Privatizing+Risk+without+Privatizing+the+Welfare+State

Main point: Theories of entrenchment, which predict and are predicated on evidence of stability of welfare state structures, fail to take into account major changes in the extent to which welfare policies can fall behind in meeting their desired //effects// even while //structures// stay in place. When institutional framework and political context prevent major formal overhauls of welfare system, “reformers” (i.e. conservatives in US politics) change policies: a) by resisting “upgrades” in the face of //drift// (exogenous changes that undermine ultimate outcome of policy), b) through //conversion// (internal shifts in ways policies are carried out, that also shift outcomes), c) and through //layering// (passage of new legislation that erodes original policy outcomes). Consequently, through such mechanisms, and in the face of increasing risks related to families and work and the increasing privatization of these risks, conservatives have effectively decreased the extent to which the US welfare system meets its original goals.  · Pierson’s theory is that opportunities for retrenchment (“policy changes that either cut social expenditure, restructure welfare state programs to conform more closely to the residual welfare state model, or alter the political environment in ways that enhance the probability of such outcomes in the future”) are highly path dependent, as “past social policy choices create strong vested interests and expectations, which are extremely difficult to undo even in the present era.” As such, we see a great deal of stability in modern welfare state despite political opposition to systems of welfare policies. However, Pierson’s theory fails to take into account “’subterranean’ means of policy adjustment that can occur without large-scale policy change.” Specifically, “Retrenchment analyses tend to downplay the important ways in which actors may shape and restrict the agenda of debate and prevent some kinds of collective decisions altogether. Most critical in this regard are deliberate attempts to prevent the updating of policies to reflect changing social circumstance.” · Three forms of retrenchment that do regularly occur are: o //Drift//—“changes in the operation or effect of policies that occur without significant changes in those policies’ structure.” While sometimes presented as apolitical, as these changes (such as increased risk, etc) occur “naturally,” in fact this process is highly political, as conservatives mobilize to prevent updating of policies to account for new realities. One observes deliberate efforts by political actors to prevent the recalibration of social programs. o //Conversion//—which occurs when “existing institutions are redirected to new purposes, driving changes in the role they perform and/or the functions they serve.” Opportunities for conversion are determined by the “architecture” of the policy (Are goals and rules well-specified? How much autonomy do implementers have to alter outcomes?) as well as by the nature of the “feedback” of the policy (Has the policy created an entrenched group of supporters who are dependent on its persistence?). o //Layering//—in which proponents of change work around institutions that have fostered vested interests and long-term expectations “by adding new institutions rather than dismantling the old.” · Institutional frameworks and political contexts determine which of these mechanisms reformers will use to change a policy. As institutionalists argue, “Opportunities for policy change are systematically shaped by the distribution of decision-makers’ preferences regarding the status quo and alternatives to it, as well as by key institutional features of political systems, particularly the degree to which procedural rules create a status-quo bias.” In the face of such a bias, then, reformers will choose conversion or drift. If there is a positive political climate for change (but high barriers to internal change of policy), then reformers will go for layering. (See useful summarizing graph in text). · Social welfare systems can be thought of not only in terms of their redistributive effects, but also in terms of their risk protection effects, with the goal being to share risk. “The bounds of social insurance thus delimit the scope of shared risk—the degree to which potent threats to income are spread across citizens of varied circumstances (risk socialization) or left to individuals or families to cope with on their own (risk privatization).” In the past decades, the US has seen increase in risk due to changes in work/ family trends (higher levels of structural unemployment, greater inequality, lower degree of wage stability/higher divorce rate, greater number of single parents, etc.) Simultaneously, and as a result of effective use by conservatives of mechanisms for changes in effects of welfare policies described above, risk has been increasingly privatized for US families.
 * Privatizing Risk without Privatizing the Welfare State: The Hidden Politics of Social Policy Retrenchment in the United States, by** **JACOB S. HACKER**