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

Rethinking the selfare state 220
arrayed for and against voucher schemes in particular contexts, an evaluation of which set
of political forces is likely to prevail requires a context-specific analysis.
Conclusions
To sum up the major implications of our study of government by voucher, in
contemplating voucher reforms in the social services sector, policy-makers need to
squarely address three constellations of issues—efficiency, equity, and political
feasibility. Efficiency largely engages the likely operation of markets for social services
within the market paradigm itself. Is such a market likely to be structurally competitive?
Is it likely to be affected by serious information asymmetries? Is it likely to generate
serious negative social externalities? Can governments identify policies that are likely to
mitigate any of these potential forms of market failure that will not themselves induce
even more costly market distortions? Equity largely engages the distribution and value of
demand-side entitlements. It is important to emphasize that voucher concept itself does
not provide any new normative purchase or insights on these issues, and hence there is
much to be said in designing voucher systems for taking long-standing patterns of
entitlements largely as given or at least not seriously negating or derogating from existing
entitlements if the politics of voucher reform are not to be rendered unnecessarily
intractable. Political feasibility, for existing programs, engages the political influence and
mobilization capacity of incumbent interests, and the countervailing possibilities of
mobilizing a relatively common front of typically more diffuse demand-side and new
supply-side interests. For new programs (e.g. child care, long-term care for the elderly
and disabled), the power of incumbency is a less significant political factor, although
citizens themselves may be conflicted as to the fiscal prudence of major new social
spending programs, on which voucher proponents will carry a substantial burden of
political persuasion.
With respect to these three sets of issues, two clear conclusions emerge from this
study. The first is that there is nothing simple or normatively uncontentious in the design
of any voucher system, despite the superficially attractive congruence between efficiency
and/or equity that proponents of such schemes claim on their behalf. This is not to
discount the considerable potential for voucher systems for enhancing the efficiency
and/or equity properties of existing arrangements for providing many social services, but
rather to argue that better trade-offs rather than happy congruence may be the most we
can reasonably aspire to. The second conclusion is that the claim that by invoking the
discipline of market-driven exit vouchers offer an escape from the messy and
unprincipled compromises of politics and the frailties of voice as a disciplining
mechanism is largely an illusion. Under voucher schemes, supply-side interests,
especially but not only incumbents, have strong incentives to lobby to maintain or erect
restrictions on entry in order to avoid competitive pressures on job security, wages, and
benefits, and to argue for unlimited or expansive vouchers. In turn, demand-side interests
(demand-side politics have received much less attention than warranted in the voucher
literature) with widely divergent understandings of equity (and their own self-interests)
will also be conflicted over qualifying suppliers, qualifying consumers, the value of the
voucher, extra billing (top ups), opt-out, and cream-skimming. All of these issues will