Political Economy of Social Policy
This article will focus on the political economy of social policy. The history, policy-making, and funding of social policy in the United States will be discussed. Areas of study include social welfare, social welfare provisions, the war on poverty, and the concept of a social safety net. The use of social indicators and social reports as the basis for policy choices will be analyzed. In addition, the strengths and limitations of problem-based and strength-based approaches to social policy will be described.
Keywords Political Economy; Social Indicators; Social Policy; Social Reports; Social Safety Net; Social Welfare; Social Welfare Provisions
Social policy, like all public policy, is an expression of the values held by both citizens and their government. Social policy is an expression of moral and economic values and viewpoints. In the United States, social policies, enacted through social welfare programs and serving as a social safety net, regulate and govern human behavior in areas such as general morality and quality of life.
Social policy is created, in part, to respond to pressing social needs such as poverty, social exclusion, unemployment, aging, children, mental illness, learning disabilities, and physical disabilities. Social policy is developed, enacted, and implemented to create self-sufficiency, equity, and social cohesion for all members of a society. Examples of significant social policy created in the United States during the twentieth century include the social security system, welfare, public housing, hunger and nutrition programs, childcare and child support, health care for people on low incomes, public education, and the social and health services of the Veterans' Administration (Spicker, 2006). All of these social policies, and social policies in general, reflect moral, political, and economic choices.
The focus of this article is on the political economy of social policy. Political economy, a subfield of economics dating back to the eighteenth century, refers to the interactions between political processes and economic variables such as economic policies. Political economy describes how political institutions, the political environment, and market forces and structures, such as capitalism, influence each other. Thus the political economy of social policy is an examination of the relationship between politics, economics, and social policy (moral and value-based policy choices for citizens).
One of the main realms and purposes of political economy is the formulation of public policy. Political economy of social policy is a form of social economics that examines the ways in which market principles resolve social problems. Political economy of social policy is a tool for understanding social inequalities that exist in society due to policy choices, enduring structures, and status-quo power and economic relations. Political economy of social policy describes how the public welfare is connected to public access to public services and social programs (Klein, 1998).
In the United States, the political economy of social policy refers to the efforts of federal and state government to address the economic insecurity and inequality that result from lapses in regular income. Social policies tend to focus on maintenance of incomes, healthcare for sick and basic services to those in crisis due to loss of income. In the United States, social policy is interconnected with economic policy (Amenta & Bonastia, 2001).
The following sections provide an in-depth description and analyses of social policy history and funding as well as an explanation of the American government's policy-making process. The policy-making section, with its focus on the U.S. Government Accountability Office's production of social indicators and social reports, will serve as a foundation for a later discussion of the complex issues concerning the problem-based approach of U.S. social policy.
The United States: Social Policy History
Social policy in the United States serves and functions a social safety net for citizens. The United States has a welfare state that serves, protects, and provides for its members through social welfare provisions, social policy, social programs, and social welfare initiatives. Public sector (or governmental) social policy and support became common practice in the twentieth century. The twentieth century was characterized, in part, by a switch in national perspective from individualism to interdependence. The social safety net switched from private sector (family, charity, community) to public sector (social policies such as welfare). The government became a source for social welfare provisions, such as public education, welfare payments, pensions, and social security for disadvantaged groups such as the poor, elderly, disabled, and students.
Significant social policy of the twentieth century includes Social Security, welfare, Medicare, Medicaid, and public housing. America's welfare system, the cornerstone of much U.S. social policy, began in 1935 with President Franklin D. Roosevelt's enactment of a social welfare program called Aid to Dependent Children (ADC) and expanded in the 1960s when President Lyndon B. Johnson added Medicare, Medicaid, and public housing programs. In 1996, President Bill Clinton reformed the social policies that structure the American welfare state or system to increase work requirements and reduce overall welfare dependence.
The twentieth-century economic expansion and transition to industrialized production created the reasons and means to finance social policy and programs in the United States. The needs of populations change as society's transition from small-scale production to industrialized production. Economic development, created by industrialization, increases work force, wage labor, the prevalence of isolated nuclear families, and creates the need for social policy. The new work force, dependant on income rather than agriculture or small business, is at risk from problems associated with income loss. The government (along with citizen self-support paid through taxes) subsidizes or insures the risk that citizens take by joining and working in industrialized economies and societies, through social policy. An industrialized society can afford (and desperately needs) social policy. This perspective is known as the modernization argument for social policy (Amenta & Bonastia, 2001).
Public sector social policy, and the welfare state, is funded through provisions established by Congress. Congress established the modern system of grants-in-aid to support state and local governments in the early twentieth century. Grants-in-aid refer to the federal funds appropriated by Congress for distribution to state and local governments. Congress awards four kinds of fiscal grants (Canada, 2003):
- Categorical grants: federal funds that can only be used by states for a pre-determined purpose.
- Block grants: federal funds given automatically to state and communities to support community development and social services programs and needs.
- Project grants: federal funds awarded on the basis of the merits and strengths of an application.
- Formula grants: federal funds awarded based on a set legislative or regulatory formula.
The funds for state and local budgets, which support social programs and enact social policies, come from federal grants, as described above, as well as indirect taxes and personal income taxes. Trends in government grants to state and local governments have followed social policy interests over the past few decades. State and local spending during the latter half of the twentieth century was characterized by the need to finance and support public education and Medicaid. Federal grants supported the economic burden and social responsibilities of these two social policy initiatives. Public education and Medicaid expenditures were responsible for 60 percent of the gross domestic product growth from 1952 to 1975 both locally and statewide. For example, between 1952 and 1976, grant increases were related to education, training, employment, and social services. The need to educate a growing population helped to create a peak in federal education grants the late 1970s. Since that time, education grants have stabilized. Health grants increased significantly with the beginning of Medicaid in 1965 and then leveled off after 1976 (Penner, 1998).
The federally financed social policy program of Medicaid established a strong program and channel of grants to state and local governments. Medicaid...
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