SYRIZA's Policy Reversal on Guaranteed Minimum Income

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SYRIZA's Policy Reversal on Guaranteed Minimum Income General rules versus particularistic favouritism: SYRIZA’s policy reversal on Guaranteed Minimum Income. Antigone Lyberaki Panteion University and LSE 1. Introduction This paper seeks to explore and understand how a radical party of the Left gradually transformed its agenda in order to approach, and then seize power. In other words, the analysis below asks how and why, rather than changing the rules of the game according to a transformative social agenda, SYRIZA merely took advantage of them in order to get into office and remain there. To do so, I examine this process of transformation by using as an example a concrete policy theme, the Guaranteed Minimum Income, henceforth GMI. The paper purports to show how a mature and well-embedded policy stance was initially tacitly marginalised, subsequently omitted and abandoned and, finally, reversed. Interestingly, GMI was abandoned at a time when all external forces (and domestic policies, too) were more or less favourable to its introduction. The explanation offered is that GMI was a case where particularistic clientelism was confronted with and finally overcame universalistic governance. 2. Background: actual social policy in Greece and the need for real social protection. 2.1. Some Theoretical issues on safety nets Does social policy exist for the benefit of the giver, or the receiver? This is an old question, which can be traced back to the motivations of individual charity: is it for the salvation of the soul of the benefactor or the beneficiary? In modern electoral terms, is its primary purpose the electoral gain of the government or the practical amelioration of the poor? Evidence based governance concerns itself with results – trying to measure and affect outcomes, such as the condition of the poor. This needs to be defined and measured. The alternative is more interested in displaying effort, the largesse of the instigating political party. In that case expenditure is the obvious objective (and there is no need to find other proxy). Turning to instruments, a social safety net is a mechanism that prevents people from being destitute. Even in social protection systems built around individual contributions, such as Bismarckian systems of social insurance, there is a recognised need for some mechanism of last resort protection. The key distinction that this paper will deal with is that between Guaranteed Minimum Income and of a patchwork of particularistic interventions. The distinction of what is GMI is clear in principle: The application of general rules based on clear, measurable and transparent criteria applicable to all; it hails from and applies the universalistic idea of citizenship leading to equal rights for all. This is juxtaposed to particularistic interventions, which address groups of citizens separately and do not commit themselves to equal treatment. Those interventions divide the society and transform each group into potential electoral clients, whose electoral and other support is exchanged for benefits controlled by the State1. In practice the dividing line between the two approaches may not always be clear cut. It is possible to adopt a pragmatic stance, founded on second-best principles, that concedes practical issues in implementing general rules, most frequently due to problems in information. It prioritises some groups either due the existence of better information or due to more pressing need. This approach 1 Basic income uses general and universalistic rules, but avoids a means test. It gives all citizens an unconditional low amount – van Parijs… 1 proceeds towards GMI in steps by progressively filling gaps in a social safety net and by addressing categories of need separately; it hopes to produce a blanket by patchwork. However, in terms of objectives this approach is clearly distinct from particularism, as it justifies itself as moving towards the general application. Its empirical difference would be apparent by a concern to ground itself in statistical terms, in order to track progress and pinpoint areas where intervention is needed. In other words, the pragmatic policy stance is an example of evidence based governance. The practical delivery problems of safety nets, and a fortiori of GMI, are similar to issues arising in statistical Hypothesis tests: Those have to cope with two types of error: • Type I error: False positives. i.e. people who appear to need it but do not in practice. Systems relying on income declaration for tax have to deal with tax evasion and avoidance. This information management issue swells the fiscal cost and can be prohibitive. It can be met partly by self-selection (public works, coupons etc). It needs the cooperation of tax authorities. • Type II error: False negatives. i.e. real beneficiaries are either excluded or cannot be reached. Stigma or disability are frequently cited as reasons for non-declaration and justify a mechanism for outreach. It needs the cooperation of social policy professionals such as social workers (Banarjee & Duflo, 2011). A frequent practical problem caused by the existence of GMI is the creation of poverty traps. This arises when GMI is generous and/or if a number of uncoordinated benefits are based on the same qualifying condition. For instance if a number of social benefits are predicated on the status of being unemployed, then losing that status may make someone worse off in total – implying very large effective tax rates around that point. Many systems deal with that problem by making benefits available to working people (for Making Work Pay see EU Commission, 2005, for the poverty traps as side-effects of Minimum Income Systems, see Barr 2012). Cyclicality. Social safety nets have distinct roles to play during generalised recessions and in what may be considered ‘good times’. In good times the general population can fend for itself – generally through employment. Low unemployment means that benefits are shared out through the population. In familial systems this means that if some member of the family is employed, then the family is covered. Safety nets have to address what are the ‘hard cases’, which frequently necessitate individualised delivery and support structures, most frequently by professional social workers. Conversely, in recessions need becomes generalised and safety nets need to be accessed by all. Reaction does not need to be individualised, but should provide a type of springboard – a leg up in hard times so that misfortune does not build up into permanent scarring. In other words, in crises there is greater need for cash-based benefits that are delivered quickly, to a wide group of the population but most frequently for a limited time. The characteristics of the Greek Welfare State Greece is an example of the Mediterranean Welfare State. Its exceptionally fragmented system combined high expenditure with low effectiveness2, because it had always been geared to financing and preserving privileges – largely of the public sector and insiders. When considerably larger funds were fueled in social protection, these financed more of the same, with little change in structure either to cover new risks or to improve governance and delivery mechanisms. Partly as a result, it never operated as a formal safety net. Residual demands and increased needs were ipso facto met by the family and by informal networks (Lyberaki & Tinios, 2014). Reforms stalled repeatedly on pension issues and did not proceed further (Tinios, 2012 in book Pagoulatos 2 Greece scores poorly both in terms of efficiency and in terms of equity dimensions, in the Sapir classification of European welfare states (Sapir 2006). 2 ed.). This left most social protection functions to be addressed by the family. Table 1 charts some milestones in the Greek approach to poverty-alleviation policy. Combatting poverty was always a feature of rhetoric, as a general political objective. It was used as a general justification for the large rises in minimum pensions (between 1978 and 1985) and for similarly large rises in minimum pay and in labour protection legislation in the same period. However, this general aim was never given a quantitative or operational dimension. The study of poverty was the exclusive preserve of academic papers employing mostly the Household Expenditure Survey (Sarris & Zografakis, 2000, Tsakloglou refs). So, when in 1992, Minimum Resources protection was mentioned as an EC policy recommendation, this was easily shrugged off as having no practical implications, given that no poverty measurement or monitoring existed. Poverty was a loose ‘catch all’ concept applied to all and sundry. Rhetoric (and expenditure) could proceed independently of what the actual situation was. This situation was challenged from two directions: on the policy front, Costas Simitis, prior to being elected as PM, mentioned the creation of a New Welfare State which would be built around the notion of targeting and prioritisation (Simitis 1995). This idea was put in practice in the early months of his government, overcoming considerable opposition, in one of his first initiatives in the social field, the introduction of EKAS as GMI substitute for pensioners and the elderly poor. On the field of indicators, the introduction of the ECHP by the European Commission in 1996 implied that the concept of poverty could be operationalised and given a quantitative dimension. The existence of the ECHP (subsequently replaced by EU-SILC) meant that outcome indicators could be used for the first time in social policy. This was formalised in the context of the OMC and meant two things: First, that performance and efficiency could be measured. And second, that “helping the poor” could be given a precise and quantifiable content. From the first publication of comparable data Greece was placed in the defensive, as it invariably topped the list of high poverty countries; even more damning, given the spending emphasis, was the concentration of poverty among the old. Social transfers had extremely limited effectiveness against poverty. That period also saw the correction of social expenditure data.
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