20th Century Robin Hood: An Obsolete Legacy of the Past

This year both France and Germany select their new leadership. Election campaigners rather than focusing on "left" or "right" policy proposals now concentrate merely on charismatic appeal of the candidates. In most countries of the First World, the Left has come to see that there is no room for redistributional policies anymore that used to form the cornerstone of election programs of socialist and social democratic parties.

Various economic forces and institutional changes in the world economic system led to a strengthening of the believe-which at the end of the 1990s arose from the downfall of communist regimes in Central and Eastern Europe-that socialism, the modern reincarnation of Robin Hood, is not sustainable—that is, social welfare is harmful to the economy and the well-being of all social classes. What major factors have contributed to the sea change in welfare politics?

First, people have abandoned en mass their traditional welfare ideologies and were forced to accept the only alternative political theory that is left-namely capitalism-as the sole legitimate ideological base for ordering society and for determining social and economic policy making of all kinds.

Second, the past tradition of relying on state finance in guaranteeing highest levels of welfare programs has pushed economies over the limits of economically bearable government spending which now compels national governments-be they social democratic, socialist or ultra-right conservative-to reverse the trend in governmental welfare spending.

Third, due to a greater exposure of national economies to international competition for production and consumption markets, a relative shift from state-sponsored social welfare to economic welfare has occurred (cf, for example, George W. Bush's proposals to rescue the economy after the 9-11 attacks).

Hence, governments in the developed economies of the First World restored to new, or stick with old, subsidies for companies and investors of all kinds; including e.g. tax cuts and tax exemptions for stock market investors, corporate business tax cuts, direct cash subsidies to endangered or preferential companies and industries, and export promotion of the state covering the risk of currency fluctuations and irrecoverable costumer payments.

This greater emphasis of economic welfare is strengthened by the ideological realignment towards conservative and neo-liberal political principles. The redistributional nature of the welfare state, as a consequence, has not only lost the majority of its supporters, but also the political possibility of supporting redistributional welfare policies in an increasingly changing world economy.

Welfare state systems, accordingly, have started to change all over the globe. This development was led by a large-scale privatization of pension systems in Latin America, and now by cutting social assistance (i.e. "welfare") programs in countries of the developed world. What comes next is probably the remodeling of pension systems in good old Europe and those countries who abstained from any crisis awareness and management in the field of pensions. Pension systems may involve not only redistribution within one generation of working people, but also from one generation to the next, this is true especially for partly-funded or non-funded (i.e. pay-as-you-go) pension systems.

Governments may now come to realize that the time of "doing good" by way of raising welfare expenditures, e.g. introducing large-scale social assistance programs and supporting national pension programs via tax revenues, is over. Nowadays, governments certainly "do good" when they find new solutions for social policy that are not relying on state's financial resources (i.e. the people's tax money).

The New Right's notion of stopping any kind of activity in the field of social policy is not right, since it would mean to let modern or developing societies deteriorate-in terms of social standards-at the goodwill of the market, which as a matter of fact is likely to fail in the field of general and vocational education, health care, housing, social security, and poverty alleviation.

What new choices for these earlier developed economies are there in ensuring maximum standards of living? Funded systems are still the uncontested only alternative to state finance-based social security systems. Universal social security systems of the type implemented in Northern Europe and the UK rely from the very beginning on state finance, whereas partially-funded contribution-based systems rely, to a more or less great extent, on state finance, this especially after demographic shifts in economically fast developing societies occur.

Singapore (since 1955) and also recently Hong Kong (since December 2000), alongside other countries, have found their own solutions for providing social security based on fully-funded providential fund systems, i.e. social security systems that are based on private saving accounts with no direct and indirect distribution from one individual to another and, on top of that, there is no tax money needed, except for the administration of these social security systems. Hong Kong and Singapore both have now state-regulated social security systems; in case of Singapore the state itself runs the Central Provident Fund system (leading to low returns of investment and, thus, hidden taxation); and in case of Hong Kong licensed banks and insurance companies run schemes of the Mandatory Provident Fund.

There is, hence, no "Robin Hood" welfare state in Singapore and Hong Kong; and still, the high standards of living in both these societies are not to and cannot be explained by economic factors alone. Vast governmental efforts besides the erection of provident fund systems for the working population and their dependants in the fields of housing policy, education policy, and health care were indispensable for the social, as well as economic, development of Singapore and Hong Kong.

Whether European and other developed societies depart from "Robin Hood" perspective in conducting social policy or not, will depend on the political Left of these countries-on people like Gerhard Schroeder and the not-yet-determined successor of Lionel Jospin. In case they chose to look for new social policy alternatives other than cutting welfare efforts there is hope for future prosperous societies with prosperous economies, in case they choose to go back to the social democratic or socialist "Robin Hood" policy stance, the New Right will win anyway.

Recent electoral trends in France and Germany, and elsewhere, favor other parties than those of the left, which tends to strengthen Nationalist Parties ever more. In the face of this, the political left should make a fundamental choice in social policy making, and abstain from merely copying the policy proposals of the Right.

by Christian Aspalter (The University of Hong Kong/Chaoyang University of Technology, Taiwan)