Magazine article Foreign Affairs

Inequality and the Safety Net

Magazine article Foreign Affairs

Inequality and the Safety Net

Article excerpt

To the Editor:

In "The Next Safety Net" (July/ August 2015), Nicolas Colin and Bruno Palier correctly identify the increasing incompatibility between twentieth-century social welfare systems and twenty-first-century employment patterns. They predict a future in which the majority of workers will have precarious, short-term, low-paying jobs and in which social benefits tied to an outdated occupational model will fail to meet their needs.

As a solution, they favor Danish-style "flexicurity"-comprehensive social provisions decoupled from employment, together with labor-market deregulation. Flexicurity allows firms to make business-driven hiring and firing decisions against a background of government-financed benefits and worker retraining programs. In the new economy, flexicurity would have obvious advantages. But Colin and Palier fail to subject flexicurity to the same criteria by which they dismiss other types of safety nets, such as a guaranteed basic income, an option that they should take more seriously.

They write, for example, that a basic income is "extremely expensive and insufficient" and that governments are ill equipped to compete with the private sector in job creation. That may be the case, but flexicurity is not cheap or entirely reliant on private-sector job creation, either. The tax burden in Denmark is the highest among the countries of the Organization for Economic Cooperation and Development, at almost 50 percent of gdp. And its public-sector employment accounts for a third of its labor force, compared with the oecd average of under 20 percent. …

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