Properly devised social protection tends to spur growth and development and a lack of it has a definite hobbling effect on the rate of change in prosperity that a country aspires for. In fact, in the deafening din about the market economy we tend to forget that social protection, as is understood in the sense of public welfare, has a definite defining role in the process of development led by the market.
In my previous blog I discussed one aspect of inequality and shocks and how it may affect development. In continuation of that let me point out that there is no economy in this world that hasn’t had the crippling experience of inequity and poverty during some interval of its history however developed it may be now. In continuation of that let us now take, for example, the experience of the Nordic countries seen in the material, social and health perspective. The relatively near absent inequity there is attributed to an efficient institutional system that focuses on equal opportunity for all when it comes to education, social and health management. And the tool used to achieve this goal that is the aspirational struggle for a lot of countries, has been through progressive taxation and institutionalized welfare steps.
The Nordic countries boast of a very high average academic capability per citizen that itself has arguably led to the sustainability of what is in some quarters described as a social democratic political structure that has successfully married democracy with socialism in the sense of universal equal opportunity in access to the basic needs of life.
The reason for social protection being the necessary condition for achieving development lies precisely in the creation of equity in access to basic amenities of life, including education. Poverty is first defined by lack of access to basic amenities of life. And the lack of this access is the first reason for an un-empowered citizenry. If we look at the dynamics, the process in a simplistic way works in the following manner.
If a person is born in an economic stratum that is characterized by a struggle for existence, it can be safely assumed that he would also spend his life merely struggling to live and exist. There is no gainsaying the fact that such a situation closes his window for bettering his life unless of course he by a quirk of fate wins a lottery or something. And market economy by itself will not provide him the opportunity to rise above his station.
This is where social protection becomes important. Instead of chance or a quirk of fate, if there is social protection mandating access to education and health, and also a provisioning system that takes care of the child’s absence as a denied source of supplementary income to its parents, it would boost the process of development. Education empowers through creation of employ-ability with awareness and access to healthcare take away the worry and the resultant pressure of creating provision for it from the next to nothing income that the poor earn. Access to basic minimum requirements of life frees up enterprise in the poor, in turn, opening up that closed window towards a better life.
Social protection thus expands the economic bandwidth of a nation. As the nation turns prosperous so does its tax kitty on the one hand, on the other, as the people thus also turn prosperous the pressure on the government coffer in the long run also lessens thereby creating surplus for investment in basic research and infrastructure. Therefore there is no gainsaying that social protection is a necessary condition for economic development. The policy challenge here is innovative creation of instruments of delivery of such protection specially in a hugely populous country like ours.
