and the Welfare State addresses the behaviour of right-wing governments in welfare state reforms, particularly in the domains of health and unemployment. In this book, Carsten Jensen challenges two widespread – if often implicit – assumptions of the literature on comparative welfare state reform. The first assumption is that right-wing parties are overwhelmingly hostile to the expansion of public social security schemes. Since they represent middle-to-high-income voters who can purchase private insurance, right-wing parties should generally oppose state-sponsored welfare programmes that involve some form of redistribution from rich to poor. The second assumption is that the welfare state constitutes a monolithic bloc where politics is relatively homogeneous, and where preferences for state intervention are consistent across schemes. Indeed, countless studies seek to explain the determinants of social spending as a whole, or try to uncover the factors that shape individual preferences for “welfare” or “redistribution” without discriminating between healthcare, pensions, unemployment, family policy or other programmes. The implicit assumption is that voters and parties hold similar views about state intervention across welfare schemes.

Drawing on an extensive empirical analysis using quantitative data on individual attitudes, public spending as well as case studies (on Denmark, the United Kingdom and Australia, with a brief discussion of the United States), Jensen shows that both these assumptions are wrong. First, in welfare schemes such as health care, right-wing governments do not spend less than left-wing governments, and in some cases even outspend them because of the need to maintain both a public system popular with voters and a private alternative propped by government subsidies. Second, he shows that middle-to-high-income voters are not less favourable to welfare expansion when it comes to programmes aimed at covering life-course risks such as illness, that are uncorrelated to income. In these schemes, the risks to be covered are so high – e.g. the costs of cancer treatment – that even affluent voters will want as much insurance as possible from the state.

The starting point of Jensen’s argument is that there is a fundamental difference between labour-market and life-course risks in terms of how they affect voters across the income distribution. Labour market risks such as unemployment disproportionately affect low-income voters and therefore display a clear class divide between who pays (the rich) and who benefits (the poor). In contrast, life-course risks related to human biology, such as old age and sickness, affect individuals more or less equally across the income distribution, and have a much smaller redistributive dimension. We know that poorer people are generally in poorer health, but since the probability of illness (e.g. cancer) is more randomly distributed than, say, unemployment, there is a genuine rationale even for high-income earners to ask generous coverage from the state. Much of Jensen’s analysis is derived from this assumption, assuming that governments are primarily vote-seekers. Hence, the policies of right-wing governments in the healthcare domain are mostly characterised by an expansionary consensus seeking to reconcile extensive provision and some degree of marketisation, while their policies regarding labour-market risks are characterised by more frontal attacks seeking to undermine the power-base of unions in particular.

Jensen substantiates his argument with a very nice combination of micro, macro and case-based data. The first empirical chapter clearly shows that levels of popular support vary substantially across welfare schemes. In line with Jensen’s argument – but also with previous research by Van Oorschot (2006) – he shows that levels of support for life-course related risks are systematically higher than for labour-market risks. This difference in mean levels of support is due to a large part to the behaviour of middle-to-high income voters. Indeed, whereas support for unemployment protection is clearly correlated with income (it declines clearly as income increases), support for healthcare stays consistently at high levels throughout the income distribution. Hence, while the poor benefit from welfare in general and unsurprisingly support both types of programmes, the rich only support those from which they can benefit directly. In a nutshell, this means life-course related risks have a much clearer potential for cross-class support, which makes them much more difficult to retrench. This even provides strong incentives for all parties to expand them if they want to maximise their vote share.

In a series of interesting case studies, Jensen shows how different right-wing parties embedded in such different political settings and traditions as Denmark, the United Kingdom and Australia ended up adopting very similar political strategies. The case studies introduce a degree of nuance in the argument in the sense that they shed some light on how right-wing governments seek to reconcile vote-seeking (welfare is popular) and policy-seeking (right-wing parties want more markets and less state) constraints. In healthcare, this strategy consists in a subtle combination of expansion of services and marketization through the backdoor, for instance via the contracting out of private providers, public subsidies for private insurance, or the extension of public insurance coverage to private hospitals. It is interesting to note that marketization in these cases cannot be equated with cost-containment, as many of these reforms ended up costing much more than state monopolies in provision. This is mainly related to what Jensen understands as a process of layering, whereby subsidised private alternatives are added on top of the public system.

In the domain of labour market policy, where the politics of reform should be more straightforward because the constituency of right-wing parties is not interested anyway, right-wing strategies have also been more subtle. The right-wing reforms analysed by Jensen consisted in “eroding and attacking” the traditional supporters of social protection in this area, namely the trade unions. Rather than explicitly attacking social protection itself, which could be countered by left parties as neoliberal attacks on acquired rights, right-wing governments have often preferred to undermine the power-base of unions, by restricting their ability to organise workers on the workplace or challenging their monopoly over the management of insurance schemes (in Denmark). In spite of their less visible nature, the long-term effects of these attacks have been profound especially in countries where corporatist arrangements played a central role in the management of the welfare system.

In a compact and provocative form, Jensen’s analysis provides an illuminating account of the preferences and strategies of right-wing governments in welfare state reforms. It makes a bold argument and supports it with an elegant combination of innovative theory, sophisticated methods and a keen understanding of the issues at hand. While right-wing support for welfare had so far essentially been envisaged as coming from employers (Estevez-Abe et al. 2001; Mares 2003), he provides a powerful case for bringing right-wing parties back in the picture.

There are two points which in my opinion could have been more thoroughly developed. The first is a deeper engagement with recent literature on social class (Oesch 2008). While Jensen seeks to depart from crude categorisations equating higher incomes with opposition to welfare, the fact that middle-to-higher incomes vote for the right is taken as a given. If this categorisation fits the countries he analyses fairly well, we know from recent research that the picture of class voting in other European countries has become more complicated than that. Low-income workers have become the main constituency of anti-immigration right-wing parties, while the new relatively well-off middle classes employed in the public sector (teachers, healthcare workers, public servants, academics) are now the main constituency of (left) social-democratic parties. From this point of view, it may be expected that these latter electoral constituencies support healthcare spending, but for different reasons that the ones emphasised in the book (for instance, healthcare, like education, is a very large employer nowadays). Hence, if Jensen clearly establishes the difference between levels of support across schemes, the reason why higher income voter support healthcare is still open to discussion. For instance, I would suspect education spending, which does not relate to life-course risks, to look a lot more like healthcare than like unemployment.

Secondly, the overarching assumption of the book is essentially Downsian (Downs 1957): voters are primarily self-interested and their preferences are determined by their position in the income distribution. The primary concern of right-wing parties is to satisfy them. However, higher income voters may also prefer healthcare over unemployment insurance not only because they do not benefit from the latter, but because they believe that recipients are more « deserving », as suggested by Van Oorschot (2006). In general, norm-based preferences (what people think is fair) play a small role in the book compared to largely interest-based accounts (what benefits people them directly). Here again, we have no way of knowing the psychological drivers of preferences. Besides, there are many examples of policies advocated by political parties which go against the direct interests of their voters, or do not concern them directly. For instance, social-democratic parties have been strong promoters of active labour market policies benefitting primarily the “outsiders” of the labour market (whose electoral potential is limited), while it has been argued that their core constituency is the “insiders” (Rueda 2005). The “third way” policies of politicians such as Tony Blair or Gerhard Schröder also often went against the direct interests of their core electorate. Even if it is not the core focus of the book (and does not undermine its elegant analysis), this type of case fits uneasily in the framework adopted in the book.

References

Downs, A. (1957) An Economic Theory of Democracy. New York: Harper.

Estevez-Abe, M., T. Iversen, and D. Soskice (2001) “Social Protection and the Formation of Skills: A Reinterpretation of the Welfare State” in Hall, P.A., and D. Soskice (eds.) Varieties of Capitalism: The Institutional Foundations of Comparative Advantage. Oxford: Oxford University Press: 145-183.

Mares, I. (2003) The Politics of Social Risk: Business and Welfare State Development. Cambridge: Cambridge University Press.

Oesch, D. (2008) “The Changing Shape of Class Voting”, European Societies 10(3): 329-355.

Rueda, D. (2005) “Insider–Outsider Politics in Industrialized Democracies: The Challenge to Social Democratic Parties”, American Political Science Review 99(1): 61-74.

Van Oorschot, W. (2006) “Making the Difference in Social Europe: Deservingness Perceptions Among Citizens of European Welfare States”, Journal of European social policy 16(1): 23-42.

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