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Hans Pitlik, Friedrich Heinemann and Rainer Schweickert, Overcoming Reform Resistance and Political Implementation of Large-scale Welfare State Reforms, WWWforEurope Policy Brief No. 3, April 2014

How to reform welfare states in the long-term

Everybody is talking about the need for reform – reforming our economic system towards the socio-ecological transition, reforming the welfare state, reforming governance institutions etc. But usually we see that the speed of reforms is very slow, if there is movement at all, even in those cases where everybody admits to the urgency of reforms.

The latest WWWforEurope policy brief "Overcoming Reform Resistance and Political Implementation of Large-scale Welfare State Reforms" by Hans Pitlik, Friedrich Heinemann and Rainer Schweickert sums up important scientific work on why there is reform resistance and what to do against it. The authors concentrate on welfare state reforms but their insights are useful for any reform discussion.

First of all there are behavioural aspects: People tend to like things as they are, rather than any change. Even if they know that the status quo is not optimal they are reluctant to change because change means uncertainty. Similarly they do not want to give up any established "rights" – it is a psychological fact that you value things you already have in your possession more highly than things you might receive in exchange.

But it is not only individual behaviour which hinders reforms. Society as a whole – or certain groups in society – has an even greater influence. In welfare state discussion one of the most important concepts is fairness: Are any given program or any reform proposition perceived as fair? If so, then it is much easier to implement this proposition. But there are intercultural differences to this: In the United States inequality is not seen as such a problem as in Europe. Almost half of the people in Europe think that a good life is a matter of luck and good connections, in the United States only a third shares this opinion. US-Americans, to a much larger extent than Europeans, are convinced that they have control over their own lives. They therefore are less in favour of redistribution by the state.

And whatever people think, individually or as a society, it is necessary to have trust and confidence in government. Nobody wants a government in charge of reforms if this government is perceived as corrupt and incompetent. The decreasing trust in European governments therefore poses a large hindrance to reforms.

So, what can be done to bring reforms on the way more easily? In a first step, it is important to identify winners and prospective short-term losers. If it is possible one should bundle reforms in different domains so that the losers of one area can be compensated by gains in another. But there is the danger that there are too many reforms at once. Although in theory a "big bang" reform might be most efficient it also means the largest uncertainty and will therefore create oppositions from many sides.

It is a basic tenet that there must be truthful and complete information. It is advisable to reframe the reform problems from potential gains of a policy change into potential threats of losses in the case that no action is taken, e.g. by emphasizing more pessimistic future scenarios.

But the most important recipe is credible commitment to reforms: Reforms should be introduced as announced to make adjustment economically feasible and efficient. And losers should be able to rely on promises for compensation.

It is important to build institutions which are seen as "neutral" or formulate binding rules to commit on path dependency. And although it is necessary to let all groups be heard and participate in the political process, the final outcome and procedure must be seen as impartial.

Beliefs and trust in oneself and therefore less fear of reforms cannot be changed overnight. But credible institutions and emphasis on self-reliance in the educational system will change long-term values and (welfare) state conceptions.


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