Marketization undermining the welfare system | LARS P. SYLL

Sweden has during the last couple of decades tried to marketize the public welfare sector. The prime mover behind the marketization has (allegedly) been the urge for cost-minimization, freedom of c…

Source: Marketization undermining the welfare system | LARS P. SYLL

 

Perhaps not as far advanced as the British “marketisation” of welfare (and healthcare), this review of the effects in Sweden suggests that we cannot expect “privatisation” to work for a number of reasons:

  • Local authorities struggle to come up with appropriate contracts and effective monitoring of them
  • It is difficult to maintain standards (and equality across the country) when the system gets fragmented by breaking everything down into small “contracts”
  • It is difficult for providers to not only provide the best possible standards of care and the highest profits to shareholders – or put another way the system builds in a conflict between doing your best and doing it for the best price

Are we running a deficit in politicians

Not a lot has been made of the quick turnabout in policy. Philip Hammond presented a budget with lots of facts and figures and within a week, the key economic policy – being sensible – is out of the window and the budget has a £2bn hole in it.

This is not the first time this has happened with a “fiscally responsible” conservative government. George Osborne – the man who can hold down any number of full-time jobs – has had to reverse key policies within days – he was the man who decided a £4.4bn cut in benefits was not acceptable (in 2016). And he presided over the “omnishambles” budget of 2012 when various VAT changes (including the pasty tax) were later scrapped.

The problem is not limited to conservative politicians, with Gordon Brown announcing in 2007 he was “cutting” the 10p tax rate – which meant a hike in taxes, which he had to balance by national insurance changes of his own.

But the real problem seems to be the deficit in reality. When chancellors talk about “reducing the debt” what they seem to mean is “not borrowing quite as much as last year.” When ordinary people and businesses talk about “reducing debt” they mean paying some of it back.

When recent conservative chancellors talk about being fiscally responsible, they seem to ignore the numbers and try to claim that labour chancellors borrowed irresponsibly when borrowing under 40% of GDP (2005 to 2009 on average) when in recent years borrowing is only now coming back down to that level of GDP.

The idea of actually paying some of the debt back is still a dream. The “red book” which has all the forecasts in it still shows the government borrowing more money every year to 2021-22.