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hazards.
infrastructure of standards designed to minimise the incidence and cost of those It is conceivable therefore that an early commitment to social security also stimulates the development of a social infrastructure of standards of health, safety, culture and discipline.
A
There is another area where thinking and practice may be stimulated by a commitment to social security. This may be called socio-economic policy at large. representative example is a full-employment policy which among other things would reduce the charge to social security for unemployment compensation. A policy of economic growth, while creating socio-economic hazards through the extension of modern technology and market economy, expands the individual income and strengthens the individual capability to pay for the cost of security through public and private arrangements. Taxation, too, will be influenced by the philosophy of compensatory justice that guides the initiation and expansion of social security. A commitment to social security thus necessitates actions on a broad front of public policy which should make life richer, safer and healthier. In this sense, a commitment to social security is a way of making the government work harder and better in the interest of society's higher aggregate economic welfare.1 HOW the government orders the seemingly unlimited demands for its attention on a rational scale of priorities and how consistently it pursues its expanding universe of commitments are important questions, although they cannot be discussed in this paper. Suffice it to note that social security, accorded high priority for public policy, is consistent with society's aggregate economic
economists' canons of efficiency with respect to
welfare under changing circumstances of economic development.
II.
Conventional economics and social security
Welfare economics is the basic branch of economic theory that offers guidance for ways in which economics can be useful for the discussion of public policy. Yet, curiously, it has been rarely invoked by economists who are asked to bring their discipline to bear upon social security. On the contrary, conventional economics, especially its macro-economic variety, has consistently tarnished the image of social security in relation to economic development. It has only a negative advice to offer concerning social security in developing countries: the less of it, the better. 2 One might set aside conventional macro-economics as irrelevant tc social security with no further word wasted on it. But since social security is cften judged favourably or unfavourably within its framework, it is useful to see where it has gone wrong and why one is forgiven for not taking it too seriously.
A basic version of conventional growth economics explains the rate of economic growth as a function of the rate of capital formation, assuming a given incremental
1 The high degrees of substitutability and complementarity between social secur- ity measures and other policy instruments pointed out here make the definition of social security somewhat blurred. A successful labour market policy which reduces unemployment is as good a way of maintaining workers' incomes as income maintenance through unemployment compensations. A vigorous enforcement of safety standards backed up by appropriate services to prevent accidents is as good as, or even better than, a standby policy to generously compensate injured workers. Employers' voluntary paternalism is as much social security in nature as statutory obligations. For a discussion of these technical questions concerning the definition of social security, see International Labour Office, The Cost of Social Security 1964-66
(Geneva, 1972), pp. 2-4.
2 The stumbling block for economists is their unwillingness to face
and answer questions as to whether there are circumstances in which a person can justify his entitlement to a share in society's output in the amount larger than the earnings in return for his contribution of inputs into the productive process. For example, the reality described by George F. Rohrlich eternally mystifies ordinary economists. "A ground swell of protest against all forms of dependence marks our time. A fierce desire for emancipation from societal constraints and from traditional limitations deemed no longer necessary or acceptable animates important sectors of the young and the underprivileged in this country and elsewhere. Though avowed objectives differ, one common denominator is the assertion of a rightful claim." (emphasis original). "Social security for the aged: International perspectives" by George F. Rohrlich (a working pa per prepared for a hearing at the United States Senate Special Committee on Ageing, August 1969). Most economists would find it difficult to accept that there can be an extra "rightful claim" in addition to what a person earns within the economic system.
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