Ed Miliband and predistribution: what does it mean and could it work?

Mark Ferguson at Labour List writes about Ed Miliband's new 'big idea': predistribution.  This is the idea that the market, rather than the state, should be the primary mechanism for delivering a fairer distribution of wealth.  In other words, people's wages should be more equal in the first place - so that the state has less need to intervene through the tax and benefit system.

The advantages of predistribution over redistribution are numerous.  First and most obviously, higher equality and lower poverty could be achieved whilst the state spends less money.  In a time when the electorate highly associates Labour with 'profligate spending', predistribution thus becomes highly attractive.

A second advantage of predistribution is that it's more attuned to many people's notions of fairness and redistributive justice.  To redistribute income through the state you need high levels of solidarity, trust and feelings of reciprocity.  For many complex reasons, we lack these in the UK.  This makes high redistribution - akin to the Scandinavian model - politically untenable.

Predistribution is not a completely new idea.  For those familiar with The Spirit Level, the example of Japan will be remembered.  Japan is one the most equal countries in the OECD world, yet it achieves this with levels of public spending more like the US than Sweden.  How?  Predistribution.  Wages are already more equal in Japan, so the state has less of a need to intervene.  Alternatively, the market distribution of wages in Scandinavia is much more like the market distribution in the US and the UK.  The Scandinavian approach then relies upon the state - in the form of high taxes, generous social transfers and quality services - to achieve a fairer society.

It sounds like a panacea - both for the economic problems the country faces and the political and philosophical impasse that Labour finds itself in.  But it's potentially not.  As Mark Ferguson writes, in a predistribution state that ensures high equality and low poverty through the market, there is the question of what happens to those excluded from the market: such as the disabled and the unemployed.

The second problem is even more profound.  This is that the UK economy is not built for predistribution.  Over the past three decades, successive governments have built a labour market that is high in flexibility but low - at the bottom end - in wages, skills and in productivity.  The problem is that predistribution only works in a high skill, high productivity labour market.

This is why the classic predistribution policy - the minimum wage - has an economic limit in a labour market like the UK's.  Increase it too much, and either unemployment will increase or prices go up - or both.  If Ed Miliband is to make predistribution a real policy goal, he'll need to flesh out how he would fundamentally restructure the British labour market.  And this will be the real challenge.

Are religious people more or less likely to support redistribution in the welfare state?

We are all familiar with many of the characteristics that distinguish people who support the welfare state and those who don't.  We might expect, for example, left-wing voters, women with children, ethnic minorities and the poor to be amongst the most consistent supporters of welfare.  But what is the role of religion?  Are religious more or less likely to support welfare measures - such as income redistribution - than their non-religious counterparts?

This is the question posed in this interesting new study in the European Sociological Review.  Before reading the paper, my intuition was that religious people would be more likely to support redistribution. This might be because religion, or more its purported values - charity, altruism, cooperation, community - seem more aligned with the kind of values associated with support for the welfare state.

However, the authors propose a different hypothesis: that religious people are less likely to support redistribution.  They suggest that this antagonism may be due to the historic transition between the church and state in the responsibility for social welfare, with the former and its devotees unhappy at the diluting of religion's responsibility for welfare.

In short, it transpires that this second hypothesis is true: religious people are significantly less likely to support redistribution than secular individuals, even after a whole host of other variables are controlled for.  The influence of religion on anti-redistributionist attitudes is equivalent to having a higher income or being more highly educated, with these latter two determinants also linked to weak support for redistribution.

I found these results surprising, but my (mistaken) intuition might say more about perceptions of religion in the UK.  Cities with strong Catholic communities - such as Liverpool and Glasgow - tend to be overwhelmingly associated with the Left.  And, as the old saying goes, Labour owed more to Methodism than to Marx.  This interesting study suggests the contrary.  The Conservatives might owe more to the Church than to Churchill.

Is it possible to make social security popular again?

I recently came across Ben Baumberg's paper - 'Three ways to defend social security in Britain' - in the Journal of Poverty and Social Justice.  It is an interesting read and, in short, assesses the success that three recent contributions to the social security debate have had in meeting what Ben argues are the necessary conditions required to improve the quality of social security.  These are that policies:

• Lead to reductions in poverty and inequality.
• Fit existing public attitudes on the deservingness of claimants.
• Aim to, in the long run, change such attitudes on deservingness.

Without going into great detail, Ben's central contention is that the challenge facing those who desire to make social security better is as follows.  First, there is a need to engage with existing public perceptions of 'who deserves what'.  Second, however, there is a need to ensure that engagement does not become accommodation; and that, in the long run, wider public notions of deservingness are changed.  Such a strategy will clearly involve a high degree of skilful political and policy manoeuvring. 

Can it be done?

The message then is that the kind of welfare state many on the Left would like - generous, supportive, personalised, popular - will not come over night.  And to achieve it, there must be a genuine engagement with the public: many of whom do not appear to like social security very much at all.

The key to this dilemma seems to lie somewhere in dealing with the realm of contribution and reciprocity.  The lack of engagement with these concerns is what Ben Baumberg criticises about the first two contributions he reviews: Decent Childhoods and National Salary Insurance.  The third - The Solidarity Society - attempts to deal with this dilemma (of engaging with, acquiring and changing public attitudes) much more centrally.

The problem that remains is how to rethink the relationship between social security and contribution/reciprocity without merely falling back to old ideas about social insurance or capitulating to seemingly popular notions of 'tough conditionality'.  Ben's argument is that such change will only happen in stages and that this will require engaging with the public whilst also leaving the scope open for future progress.

My own thought is that this could be partly achieved with a rethinking of conditionality (at least for claimants of JSA).  This could involve, for example, higher benefit payments to claimants who enrol on training, education, work experience or community placements.  To my mind this would a) reduce poverty, b) engage with existing public concerns of deservingness and c) change attitudes in the long-term.  

The latter is the hardest task that the Left faces with regards to social security.  Yet I would argue that a shift in rewarding claimants' contributions with higher payments would emphasise to the public what claimants do whilst they are unemployed, rather than what they don't do.  The obvious fact is that many present claimants are contributing in a wide variety of ways, yet because this is not rewarded, it goes unnoticed: and the public emphasis remains unchanged.  

As Ben argues rightly, focusing on conditionality carries certain dangers: such as that future governments will simply revert back to the type of conditionality on offer now.   Yet we have to see a better welfare state as a long-term goal.  As Margaret Thatcher found out, her goal of a worse welfare state did not come about immediately.  It took years of subtle changes to public and political debate.  Little rewards could offer big hopes.