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NEXT SOCIAL CONTRACT INITIATIVE
| by Peter Lindert, Distinguished Research Professor of Economics, UC - Davis |
An understanding of economic
theory and historical performance can provide broad guidelines of what
we should include in a social contract - and the best ways to pay for
social benefits. In a new paper for the Next Social Contract Initiative, economist and professor Peter Lindert
argues that an "efficient, fair, and sustainable" social contract is
possible and entirely compatible with a competitive economy.
The United States stands out among its peers in that we have more inequality and more poverty. To rectify this, increased redistribution will not be enough; we will need to spend more on the young and universalize social insurance programs, like health care, which have proven to work better with the principle "broad is good." To pay for these programs, we should look to this same "broad is good" principle and implement broader taxes that are progressive as a result of what they are used to fund.
Lindert writes, "Large democratic welfare states, with universal entitlements, have not paid any net price in terms of economic growth or competitiveness, while following policies that delivered more equal incomes, less poverty, slightly higher life expectancy, and cleaner government relative to the United States or the average small-government economy."
The United States stands out among its peers in that we have more inequality and more poverty. To rectify this, increased redistribution will not be enough; we will need to spend more on the young and universalize social insurance programs, like health care, which have proven to work better with the principle "broad is good." To pay for these programs, we should look to this same "broad is good" principle and implement broader taxes that are progressive as a result of what they are used to fund.
Lindert writes, "Large democratic welfare states, with universal entitlements, have not paid any net price in terms of economic growth or competitiveness, while following policies that delivered more equal incomes, less poverty, slightly higher life expectancy, and cleaner government relative to the United States or the average small-government economy."
Read Social Contract Budgeting: Prescriptions from Economics and History by Peter Lindert.
Download the PDF of the paper directly here.
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