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emphasis on "social" have not been versatile enough to make social security a major factor in the redistribution of income in the interest of equality. But a moment's reflection is enough to remind anyone that this cannot be blamed on social security, because an equalising redistribution of income has not been a principal objective of social security as it has evolved over the years. "Redistribution" through social security is "compensatory" at best. Even if the compensation were perfect, the victims of socio-economic hazards would be made merely as well off as before. Their social security benefits would secure to them the continuance of their economic status quo ante. Even this degree of perfection is not a feasible proposition in many societies. Failing that, it is indeed a very remote hope that society could use social security as a means of achieving a redistribution of income from the "haves" to "have-nots". of course, one can always say that without the compensations, however imperfect, income distribution would be more unequal than what actually obtains, because the unprotected masses of the unemployed, injured, sick, disabled, aged and young would increase the weight of population without income in the general structure of income distribution. However, this offers no great comfort to those who would like to use social security as an instrument for equalising income distribution.
Two separate guestions arise with respect to the effect of social security on income distribution. One has to do with the methods of financing social security. The other is related to social security benefits.1
The
Since it is society as a whole that compensates the victims of socio-economic hazards, the burden for raising necessary resources may be spread over society in ways that may also contribute to an equalisation of income distribution. question involved here is much the sa me as the general question of equity in relation to the tax burden. Whether the equity considerations for the general tax burden always result in a higner degree of equality for post-tax income distribution is not a simple question, but it may be supposed that they do. Therefore, the best hope for making social security an instrument for promoting an equalisation of income distribution lies in the use of progressive income taxation for financing social security. Since social security refers to governmental programmes designed for the purpose, the cost of social security is no different from any other function requiring governmental expenditures. If the government's fiscal practices rest cn an equitable tax structure and if social security can have an adequate share in resources raised through taxes, one can at least say that the financing aspects of social security are conducive to a higher degree of equality in income distribution. But if the tax structure is regressive due to emphasis on indirect taxes, tax- financed social security would be promoting a lower degree of equality in income distribution.
In countries where taxes are regressive, contributory social
insurances would at least be distributionally neutral.
Now one moves to the consideration of the consequences of social security benefits. In an ideal situation where compensations for damages arising under covered contingencies are perfect, it is clear that social security benefits do nothing to the status quo of income distribution. Perfect compensatory justice only makes society riskless. But "perfect" markets do not produce equality of income; they only produce equlity of price for each commodity and equality of rate of reward for each factor of production. Since, for example, labour is not homogeneous but differentiated as to quality and skill, different persons earn different incomes according to how the market values their services and performances. Likewise, more innovative users of capital earn more profits. Thus, an economic system where markets are "perfect" and riskless still produces inequality of personal income. However, this type of inequality may be socially acceptable or even "just" in the full sense of "social justice". According to some research findings, low-income unskilled workers in the United States regard their low incomes as "just" rewards for their kinds of activities and would consider it "unjust" if they were paid as highly as skilled workers. 2 Even the People's Republic of China, a country most openly conscious of economic equality, still considers "just" certain income
1 I have benefited greatly from Felix Paukert, "Social security and income redistribution: Comparative experience", in The Role of Social Security Chapter 7. For case studies, see especially, T. Higuchi, "Income distribution and social security: Interpretation of a Japanese survey", International Labour Review (September 1965).
2 Robert E. Lane, "The fear of equality", American Political Science Review, Vol. 53 (March 1959), pp. 35-51.
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