Bill English likes to talk about “social investment”. Commentator Simon Wilson at The Spinoff is a big fan:
Social investment: the two uninspiring words upon which the entire election could hang
…
For several years now English has been driving a profound reform programme in the delivery of social services. It’s far from finished; in fact, even some of the ministers involved seem barely to understand it. But welfare reform is happening. And at its heart is a thoroughly 21st century idea: we’ve got the data, now to tell us where to spend the money.Conservative governments worldwide are watching, fascinated, not least because social investment inverts the usual conservative approach to welfare. Which is to sit back, moan about bludgers and pick up the pieces when they have to. Social investment, as English told the conference, means “spending money now to save money later”. In National terms, it’s practically a revolution.
It works like this. Thanks to the Dunedin longitudinal study and other research, it’s now possible to say which kids are most likely to become criminals, which are most likely to be diabetic by the time they reach adulthood and which are most likely to produce another generation afflicted by the same poor prospects.
To put that in the language of social investment, we now know how much of a burden a child is likely to be on the taxpayer over the whole of their life. We also know, from a wealth of evidence-based research, which programmes are likely to help most in reducing that burden.
OK – stop right there. So much wrong. Let’s unpack.
The term “social investment” is an old one. Its use in Europe (especially Scandinavia) is almost synonymous with “social welfare”. Here for example is a 2015 European report (pdf):
The concept of social investment has gained ground on the EU-level, manifested among other things in the launching of the ‘Social investment package’ by the EU Commission in 2013 and subsequent engagement in the follow up of that initiative. In this context, the Nordic experience has no doubt played an important role and Sweden is an interesting case in point for discussing the social investment approach. We argue that Sweden has long tradition of social investment which has contributed to a number of positive outcomes, such as low poverty and high employment. [p4]
In Sweden, the origins of the social investment agenda can be traced back to the 1930s with the Great Depression and what came to be labelled the ‘Crisis of the Population Question’ (i.e. the falling birth rates). In the midst of these crises, Alva and Gunnar Myrdal developed an approach to social policy aimed at mitigating production and reproduction, which opened up for an investment perspective on social policy (Morel et al., 2012). [p7]
(For a similar take highlighting increased capacity to participate see also here.)
What Bill English means by the term “social investment” is something completely different, here summed up by a bunch of bankers:
KPMG say the government’s social investment approach is not only set to save the country $12 billion but is putting building blocks in place that will see “vulnerable” New Zealanders protected long-term by targeted expenditure.
Finance Minister Bill English has been updating interest groups recently on the social investment approach – using data and investment techniques to understand what makes the most difference to the lives of those on benefits and other forms of social support, so financial help can be targeted to specific needs rather than just blindly making payments.
English is co-opting the term to his own purpose, which is, as usual, spending less on social services.
But the English version isn’t a new idea either of course. It’s just “targeted welfare”. Here’s the summary from a UN report (pdf), Successful Targeting? – Reporting Efficiency and Costs in Targeted Poverty Alleviation Programmes:
Economic, moral and political reasons may underlie the choice between targeting and universal models of social provision. In the debate about universal versus targeted solutions for combating poverty and social exclusion, many have called for targeted interventions, arguing that they are an effective way to reach the poor while maintaining budgetary restraint. In the context of minimizing government spending—a position that gained influence with the Washington consensus in the late 1980s and 1990s—targeted social programmes became widely accepted.
One of the main arguments behind targeting is to concentrate the limited resources of social schemes for the poorest and most vulnerable. Targeted schemes are presented as more effective in bringing resources to the poor, while maintaining low levels of social spending. Thus, it is argued, targeting delivers two advantages: it makes poverty alleviation measures more effective, and it maintains or decreases social spending. At first glance, such arguments seem logical, and in recent decades it has become widely accepted that targeted social programmes are a more cost-efficient way to reduce poverty than is universal provision.
Therefore, in the name of cost efficiency, there has been a continuous shift from universal provision to targeted schemes, not only in the industrialized countries but also in the developing world. But are targeted social programmes aimed at poverty alleviation always the best solution? By examining the arguments for targeting in light of its outcomes, and examining the efficiency of targeting with regard to economic and non-economic costs—specifically in the context of international commitments on poverty reduction—this paper presents four main problems associated with the reported “evidence” of targeting in poverty reduction programmes: (i) targeting does not necessarily target the poor; (ii) it is often not cost effective; (iii) it needs strong institutions, which is not always the case in the countries where it is implemented; and (iv) it is not always politically sustainable.
So let’s not pretend that English’s “social investment” is new, or that the world is breathlessly watching this work of genius, because it isn’t and they aren’t.
Our original author, Wilson in The Spinoff, tried to give “social investment” a new twist and some credibility by linking it with the fantastic Dunedin Study. But English was banging this drum long before the latest Study results, and these results should not in any case be oversold – see ‘Future criminals revealed at age three’? Not so fast, says Dunedin Study head.
Then I’m afraid Wilson jumps the shark completely:
Already, English says, the results are striking. Eight years ago “the total long-term cost of all benefits was $78 billion. Now it’s $68 billion.”
It’s not exact, of course: this is statistical probability not individual destiny. It’s important to remember that.
Arrrgh!
The current reduced welfare costs are not the “result” of “social investment” (which has it’s pay-off over a generational time scale), they are the result of vicious manipulation of eligibility criteria and other beneficiary bashing tactics. And it is beyond belief that such a claim should be conflated with very recent results from the Dunedin Study (“statistical probability not individual destiny”).
At this point I have little faith in Wilson’s grasp of this particular topic, but let’s just look at his main point, the political implications:
Social investment presents a serious challenge to the centre-left – to the Greens as well as Labour. This is the National-led government doing nothing less than redefining the paradigm of the welfare state, not by undermining it but by making it more fit for purpose. That’s the left’s job, or it used to be. It used to be a central purpose of the left in government.
And yet it’s the right that now offers a systematic, determined and evidence-based effort to break inter-generational cycles of poverty, crime and ill-health. Welfare that is both more effective and more affordable. Who would be opposed to that?
Oh please. Of course no one is going to be opposed to targeting welfare spending where it will be most effective (here’s Labour advisor Rob Salmond writing in support). The difference is that the political left (which created social welfare) take a genuinely constructive approach, and the political right (which has always opposed welfare) is adopting some clever spin to justify reduced spending.
At some level Wilson understands this:
Despite the promise, despite the deep data analysis and the policies built on it, and despite English’s own determination, the government has done absurdly little to achieve its social-investment goals.
Many National MPs still indulge in victim blaming and beneficiary bullying. And what about all those stories of cruel indifference and bureaucratic blockheadedness in government agencies, uncovered last year by journalists like John Campbell at RNZ, Kirsty Johnston at the Herald and Mike Wesley-Smith at Newshub?
In a buoyant economy, why are working families living in cars and why aren’t all homes warm and dry? Why do illnesses like rheumatic fever persist? When will children no longer be such easy prey to the temptations of sugary fatty foods and why do we still have epidemic levels of domestic violence? Where is the utter blitz of support for low-decile schools and their communities? Why are our incarceration rates still the second highest in the developed world?
The list goes on and on, and the answer to every question on it is that National (and Act) are the wrong people to reform the welfare state. No matter how sincere Bill English may be, he and his colleagues are compromised by the deeper interests of their supporters, confused by what they are doing anyway and unwilling and/or unable to shake their old prejudices.
Exactly. So why did you buy in to the nonsense spin that forms the first half of your piece?
For other takes on why the English version of “social investment” should be treated with deep suspicion see Shamubeel Eaqub reported in Data-driven social welfare policy lacks humanity – economist, and Keith Ng in I’m a data nerd and a data cheerleader, but still I fear Bill English’s datatopia, and…
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