Division of responsibilities
The backlash highlights the need for a new social contract, one that adapts
to changed economic realities and better manages the social implications of
globalization. The social contract includes the payment of taxes in
exchange for public goods, and the way that society looks after the old,
the young, the infirm, and those who have fallen on hard times. Because the
social contract is fundamentally values-driven, solutions will vary across
societies.
Even so, every society will have to think of who benefits from its social
safety net, which is the mechanism through which we pool risk and offset,
to some extent, the impact of luck on life chances. Every society will also
have to make choices about the division of responsibilities between the
family, the voluntary sector, the market, and the state. This is essential
since the welfare state is also the mechanism for ensuring the equal
standing of all citizens so that they can participate fully in public life.
There are fundamental questions to answer, which have grown more complex in
more heterogeneous and globalized societies. Whom do we feel obligations to
take care of and share risks with? What responsibilities go along with
those obligations? How much do obligations extend beyond families to
communities or other regions? What about poor people in other parts of the
world? Are we obliged to leave future generations at least an equivalent
endowment of physical, social, and natural capital as we were given?
As part of the new social contract, we may need to reinstate the
reciprocity and insurance element in welfare provision. There is a toxic
perception that there are "hard-working people" and "welfare scroungers"
when in fact, as John Hills at the London School of Economics (LSE) has
shown for the United Kingdom, the vast majority take out (in the form of
education, health care, and pensions) broadly as much as they put in (in
taxation when they are working) over the course of their lives. The rich
pay more tax but tend to live longer, so they benefit more from pensions
and health care in old age.