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Innovations wanted

by Hans Dembowski


Hospitalised patient in Tanzania.

Hospitalised patient in Tanzania.

Ten years ago, D+C/E+Z contributors from emerging markets and developing countries told us that Europe’s social model was what impressed them most about the EU. A continent of welfare states looked attractive to people from countries haunted by mass poverty. Today, however, the same contributors ask us why the EU is tolerating the dramatic decline in health-care services and social security in Greece and other indebted member nations. They read this as indication of EU leaders believing that social protection is something only prospering nations can afford.

From a developmental perspective, this message is wrong. Countries like Germany, Britain or France built their social-protection systems long before they reached today’s levels of prosperity. For an economy to operate efficiently, people need access to health care, and the sick and old must not become burdens, stifling family members’ economic activities. Moreover, young people deserve good education, and policies must be designed to create opportunities for everyone.

Society must leave nobody behind, and for the sake of cohesion, the gaps between the very rich and the very poor must not widen endlessly. Evidence shows that highly unequal societies tend to be particularly violent. The reasons are obvious. The elites feel they must keep the poor under control by whatever means necessary, and some of the poor despair and become desperados, willing to take what they feel they deserve by whatever means necessary.

At the international level, all this is well understood, as is evident in the list of Sustainable Development Goals that the UN is set to adopt as the follow-up to the Millennium Development Goals in September. Reducing inequality and poverty is high on the agenda.

There are various ways to organise social protection. The private sector can and must play a role because it is the engine that drives wealth creation. However, market dynamics in themselves do not lead to satisfying results. The reason is that markets do not respond to need, they respond to purchasing power. Prudent regulation and government action are necessary to allow those who do not have enough money to fulfil their basic human needs.  

There is no blueprint that fits each and every nation. Policies must be designed in ways that reflect specific contexts. Accordingly, social protection is a policy field in which innovations are welcome. In past decades, Brazil and Mexico pioneered conditional cash-transfers for poor families that send their children to school and make them visit a doctor regularly. India has established a public-works scheme that guarantees rural households a minimum income. In sub-Saharan Africa, flat-rate old-age pensions are being tested and proving effective. In the meantime, the USA, the big advanced nation that was lagging behind, has finally introduced universal health-insurance coverage.

Some activists have begun to demand that social-protection policies must be organised at an international level (see Jung and Pokawa in D+C/E+Z, 2014/12, p. 482). To most experts, the idea still sounds utopian. The EU might become a frontrunner however. Some of its leaders are tentatively discussing pan-European unemployment benefits. It is certain however, that the EU will lose much of its soft power if it allows the perception to take root that its members’ welfare states collapse in times of crisis, percisely when they are needed most.

Hans Dembowski is editor in chief of D+C Development and Cooperation / E+Z Entwicklung und Zusammenarbeit.