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“A solid basic level of social protection is affordable and implementable nearly everywhere. It can be achieved now or—at least after some investment in good governance—fairly soon,” argues Michael Cichon, fellow of the International Council on Social Welfare and its immediate past president.
Publicly financed social protection transfers were often portrayed as unsustainable and detrimental to economic development. Many societies’ and governments’ economic and development strategies were based on economic myths—among them the alleged trade-off between economic performance and redistribution, and the theory that the trickle-down effect would automatically reduce poverty and inequality as economies develop. Reality and research show that these are merely myths.
Virtually all developed economies have substantial social protection systems, with expenditure of 20 to 27 percent of GDP and more. There is no proof that they have sacrificed much growth as they combated poverty, inequality, and insecurity. If the trickle-down myth were true, we would not see wide variation in poverty and inequality between countries with similar per capita GDP. Markets—left to themselves—do not develop conduits for redistribution other than transfers of wealth or sharing of income within family or kinship groups.
However, the knockout myth that has often stifled progress in social protection is that it is not affordable and not sustainable. This line of thinking claims that many countries neither have nor can mobilize the resources to finance even basic social protection. That notion is challenged by a comprehensive study from the Global Coalition for Social Protection Floors, a worldwide network of almost 100 trade union and nongovernmental organizations, and by similar studies from other groups. Continue reading…
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As the world seeks to address the rise of populism and nationalism, it is becoming clear that economic insecurity lies at the heart of much of the discontent. The latest issue of Finance & Development magazine, produced in partnership with the London School of Economics and Political Science, explores the need to rethink the social contract—including how society looks after the old, the young, the infirm, and those who have fallen on hard times—to create a greater sense of security in our globalized and fast-changing economy.
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