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THE GLOBAL CRISES AND THEIR IMPACT- The Future of Welfare State

Juho SaariProfessor

University of Kuopio, Finlandjuho.saari@uku.fi

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I. DIFFICULT TIMES

The global recession is becoming more likely regardless of stimulus packages.It will last at least three to four years, and will result in major adjustment in employment and industries.Massive social costs of creative destruction and economic transformation .But the majority of individuals and companies will probably survive intact - the winners will be better-off.A few good news in the field of social development.

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2. THE CHALLENGES OF PUBLIC ECONOMIES

Excessive public deficits in most advanced societies/economies - but not everywhere, indicating major shifts in a global system; Public economies in additional heavy debts for 10-20 years.The crowding out of social expenditure and ODA of public expenditure in many growth-oriented economies/societies.– Fiscal stimulus, national innovation systems, growth and

employment policies, education– Tax cuts? (we are all Keynesians now)

The collapse or cut-throat competition of the charities.

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3. THIS CAN BE A WINDOW OF OPPORTUNITY

The recession also means opportunities. Q: who shall be able to exploit this opportunity socio-politically?– How to protect ODA and social expenditure?

At least temporarily changing the balance of power in capitals and the BW institutions between different policy proposals.The state will invervene and regulate financial markets and some industrial sectors more efficiently, and will become a major shareholder in many industries. Historical evidence indicates that the rapid world systems, socio-economic and institututional transformations stimulate new thinking in social development.

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4. A CASE OF FINLAND:A successful adjustment of comprehensive

social policy is possible.

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5. REINVENTING THE WHEEL I - A policy paradigm for social development

A semi-new paradigm in development thinking on the institutional design of the markets and public policies: focus on adaptive efficiency.In advanced economies (at least) national models with policy complementaries are quite path-dependent structures - one size/policy package does not fit for all.Something to learn?: Scandinavian models are (still) effective in combining competitiveness, sustainable development, employment, and social cohesion.

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6. REINVENTING THE WHEEL II - Agenda setting for social development

POLICY COORDINATION: Flexicurity - labour relations, active labour market, life-long learning, social policy

LONG TERM-THINKING: Life cycle approach revisited - distribution over a life cycle with a stronger redistibution towards families with children.

UNCERTAINTY - families, labour markets, housing, and indebtedness.

PROPERTY RIGHTS : Asset based social policies - New sources of resources to households.

SUBJECTIVE WELL-BEING: Focus on relative differences and competition.

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7. REINVENTING THE WHEEL III - Framing new policies

It matters how people and organisations interpret new policies.How policies are frames is crucial for positive feedback and trust.Common policies need coherent messages from the ministries of social affairs to the ministries of finance, and in-between the regional and global institutions.Strong connections to sustainable development policies.

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As an example, how to promote subjective well-being

More positive expectations to limit the impact of adaptive preferences.Smaller social differences to limit the rat race.More legitimacy of social policy institutions to allow flexibility.More trust towards the government to make reform-making possible.

More voluntary work to support social connections.

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THANK YOU