welfare state

The need for a new welfare capitalism: postscript

I wrote a couple of months back about the need for a new welfare capitalism in Singapore. This post supplements it with references to a couple more articles and books, which shed light on my argument.

Essentially I advocated a much more robust approach to ensuring job security and mitigating the necessarily insecure conditions of modern, global capitalism. This would involve unemployment insurance, job training and restructuring, and a minimum wage along with many other minimum conditions; complementary to that, the state would also have to reaffirm meritocracy by investing heavily in early childhood education and care (James Heckman at the University of Chicago is one of the biggest advocates for this, and has quantified, in the US context, the economic, educational, health and crime-reduction benefits of ECEC).


The need for a new welfare capitalism

This piece takes a step back from empirical work and invites the reader to join me in a bit of conceptual exploration, on the way goods and services are produced in a modern economy like Singapore’s, and the institutions that support those people who work to produce those goods and services.

To Singaporean ears, the term “welfare state” epitomizes all that is wrong with the decadent West: a state which saps the industry and drive of its people, rewards idleness and irresponsible fecundity, and yet delivers unemployment, crime, a breakdown of the family unit, and all that at far greater cost to the taxpayer than the Singaporean system. By contrast, we value work so much that we have neither a minimum wage nor an unemployment insurance. We value family solidarity, so we require those in need to turn to their family first—even to the extent of legislating a requirement for children to care for their elderly parents.

But defenders of Singapore’s system neglect a few vital facts. The foundations of our social institutions were laid down when our population was much younger and the occupational structure of our economy was less skill-intensive than it is today. The demographic dividend paid off by keeping healthcare costs and demands on the health system low. Meanwhile, it was possible for (largely healthy, young) workers to switch jobs and sectors in a relatively low-skill economy if they were made redundant. Jobs were fungible and it was a workers’ market in a long boom era of near-zero unemployment. If one were looking for empirical confirmation, I suspect that the CV of a typical 55- or 60-year-old worker nearing retirement today shows a surprising amount of diversity and adaptability in occupational choice.