Rethinking the Welfare State: The prospects for ... - e-Library

Conclusion 213
major puzzles. The trends observable in many countries over the past two decades or so
towards economic deregulation (including trade liberalization) and privatization and the
introduction of competition into hitherto monopolized sectors, in most cases have
generated substantial benefits for consumers, 8 but consumers are the quintessential
example of diffuse interests, who in these contexts seem to have triumphed over
concentrated incumbent producer interests, contrary to the predictions of Public Choice
theory. Similarly, the dramatic growth in environmental, health and safety, and other
forms of social regulation in recent years again appears to reflect the triumph of
consumer, environmental, worker, and related racial and gender interests over
concentrated producer interests. Thus, in our view, Public Choice theory does not have a
well-developed dynamic account of what sorts of forces disrupt existing political
equilibria and lead over (often relatively short periods of) time to non-incremental policy
changes. 9
Government by voucher as an idea
Our conclusions are perhaps not surprising. Once we move beyond mere aphorisms or
sloganeering, the detailed design of voucher systems raises technically complex and
normatively contentious issues. Moreover, these design issues are likely to elicit
substantially different responses and different efficiency-equity trade-offs from one
programmatic context to another. These conclusions are best under-scored by briefly
reviewing our tentative and no doubt highly contestable design proposals in each of the
programmatic areas that we have surveyed against the major design issues which we
identified at the outset of this book.
The case for redistribution and its form
Both the case for redistribution in general and the case for redistribution in kind are
inherently highly contestable normative issues. Any voucher system implicitly provides
an affirmative answer to both questions. In the programmatic areas reviewed, primary
and secondary school education and child care seem principally to implicate the
distributive justice, social and political externalities, and incomplete capital markets
rationales for vouchers, and somewhat less strongly the paternalistic rationale. Postsecondary
education and job-training programs principally implicate the distributive
justice and incomplete capital markets rationale, much less strongly the social and
political externalities rationales, and weakly, if at all, the paternalism rationale. Health
care and long-term care strongly implicate the distributive justice, political externalities,
and incomplete insurance markets rationales, less strongly the social externalities
rationale. Because of information asymmetries between patients and physicians, there is a
paternalistic rationale for regulating service quality in this market. Legal aid implicates
principally the distributive justice and incomplete insurance markets rationales, but also
to a significant extent the social externalities rationale (in terms of promoting respect for
the rule of law), and only weakly the paternalistic rationale. Food stamps and low-income
housing programs principally implicate the distributive justice rationale, but evidence of