Valdai Club

It must be kept in mind that two big threats to welfare states, aging populations and the technological revolution, have not gone away. Therefore, the coronavirus pandemic will not change the long-term trend towards governments rethinking social spending obligations, writes Valdai Club expert Oksana Sinyavskaya.

After several decades of talk about the imminent collapse of welfare states and the triumph of the market economy, what we have seen in recent months could be called a renaissance of state paternalism. A growing number of countries are introducing measures to support enterprises and citizens, lowering taxes, unpacking stabilisation and reserve funds, and increasing public debt. That is, doing everything that before the present emergency situation had seemed impossible.

The very fact that in order to save human lives from a new disease, states have been ready to give up their current economic interests indicates that over the past century, the protection of health as a human right has become an integral part of the social contract. The value of this guarantee is considered no less important than protection, let us say, from an external enemy. Moreover, this was also characteristic of the reaction to coronavirus among Asian countries; the approach is not unique to the Western world. This did not happen, for example, a hundred years ago, when the Spanish flu raged.

Does this mean that after the end of the pandemic, talk about the uselessness of welfare statism will stop? I’m sure that isn’t the case. When the threat of mass deaths of citizens recedes, and economic difficulties, on the contrary, escalate, the governments of many countries will probably again talk about the need to cut social spending, tighten access to social programmes, reduce benefits, and target them more selectively, all in the name of state budgets and the economy.

How radical these reversals are will largely depend on the respective countries’ pre-crisis level of development and how efficiently they managed to cope with coronavirus: many states will have fewer resources due to the duration and severity of the epidemic. States which witness more deaths, more job loss and lower incomes due to extended quarantines will see a higher likelihood that their policymakers will move to “tighten their belts” and attempt to extract themselves from economic crises at the expense of their citizens.

It must be kept in mind that two big threats to welfare states, aging populations and the technological revolution, have not gone away. Therefore, the coronavirus pandemic will not change the long-term trend towards governments rethinking social spending obligations.

Meanwhile, if we move away from a purely fiscal perception of social policy, we can see several important lessons of the current crisis that can set the vectors for the transformation of welfare states in the 21st century.

The first things that strike one as direct results of the specifics of the coronavirus are demand for a new model of medicine and demand for a new model of aging. A pandemic not only exposes weaknesses in health care systems and tests their ability to deal quickly with emergencies. The high mortality rate among people with coronavirus from complications associated with a variety of chronic diseases casts doubt on the effectiveness of the models for increasing life expectancy which prevailed at the end of the 20th century. In the current environment, it is no longer enough to prolong the lives of people with worsening health problems. It is important to learn how to postpone the onset of these diseases and maintain the health of citizens to the oldest possible age. Therefore, anti-aging medicine that appeared less than three decades ago, which is involved in the identification, prevention and correction of age-dependent diseases, will receive a powerful impetus for development.

It is important to emphasise that life extension is not alone in this respect and not merely the reserve of high medical technology and expensive services available to the elite. Studies show that lifestyle also contributes significantly: nutrition, physical activity, sleep, stress levels, etc. And this opens up great opportunities for the state and non-state players to promote a healthy lifestyle and the concept of healthy longevity.

The second and perhaps most important issue that this pandemic has exposed is the high social cost of inequality. It would seem that in the face of the virus, everything would be equal, which is confirmed by cases among politicians, famous actors, athletes, show business personalities and other elite segments of society. However, these are exceptions that do not change the general rule: the risks of contracting infection, not receiving proper treatment on time, and dying are obviously higher in the lower strata of society. The higher the level of income and property inequality in the country, and the more selective the coverage of social programmes is there, the more likely it becomes that these differences will be more pronounced, as evidenced, for example, by the latest data from the United States.

There are several reasons for this. First, high economic inequality is usually accompanied by significant inequalities in health and life expectancy; it means that at the same age, there will be more chronic diseases among people with a low social status. Second, representatives of the lower social strata are often employed in the service sector and personal services: they work in catering, the trades, as couriers, taxi drivers, housekeepers, carers, nannies, etc. And, therefore, during the period of the epidemic, they either continue to work, exposing themselves to a high risk of infection, or have lost their only source of income. Since their work is often carried out informally, the availability of medical services and social benefits for them largely depends on how much the state is ready to notice them. The quality of life during the period of quarantine measures is incomparably higher in the upper social groups, where one finds spacious housing, “rainy day” savings, and the possibility of remote employment. It can be assumed that in the upper strata of society, the elderly will not end up in those nursing homes which face mass infections, where old people are dying off – as evidenced by data from France, Spain and Italy.

Ultimately, a society that allows such high degrees of inequality is likely to pay a higher price for overcoming the crisis generated by the pandemic. It experiences a large number of deaths, there’s a greater risk that many citizens will be left impoverished, and the resulting economic crisis will be deeper.

Solving the problem of excessive inequality is not only the prerogative of social policy.

From the perspective of the future welfare states, it is important that the pandemic highlighted the risks generated by constrained social support measures, including with respect to medical services. It reinforced the demand for universal medical coverage among those with with minimal social support and minimal social guarantees. It is no coincidence that many developed states have expanded anti-crisis measures to cover people who had previously been ‘under the radar’, such as self-employed people, temporary workers, and contractors.

At the same time, the current crisis has emphasised the benefits of universal welfare states. Among the developed countries, the Scandinavian nations have done the least to expand the scope of existing social services. This isn’t because they care less about their citizens. On the contrary, due to the breadth of existing social services on offer, where people from all walks of life have access to a wide array of social programmes, allowing everyone to maintain a decent standard of living amid various circumstances, these countries have not needed to resort to roll out extraordinary measures to address the current crisis. Their versatility and flexibility have insured them against force majeure.

The third lesson of the pandemic is one for social policy: welfare payments and state assistance aren’t enough to maintain an acceptable quality of life among the misfortunate. Old people, people with disabilities and single parents, who are all essentially locked up at home, have urgently needed to have food and medicine delivered, and have had to rely on the work of volunteers.

The experience of mass social isolation has shown us how important personal contacts and communication are for us. Despite the fact that the virtual environment cannot replace live communication, information technology has made it possible to offer new forms of mutual support. Various grassroots initiatives have been launched: self-help groups based on social networks, charitable educational programmes for children (reading books, virtual tours, etc.), online broadcasts of performances and concerts – all these manifestations of solidarity help people withstand home confinement.

Despite the extraordinary circumstances under which these projects have arisen, they’ve demonstrated the high ability of people, communities, and non-governmental organisations to organise themselves and jointly compensate for an otherwise less than optimal quality of life. And this is not the first, but a big step forward on the road from a welfare state to a welfare society, based on the value of human life and a shared recognition of the importance of the quality of this life.