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

Rethinking the selfare state 36
monopoly provider of an essential service. Where this is the case, one major proclaimed
advantage of vouchering—“competition on the supply-side”—is neutralized. Inadequate
competition, in turn, neutralizes the cost advantages of vouchering, as well as its
advantages for consumer choice. It also greatly diminishes the accountability of private
providers to individual consumers because the ownership effect is not counterbalanced by
the competition effect: where there is only one provider, customers cannot threaten to
“take their business elsewhere.”
While there may be some force to this concern, in the sense that small communities
typically possess many fewer commercial suppliers of most goods and services than more
densely populated areas, it is important not to overstate economies of scale in most of the
social services that are the focus of this study and hence impediments to new entry. For
example, one might readily imagine alternative schools to the local public school opening
up in unconventional facilities (e.g. church halls, basements or community centres). In
addition, by providing consumers with vouchers that can be redeemed at any provider in
any community, not simply at designated “in-district” suppliers, voucher programs have
the potential to broaden the supply market available to consumers, thus enhancing choice.
Broadening the “catchment area” of voucher programs, however, may importantly
require that vouchers be set and financed at higher levels of government than local
governments, weakening the local voice option in exchange for arguably less effective
political voice at higher and more distant levels of government.
Such concerns about the likely effect of voucher programs on the supply-side markets
in their various domains of potential application need to be taken more seriously than has
sometimes been the case. As will be consistently emphasized in our discussions of
specific programmatic areas, policy problems do not begin or end with a choice of
instrument. Instead, the success of any given mode of delivery depends not only on the
characteristics of the instrument itself, but also on the market conditions in which it will
be operative.
Interest groups, normative legitimacy and the political acceptability
of social program reform
There are two different elements to be considered in assessing the political acceptability
of social policy reforms such as the implementation of voucher schemes or the
modification of existing voucher programs. These elements are:
1 the interests of stakeholders; and
2 the normative legitimacy of a public policy choice.
When making changes to government policy, the interests of incumbent and potential
goods and service providers, the interests of political actors and bureaucrats, and the
interests of political interest groups and the media, all play an important role in
determining the acceptability of proposals for new public policies. As well, various
stakeholders can benefit from externalities generated by particular policy choices. These
benefits play an important role in the political acceptability of policy decisions. Against
this background of interests, there is also a process of normative justification involved.