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The emerging coronavirus (Covid-19) crisis and the new (emergency) social situation: Some mistakes that must be undone - Column book

The emerging coronavirus (Covid-19) crisis and the new (emergency) social situation: Some mistakes that must be undone – Column book

One of the phrases that has spread recently is that response measures to the pandemic crisis are made possible by the presence of the welfare state. This statement, unfortunately, is wrong: in fact, we are facing a different reality that we can classify here as a social emergency, and it cannot be confused. In fact, if we think about the contemporary social situation – which is more than just a social welfare state – we notice that the measures now adopted (from the start, social support) have nothing to do with the usual social protection programs, the “maxime” social insurance that was established long ago. In defense of workers (the emergence of modern social security). Moreover, a social insurance system, designed to address the occurrence of social risks (such as illness and unemployment) is just an insurance system designed to respond to risks according to the likelihood of their occurrence. However, the current pandemic crisis exceeds any risk that the insurance system can absorb in a permanent way, let alone permanently. Indeed, it is no wonder that in the insurance economy, catastrophic situations, in the field of uncertainty and lack of risks, such as epidemics, are generally excluded from the protection scheme (they would not be able to do this by exorbitant) insurance premiums that almost no one would be able to pay. ). Thus, the financial capacity of insurance plans is limited by the nature of the risks involved being insurable.

Not surprisingly, then, pandemic response measures have nothing to do with the generosity of the various “social” states, but rather with a certain combination of absolute necessity, political will, and financial strength. According to the IMF’s “ Financial Control Database ”, which was published in April 2021, the United States of America is the country, among the most developed countries, where direct budget measures have been adopted since January 2020 – measures in the field of health and others. Socio-economic in nature – it has a greater expression as a percentage of GDP (25.5%), as against 16.2% in the United Kingdom, 15.9% in Japan, 11% in Germany, 3, and 8% in the case of the European Union (Union European). Thus, although the United States is usually cited as an example of a weak social condition, at least when compared to the European social state, this did not prevent, in that country, a much more “muscular” reaction than the European reaction, the use of discretionary measures for companies that It sought (more than) to compensate for a smaller share of automatic stabilizers associated with traditional social benefits (such as unemployment and sickness benefits).

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On the other hand, the new expenditures caused by the epidemic appear to have been mainly funded by taxes. In countries with a social security business matrix – as in Portugal – this form of financing differs from what is normal for social benefit financing, which is dependent on social contributions on wages. Indeed, in Portugal, most of the subsidy measures granted, even if addressed by the social security system, were backed by transfers from the state budget (OE), specifically on tax grounds. If financial funding for social support measures is certain to make sense in an emergency context like the one we are experiencing, it is not desirable that this funding itself be sustained or spread widely, for two main reasons. First, because it is achieved through conversions from OE, it reinforces forms of the budget illusion (“free myth”), that is, less awareness of the costs associated with attributing it. In fact, the financial financing model (unlike the insurance scheme) is not designed to ensure better management and absorption, over time, of the costs associated with each social benefit. Second, because this funding model is also not the one that best secures social protection rights, contrary to what one might think. In the context of financial financing, the value of the benefits (which have no associated ex ante contributions basis) will depend on those which are, at any given moment, the (limited) financing conditions of the state itself, which as a general rule guarantee only a minimum of dignity and are more easily vulnerable to social decline. Consequently, problems of appropriateness (inadequate protection) are more ‘natural’ in tax financing schemes than in contribution-based schemes, as evidenced by the old and new benefits, now created, that are not contributory or tax-based.

Finally, the pandemic is said to have increased poverty, instability and social inequality. If this is true, then it is nothing short of a consequence of our country’s economic weakness. Poverty will not be overcome sufficiently – in this new technological economy characterized by increasing disruption of employment – if the focus is not now on economic growth, on increasing the productive capacity of firms and the country, because only it will allow for good job creation. Jobs that support social insurance programs, whatever they are. A social emergency is a state of welfare with minimal limits that cannot and should not persist.

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