A Social Policy Trilemma

A Social Policy Trilemma

There is a trilemma in economics that states that a nation can only have two of the following three things:

– Free movement of capital

– A fixed monetary exchange rate

– An independent monetary policy.

All three of these are things that a country would sometimes quite like to have; however, the trilemma states that if a country has two of them, the third must in consequence be given up – it is not possible to maintain all three at once. The choices are not purely binary: one can have some capital controls for example, and there are levels of independence in monetary policy, but at any point, increasing one necessitates a decrease in one of the others.

A Social Policy Trilemma​

There is a similar, less-recognised, trilemma in social policy, that means a nation can only have two of the following things:

– Free movement of people (no immigration controls)

– Non-contributory universal social welfare (for example, free health care, non-contributory out-of-work benefits, free university tuition)

– An independent sovereign social welfare policy.

Again, these are all three things that some people might consider to be beneficial.

To demonstrate this, imagine that a country has all three of these and chooses to set its social welfare at a level that are significantly higher than at least some of its neighbours. With free movement of people, movement of people from countries with less generous schemes will quickly render these unaffordable and/or creates other social pressures, for example on schools and hospitals. There are three potential solutions:

1. Impose immigration controls, by restricting the number of people who can enter; OR

2. Abandon the universal social welfare, or at least reduce it to the level that is no longer a significant draw for those outside the country; OR

3. Abandon an independent social welfare policy, for example by agreeing welfare policies collectively (by either democratic or technocratic means) on either a regional or global basis, so that there are no longer national disparities to create population flows.

Even more so than with the economics trilemma, these are not binary choices. People’s country of residence, even in the modern world, is ‘sticky’: it takes effort and resources to move, and people will not immediately do so for a minor disparity in benefits. It is possible to pool some but not all decision-making; immigration policy may be set at a wide range of levels between ‘complete free movement’ and ‘completely closed borders’. The important point to recognise, however, is that the three are fundamentally in tension and that advancing one means retreating on another.

Possible solutions

The modern liberal globalist solution is, either implicitly or explicitly, to place least weight on the third, the independent social welfare policy. This approach would see an increasing amount of national policy agreed via multilateral organisations. Sometimes this has an explicitly technocratic agenda, seeking to remove democratic accountability from the decision-making process, on the grounds that decisions are better made by ‘experts’; at other times, support for democracy is (at least outwardly) maintained, but the democratic institutions are moved from a nation to a regional level.  This is seen most obviously, of course, in the EU project, in which decision-making is progressively removed from nation states and where one of the principal benefits, to its supporters, is the free movement of people within that region.

A more neoliberal solution might be to compromise on the second, the universal non-contributory social welfare. This approach would maintain a high degree of free movement, to provide workers for businesses, and maintain a sovereign social welfare policy, but resolve the trilemma by reducing or abolishing universal social welfare, either by simply reducing their level, or by transforming them into contributory benefits, such as insurance-type schemes.

A traditionalist approach would choose to compromise this on the first, and we see this in both the more traditional parts of the right and left. This approach sees national sovereignty as important and would usually support a significant degree of universal social welfare (pensions, the NHS), but is happy to compromise on free movement, placing stricter limits on immigration and prioritising social welfare for citizens or long-term residents.

 

This post is not arguing for which approach is best. It is simply saying that there must be a choice: just as in economics, we cannot have all three at once. In cases like this, it is better to make such choices explicitly, in recognition of the trade-offs, and to understand that those who choose a  different position on the trilemma may not think that one of the three is actively negative, simply that it is less important than the other two.

 

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