We've been talking in this module about comparing US Social Welfare to other nations.
Thinking about what values we make this comparison.
Therefore by implication by what values which shape the US Social Welfare System.
So, one of the things that differentiates US Social welfare
from other comparable western European and Canadian and Australian,
is the strength of the conservative movement in the United States,
and the values that they bring to this discussion.
So, in this next two lectures,
I want to explore that and try and bring this more completely into the debate.
So, let's start by talking about the notion of economic efficiency.
Economic efficiency is built on the idea that
we use every resource to its maximum capacity,
and that we do not waste that,
we do not create inefficiency.
So, by doing this we increase
the total pot of what we have and we make our nation more wealthy.
This expansion of wealth,
has reduced poverty in the United States and in the developed world,
from about 80 percent in 1900 to
less than 20 percent by the year 2000.
So, we've seen a really substantial movement
in social welfare that is come from economic efficiency.
So, an economy is efficient when everything is
being used to its maximum and most useful purpose.
So, in an efficient economy when you take something from
one area you are developing an inefficiency in that area,
because it's already being maximally used,
and so in economics we have an idea called Pareto optimality.
That is when we act to make one person better off,
we must make sure we make no one worse off,
because if the market is working and if we have an efficient market,
we will introduce inefficiencies when we start making others worse off.
Built into this is an idea that how do you
compare the relative value of merits of people,
and how do we make sure we get the best return on
each specific marginal use of any particular product.
So, economic inefficiency is really a central idea of
market-based thinkers on particularly the economic conservatives.
They will approach the question about need,
who is in need or the questions of equity by saying,
"What are we doing about efficiency?"
Others will argue that we need to be building a welfare state
that meets people's needs or makes us more equal,
and they will not be as worried about the question of efficiency.
The conservative argument is that there will be so much less
because we're not using things efficiently that everyone will be worse off.
So, moving away from efficiency to address need or to address equity distorts the market,
it distorts the use of goods,
it distorts work incentives,
it causes people to receive less from their work because
they're receiving benefits in a way that's not connected to their work.
Whether those are health care benefits or housing benefits or income benefits.
It may reduce the incentive to work,
and if people are working less then we are not
most efficiently using the resources we have in the country.
So, economic conservatives will call for limited regulation.
Regulation introduce inefficiency into the system and it violates individual freedom.
So, the meaning of freedom here is the ability to
move and not be constrained by some arbitrary or central authority,
but that is the ability to move and not be constrained by government.
This is a fundamental idea of the American Revolution that limited government,
is really a central piece.
Then also the right to private property,
is something that is held very central that what I worked to create,
I have the right to keep.
Then if I worked to create it I will probably use it most efficiency.
So, in the next lecture,
I want to talk about economic conservatives.
Social conservatives as opposed to economic conservatives and continue
this development of the alternative ways of thinking about social welfare.
John RobertsonPolicy Lecturer
