Sunando Roy June 1995
1. While economists agree on the view that equality is a desirable objective, they have tended to emphasise different indicators of economic equality. John Rawls (1971), (1988) emphasised the need for equality in the distribution of primary goods or essential commodities, Dworkin (1981) highlighted `treatment as equals’ and `equality of resource’, Harsyani (1982), Hare (1982) put equal weights to equal interests of all parties. Atkinson [(1975), (1983)] following Dalton (1920) emphasised maximisation of social welfare. Another recent phenomenon is the attempt to construct a Human Development Index (HDI) to judge the relative progress made by different countries in the sphere of social welfare. The concept of Human Development originally was to enlarge peoples’ choices. In principle, these choices can be infinite and are liable to change over time. But at all levels of development, there are three essential aspects : (i) to lead a long and healthy life (ii) to acquire knowledge and (iii) to have access to the resources required for a decent standard of living . Human Development is generally considered a standard of minimal measure. A country which has attained a reasonably high level of human development must seek to improve upon other dimensions not captured by HDI .To cover additional dimensions, since 1991, attempt has been made to construct a Human Freedom Index (HFI) based on the work of Charles Humana (1986) by incorporating political instability as an additional parameter of construction. Thus, we find that equality or inequality can be expressed in terms of a large number of focal variables.
2. Theoretical Justification : The theoretical support for the existence of public welfare services for the provision of basic necessities comes from many streams of thought. As a matter of fact, in recent years we can find a convergenance of opinion on the role of public welfare services for improving the standard of living of the population. The different views may be categorised into :
(1) Quality of life view advanced by Development Economists,
(2) Growth view propagated by the Neo Classical School.
(3) Views of International Agencies (IMF, World Bank and UNDP).
(4) Empirical works with Social variables.
3. Quality of life view : Many development economists in recent years have observed that there is no automatic link between quality of life and growth of GNP . Many countries, like Chile, China, Sri Lanka and others were found to have done well in the
provision of basic necessities of life to their population and thereby improve upon their standard of living , in spite of relatively slower growth in income (GNP). This lack of correlation between the GNP and the quality of life was explained under the following framework..There are two routes of attaining an improved living standard for a developing nation – the long route has been termed as the `Growth mediated Security Strategy’ and the short route the `Supported Security Strategy’ .
4. When a State attempts to achieve a high level of economic growth and consequently improve the standard of living of the society through the `trickle down effect’ it is `Growth mediated Security Strategy’. On the other hand, when the State directly intervenes in the free market by public provisioning of basic necessities through public welfare services, it is termed as Support led Security Strategy. The support led security strategy is considered the more efficient strategy since the Growth-mediated security strategy creates unaimed opulence (affluence) .
Sen and Dreze (1989) observed that providing funds for public welfare services will involve some trade-off with growth. The Support led Security Strategy will come into question, if and only if , there exists a remarkably powerful negative trade off between public support measures and economic growth.
5. Growth View : Provision of basic necessities of life has been justified by the recent developments in neo classical growth theory. With the mushrooming of endogenous growth models the need for state intervention in certain specific areas has come into focus. Lucas (1988), building on the classic works of Uzawa (1965) stressed human capital formation.Barro (1990) and Barro and Sala-i-Martin (1990) emphasised the need for promoting public investment in infrastructure to promote growth. Some other researchers like Grossman and Helpman [(1990), (1991)], Romer (1990), Aghiton and Howitt (1992) following Arrow (1962) highlighted the necessity of Research and Development which will lead to product diversification and promote the level of economic growth. Thus one finds the emphasis on certain public welfare services by recent neo classical growth theory.
6 Views of International Agencies : It is interesting to find the views of international agencies like IMF, World Bank, United Nations Development Programme and FAO converying to a certain extent on the issue of public provi¬sion of welfare services. The World Bank’s World Development Report (1993) highlights the need for Government involvement in education and health care.
The Human Development Reports published by UNDP since 1990 has also stressed the role of public welfare services in human development. The Director General of the FAO Committee on World Food Security in April 1983 emphasised the need for proper food distribution and the role of the state to ensure physical and economic access of all to the basic food they need. The IMF also felt that structural adjustments in an economy may provide substantial hardships to the poor during the transitional phase and therefore it is necessary for the state to cushion the less well-off from excessive burdens .”
7. Moral View ; The moral view is based on the Rawlsian framework of social justice where provision of basic goods and services to all should be ensured by the Rawlsian difference principle under which the welfare of the least advantaged is maximised. Hayek (1960) and Kornai (1990) also felt the need for provision of a national minimum11 . Atkinson summarises the moral view in the following manner. In his view the justifications for public welfare services are :
“Concern for the misery of fellow citizens, the avoidance of political unrest, a dynamic criterion of justice, the ensuring of effective liberty from the stand point of transfer recipients, the legitimisation of the pursuit of other goods and a possible contribution to aggregate economic goals.” [Atkinson (1991:13)]
8. Empirical Examination of Public Welfare Services : Empirical studies on public welfare services have tended to highlight the positive association between public provision of basic
necessities and an improved quality of life. The studies conducted can broadly be categorised into four types :
(1) Cross Country Comparisons
(2) Comparison between different regions of a particular coun¬try.
(3) Inter temporal comparisons
(4) Micro studies.
9. Among the Cross Country Studies, we find important contributions by Sen (1981), Griffin (1992) UNDP (1994), Stewart (1985), Caldwell (1986), Among inter regional comparisons within single countries we can mention Seeta Prabhu and Chatterjee (1993), Reddy and Selvaraju (1994), Jain (1985).
10. Among intertemporal studies, an important contribution is by Anand & Kanbur (1987) on Sri Lanka.
11. Micro studies are numerous. Some of them are Garcia and Pinstrup-Anderson (1987) CDS (1975), Grossman (1972), Mellor (1978), Carrin (1984) Paniker and Soman (1984), Gaiha and Spinedi; (1994). Among Micro studies, Sri Lanka and Kerale has been the centre of attention as they have successfully improved quality of life with low level of GNP.
12. These studies reveal that public provision plays an important role in improving quality of life of the population. Thus, from the empirical studies also, it is possible to find a rationale for existence of public welfare services.
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