‘We are All in This Together’? The Hidden Costs of Poverty,Recession and Austerity Policies on Britain's Poorest Children

In 2010, in the UK a new Coalition government inherited an ailing economy at a time of economic uncertainty and recession. Their response was to institute a fundamental revision and retrenchment of government spending accompanied by unprecedented cuts in welfare services and social security provision. This article explores the nature and meaning of these changes from a child‐centred perspective, to understand how and in what ways policy change and welfare retrenchment may uniquely impinge on low‐income children's lives. It reveals that recent cuts and welfare changes have threatened to overlook their needs and exacerbate their deepest concerns.     

Neo-isolationism,balanced-budget conservatism,and the fiscal impacts of immigrants

"A rise in neo-isolationism in the United States has given encouragement to a new fiscal politics of immigration. Growing anti-immigrant sentiment has coalesced with forces of fiscal conservatism to make immigrants an easy target of budget cuts. Limits on legal alien access to social welfare programs that are contained in the 1996 welfare and immigration reform acts seem motivated not so much by a guiding philosophy of what it means to be a member of American society as by a desire to shrink the size of the federal government and to produce a balanced budget. Even more than in the past, the consequence of a shrinking welfare state is to metamorphose legal immigrants from public charges to windfall gains for the federal treasury."     

LEGISLATIVE TURNOVER,FISCAL POLICY,AND ECONOMIC GROWTH: EVIDENCE FROM U.S. STATE LEGISLATURES

Increased turnover among legislators can make them short‐sighted, affecting fiscal policy and economic growth. We exploit the exogenous variation in legislative turnover induced by term limit laws and by redistricting in the 50 U.S. states, finding that increased turnover increases capital spending by state governments, which may be designed to constrain future governments. The changes may cause long‐run distortions in the economy, reducing long‐term economic growth. (JEL H72, H73, H76)     

Gender and social policy: the impact of the public expenditure cuts and reactions to them

In social policy research the gender dimension has been relatively neglected in Britain. The attempt to selectively reduce public spending is examined with reference to its objective impact on men and women using official statistics and specialist reports. In addition, on the basis of a large-scale interview survey the subjective impact of and political reactions to the cuts are analysed by gender. The main findings are that this current social policy negatively affects women as both public sector workers and consumers more than men. Political reactions to the cuts were extensive but unrelated to gender per se. However, when one controls for economic activity and related variables, gender differences in terms of both political attitudes and behaviour were insignificant compared to the contrast between the economically active and inactive. The main social policy implication is that the restructuring of the welfare state hits women first and foremost.     

THE IMPACT OF FISCAL POLICY ON PROFITS

This paper investigates the impact of fiscal policy on profits using panel data for 18 high‐income OECD countries during the period 1975–1999. We estimate a profit equation allowing a consistent treatment of the government budget constraint, and we try to disentangle the effects of different spending and taxation items. As far as public spending is concerned, our results strongly suggest that capital expenditures are associated with higher profits, while expenditures on goods and services and in particular on wages and salaries deteriorate profits. In general, “productive” expenditures seem to increase profits while the effect of “unproductive” expenditures is insignificant. Transport and communication expenditures seem to have a positive impact on profits. On the revenue side, we find that both direct and indirect taxation has a negative impact on profits. (JEL E62, H32, H54)     

增长、就业与社会支出——关于社会政策的“常识”与反“常识”

经济发展和社会政策的关系在学界和公共平台一直争论不休。主流观点认为,社会政策汲取的税收会扭曲市场激励机制,而且通过提供慷慨的保障弱化了劳动者的工作动机,进而对就业产生负面影响。此外,社会支出具有刚性,难以控制。本文回顾了国内外现有的理论和经验研究,分析了社会政策与经济发展、社会保护与就业的关系,以及社会支出是否可控三个议题,从而否定了社会政策是短视国策的看法。历经30多年高速增长的中国,财富与矛盾都在积聚,未来的发展和稳定不可能继续依赖海量的投资和不稳定的外部需求。通过系统化的社会保护体制建设,将社会保障视为一种投资而非纯粹的耗费,中国可望走向更具韧性和更为人性的稳定状态。     

Female labour force integration and the alleviation of urban poverty: a case study of Kingston,Jamaica

The author posits that female labor force integration in Jamaica accomplishes little in alleviating poverty and making maximum use of human resources. Women are forced into employment in a labor market that limits their productivity. Women have greater needs to increase their economic activity due to price inflation and cuts in government spending. During the 1980s and early 1990s the country experienced stabilization and structural adjustment resulting in raised interest rates, reduced public sector employment, and deflated public expenditures. Urban population is particularly sensitive to monetary shifts due to dependency on social welfare benefits and lack of assets. Current strategies favor low wage creation in a supply-side export-oriented economy. These strategies were a by-product of import-substitution industrialization policies during the post-war period and greater control by multilateral financial institutions in Washington, D.C. The World Bank and US President Reagan's Caribbean Basin Initiative stressed export-oriented development. During the 1980s, Jamaican government failed to control fiscal policy, built up a huge external debt, and limited the ability of private businessmen to obtain money for investment in export-based production. Over the decade, uncompetitive production declined and light manufacturing increased. Although under 10% of new investment was in textile and apparel manufacturing, almost 50% of job creation occurred in this sector and 80% of all apparel workers were low-paid women. Devaluation occurred both in the exchange rate and in workers' job security, fringe benefits, union representation, and returns on skills. During 1977-89 women increased employment in the informal sector, which could not remain competitive under devaluation. Women's stratification in the labor market, high dependency burdens, and declining urban infrastructure create conditions of vulnerability for women in Jamaica.     

Race,Class, and Support for the Welfare State*

Two competing approaches to the study of African Americans—the race and class perspectives—have dominated attempts to explain their views on contemporary issues. To examine the race versus class debate, this study uses African Americans' views on government spending for five social welfare concerns: (1) improving and protecting the nation's health, (2) solving the problems of big cities, (3) halting rising crime rates, (4) dealing with drug addiction, and (5) improving the nation's education system. Data from the 1972–1990 General Social Surveys are used to compare middle-class blacks with both working-class blacks and whites and middle-class whites in terms of their support for government spending for those five social welfare issues. Examining group means, we found no significant difference between the two black classes but a significant difference between the black middle class and the white middle class on support for government spending in all areas except halting the rising crime rates (where there were no significant differences among the four groups). Similarly, using logistic regression analysis we found that race continued to have a significant effect on support for spending even after controlling for class, year, age, gender, education, income, and occupational prestige. In respect to social welfare spending, the results indicate support for the race, as opposed to the class, perspective; that is, race is better than class for predicting African American attitudes on government spending.     

THE OPTIMAL TAXATION OF ASSET INCOME WHEN GOVERNMENT CONSUMPTION IS ENDOGENOUS: THEORY,ESTIMATION AND WELFARE

This paper derives the Ramsey optimal fiscal policy for taxing asset income in a model where government expenditure is a function of net output or the inputs that produce it. Extending work by Kenneth L. Judd, I demonstrate that the canonical result that the optimal tax on capital income is zero in the medium to long term is a special case of a more general model. Employing a vector error correction model to estimate the relationship between government consumption and net output or the factor inputs that generate it for the United States between 1948Q1 and 2015Q4, I demonstrate that this special case is empirically implausible, and show how a cointegrating vector can be used to determine the optimal tax schedule. I simulate a version of the model using the empirical estimates to measure the welfare implications of changing the tax rate on asset income, and contrast these results with those generated in a version of the model where government consumption is purely exogenous. The shifting pattern of welfare measurements confirms the theoretical results. I calculate that the prevailing effective tax rate on net asset income in the United States between 1970 and 2014 averaged 0.449. Hence abolishing the tax completely does generate welfare improvements, though only by the equivalent of between 1.103% and 1.616% permanent increase in consumption—well under half the implied welfare benefit when the endogeneity of the government consumption is ignored. The maximum welfare improvement from shifting part of the burden of tax from capital to labor is the equivalent of a permanent increase in consumption of between only 1.491% and 1.858%, and is attained when the tax rate on asset income is lowered to between 0.148 and 0.186. Allowing the tax rate to vary over time raises the maximum welfare benefit to 1.865%. All the results are very robust to a wide range of elasticities of labor supply. (JEL E62, H21, H50)     

Social justice,care and developmental welfare in South Africa: a capabilities perspective

One of the paradoxes of the democratic project in South Africa is that the combination of political empowerment, organised constituencies of poor people and increasing social sector spending has made minimal impact on increasing equality. Despite an overall macroeconomic framework that emphasises fiscal restraint, social welfare spending has increased in the past 14 years, and dramatically so since 2003. Almost one in four South Africans receives some or other form of grant, and the majority of recipients are women. Indeed, South Africa is regularly described as the developing world’s largest and most generous welfare state. I address the extent to which gender inequalities are reduced through public sector spending, asking the question: what is the optimal relationship between social policy and the intrinsic democratic goals of equality, social justice and citizenship? Drawing on Amartya Sen’s capabilities approach, the article argues that a focus on social sector spending alone is inadequate to address questions of social justice. Instead, I draw attention to the normative assumptions, discursive environment and institutional context in which social policy is elaborated and implemented. I argue that, in a context in which there is relatively poor infrastructural capacity in the state to ensure that service delivery takes place in fair, consistent and egalitarian ways, households and communities act as shock absorbers of state failures and women’s gendered burdens increase, despite formal commitments to gender equality. While women appear to have gained from political empowerment, women politicians did not effectively leverage their position in the state to promote pro‐poor policies or to build coalitions to challenge the watering down of early commitments to reducing gender inequalities.     

The Case for Countercyclical Fiscal Capacity

A growing literature has sought to demonstrate when and howgovernment capacity links to performance. This article examinesthose questions in the area of financial management. A basicchallenge for state governments is to maintain budgetary stabilityand program predictability in face of economic downturns. Stategovernments can best meet this challenge by developing whatwe call countercyclical fiscal capacity (CCFC). We present theconcept of CCFC as the creation and use of financial tools thathelp state governments maintain countercyclical spending andprogram stability during revenue shocks. We operationalize theconcept in terms of fiscal reserves that are used to mitigateemergency-spending cuts and tax increases and analyze the operationof such reserves over a period that includes recessions in 1991and 2001. We find evidence of the efficacy of CCFC and arguefor greater investments in this aspect of government capacity.     

Dispensing Charity: The Deficiencies of an All-or-Nothing Fiscal Concept

In deciding the means, levels, and targets of taxation and spending across third-sector organizations, governments seeking to increase social welfare should use fiscal concepts and indicators that can detect and grade the welfare consequences of their decisions. On these terms, charity, as its meaning has originated and evolved in common law, is a deficient fiscal concept: it is neither teleological nor gradational, and therefore can offer no guidance on how to design and differentiate the fiscal treatment of third-sector organizations in ways that could increase social welfare. In general, the national governments of Australia, Canada, England and Wales, India, and Singapore treat uniformly the third-sector organizations whose purposes comply with the legal meaning of charity. In order to reform and differentiate that treatment with the prospect of increasing social welfare thereby, governments should start by dispensing with charity as a fiscal concept.     

HAS FEDERAL BUDGET DEFICIT POLICY CHANGED IN RECENT YEARS?

This paper applies new tests for parameter instability in cointegrated regression models to the U.S. Federal government's intertemporal budget constraint in order to detect whether there has been a regime change in spending and taxing policies. Some researchers have argued that fiscal policy under Presidents Reagan and Bush moved the U.S. deficit onto an unsustainable path. My results suggest that government deficit policy in the 1980s was not significantly different from policies during the three earlier decades. However, a diverging debt-GNP ratio suggests that the government will run into problems marketing its debt if current policy continues.     

FISCAL STABILIZATION WITH PARTIAL EXCHANGE RATE PASS‐THROUGH

This article examines the role of fiscal stabilization policy in a two‐country framework that allows for partial exchange rate pass‐through. Analytical solutions for optimal monetary and fiscal policy rules depend on the degree of pass‐through. Each country unilaterally uses its fiscal instrument to stabilize the costs facing exporters. The welfare effects differ strongly depending on the degree of pass‐through. For high levels, both countries are better off with the fiscal instrument and welfare is closer to the benchmark flex‐price level. For low levels, however, the unilateral equilibrium policy rules lead to high volatility in taxes, and fiscal policy ends up being destabilizing by transmitting exchange rate fluctuations. Because these results stem from strategic considerations by the two countries, the fiscal instrument is not used under policy coordination. In addition, imposing a monetary union increases welfare when pass‐through is low, including the case of local currency pricing. (JEL E52, E63, F41, F42)     

Welfare-reducing growth despite individual and government optimization

In the presence of substantial relative-income effects and environmental disruption effects, economic growth may be welfare-reducing even if each and all individuals are optimizing and eagerly trying to make more money and the government also maximizes the welfare of individuals by the choice of income-tax rate and the ratio devoted to the abatement of environmental disruption. Welfare-reducing growth may be avoided if environmental disruption may be directed taxed at low costs and/or government spending on public goods is not environmentally disruptive. Received: 2 September 1998/Accepted: 16 February 2000     

Class habitus and perception of the future: recession,employment insecurity and temporality

This paper examines the consequences of the recent economic downturn and UK government spending cuts, as exacerbations of prevailing trends in neoliberal employment policy, on temporal perception, specifically as it relates to the adaptation of subjective anticipations of and projections into the future to objective prospects of unemployment by class. Grounded in a phenomenologically‐minded Bourdieusian conceptualization of class and time and contextualized by statistics on chances of job loss, it draws on qualitative research with 57 individuals from across the class structure to chart differing dispositions toward the future. In particular, it distinguishes three orientations – the future as controllable, the future as uncontrollable and the future as reasonably controllable – which appear to correspond with resources possessed.     

MULTICOINTEGRATION AND SUSTAINABILITY OF FISCAL PRACTICES

Using multicointegration methodology, we develop criteria for testing sustainability of fiscal budgeting processes across all states of nature. Criteria are derived from the optimal control literature where levels and rates of change of a system of variables are determinants of policy response. The appropriate policy response mechanisms are outlined and linked to the multicointegration methodology. We then test government spending and revenue systems of 15 industrialized countries for the presence of such mechanisms. We find that only Norway and the United Kingdom exhibit policy responses that are consistent with our criteria.(JEL H6 , E62 , C22 )     

The Federal Budget Process

As diminishing government funding becomes a major American preoccupation, federal social policies are often evaluated more in terms of their impact on the deficit than their effectiveness. This article discusses the current state and future projections of the budget and the two processes that affect fiscal policy: authorization and appropriation measures and budget resolution/reconciliation. Knowledge of the federal budget process shows social work students how budget restraints have been used as weapons against social welfare programs. In addition, this knowledge allows the policy practitioner to recognize certain “decision points,” or places in these processes, at which social workers can intervene.     

THE WELFARE COSTS OF DEFICIT FINANCE

We analyze the welfare consequences of deficit finance in a general equilibrium model fit to the US. economy. Current spending may be financed with current and/or future distortionary taxes. The economy is open to international capital flows. The welfare costs of financing marginal current spending are substantial and are sensitive to the timing of the required taxes; postponing a tax on labor income is advantageous but postponing a tax on asset income is not. Ricardian equivalence poorly approximates the economy we consider.     

Practising social work in a context of austerity: experiences of public sector social workers in Greece

Since the 1980s and within a context of neoliberal globalization, the welfare state provision in many countries has been affected adversely by austerity and social spending cuts that have intensified since the last global financial crisis of 2008. A country that has been particularly harshly affected is Greece. This paper draws on interviews with public sector social workers in Greece and presents their perceptions of the consequences of austerity/social spending cuts on their work. The research findings of this study suggest that, within the context of austerity, social workers are facing a number of challenges and tensions. The paper argues that these tensions and challenges are local manifestations of the global conditions of neoliberal globalization and as such they have relevance for other countries. Furthermore, it argues that this understanding needs to inform the actions of social workers. It is important for these tensions and challenges to be contextualized within the socio-economic conditions in which they arise in order for austerity and social spending cuts to become a locus of intervention.