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BOOK REVIEW |
Professor of History and Social Work University of Houston Houston, TX 77204
Social Security: History and Politics from the New Deal to the Privatization Debate, by Daniel Béland. University Press of Kansas, Lawrence, KS, 2005, 252 pp., $29.95 (cloth), $16.95 (paper).
The Reform of Bismarckian Pension Systems: A Comparison of Pension Politics in Austria, France, Germany, Italy and Sweden, by Martin Schuldi. Amsterdam University Press, Amsterdam, The Netherlands, 2005, 312 pp., 
39.50 (paper).
Why did George W. Bush make the privatization of Social Security the top priority of his second term in office? And why did the President fail? Or did he only suffer a momentary setback? Answering these questions presupposes a context that facilitates comparing and contrasting what happened in 2005 with what has occurred at other times and other places. Had any of 43's predecessors ever attempted such a radical step to constrain the growth of a federal social insurance or welfare program? These questions are raised in Daniel Béland's Social Security, which offers a fine historical perspective on social-security policy choices in America from the Great Depression to the proximate future. Was retrenchment a priority elsewhere? Martin Schuldi's The Reform of Bismarckian Pension Systems is a cross-national account of earnings-related social insurance in five European countries that enables us to look for patterns in programs similar to our Social Security system.
Taken together, these two books provide a rich comparative lens for assessing the basis for, and the significance of, the politics of privatization. Historical and cross-national analyses, by transcending the particular details of a specific moment, enable us to revisit other courses of action that might have been pursued. Indeed, the architects of America's original social security bill duly assessed plausible policy options here and abroad.
The New Deal's Comparative Approach
On June 29, 1934 Franklin Delano Roosevelt, invoking the authority of the National Industrial Recovery Act, charged his secretaries of Labor, Treasury, and Agriculture, the Attorney General, and the Federal Emergency Relief Administrator "to study problems relating to the economic security of individuals" and to report back "its recommendations concerning proposals which in its judgment will promote greater economic security" (Project on the Federal Social Role, 1985, p. 140). The Committee on Economic Security (CES) was to be assisted by an Advisory Council, consisting of presidential appointees representing employers, employees, and the general public. High-ranking federal officials served on a Technical Board, supported by four actuarial consultants. Professor Edwin Witte, an economist at the University of Wisconsin who had helped to draft the only state-level unemployment compensation plan at the time, served as executive director. He rallied the support of more than one hundred academics, civic leaders, and administrators who volunteered to work on one or more of Witte's nine advisory committees.
The Committee on Economic Security really did its homework. The report CES delivered to the President was based on "many valuable studies giving the factual background, summarizing American and foreign experience, presenting actuarial calculations, and making detailed suggestions for legislation and administration" (Project on the Federal Role, p. 17). The collective expertise was awesome: At the table was virtually everyone who had developed U.S. corporate and union pensions, the nation's railroad retirement system, old-age assistance plans, and understood how to surmount Constitutional difficulties and congressional obstacles. (The only notable exceptions were Abraham Epstein and I. M. Rubinow, who nonetheless managed to express on record their support for using general revenues to finance social insurance.)
The experts reporting to the Committee on Economic Security possessed unique historical perspectives on the risks of old-age dependency and unemployment. Most of them had been advocates, architects or analysts of existing U.S. social insurance legislation. Not content to incorporate ideas and structures solely from domestic programs, CES made an extensive survey of foreign experiences. Researchers compiled data on "compulsory contributory old-age insurance laws of general coverage" for twenty nations (Project on the Federal Role, p. 283). Comparative analyses, temporal and geographic, greatly mattered in laying the foundations for Social Security in the U.S.
This comparative approach to policymaking was robust enough, actually, to empower CES to propose something radical:
The program for economic security we suggest follows no single pattern .... In placing primary emphasis on employment, rather than unemployment compensation, we differ fundamentally from those who see social insurance as an all-sufficient program for economic security .... Where other measures seemed more appropriate to our background or present situation, we have not hesitated to recommend them in preference to the European practices (Project on the Federal Role, p. 70).
Honoring FDR's request that U.S. social insurance build on "tested liberal traditions" faithful to the nation's "republican form of government," CES sought to strengthen the American work ethic, rather than assume borrow from existing unemployment models. For the first time in U.S. welfare history, CES provided a successful rationale for making the Federal government ultimately responsible for promoting the "general welfare" (as the Preamble to the Constitution put it, albeit in a very different context). Inadequacies uncovered in national precedents and foreign experiences made bold experimentation possible. Comparative approaches to social security policymaking ironically served a counter-intuitive function: understanding flaws in "the big picture" prompted fresh thinking.
The Contemporary Comparative Challenges
According to Béland and Schuldi, we again need comparative approaches to broaden thinking about social insurance. Daniel Béland has four objectives: a) to reconstruct the history of Social Security to illuminate the privatization debate; b) to offer "new comparative insights" historically; c) to formulate "an original theoretical framework" that conjoins ideals and institutions; and d) to assess theoretically the potential impact of gender and race in the development of Social Security (Béland, p. 2). Martin Schuldi's chapter explicating his "Actor-Centered Explanatory Framework" sets forth a theory to "analyse (sic) the strategic context in which pension politics take place" (p. 86). Among other things, he hypothesizes that neither the status quo nor a radical dismantling of current entitlements is possible; that there will be "few systematic differences in the cost containment efforts between left- and right-wing governments;" and that population aging and fiscal austerity make pension reform unpopular (Schuldi, pp. 85–86).
Béland provides fifty pages of notes to bolster his 194-page narrative of Social Security: History and Politics from the New Deal to the Privatization Debate. Having written a history of Social Security (Achenbaum, 1986), it is tempting to impose my views on Béland's book. Instead, reading his argument reminds me of the varieties of writing history and the diversity of emphases in recounting Social Security's development. Most readers would neither notice—nor much care about—erroneous details or interpretive twists that provoke historians' dander. Béland's account is reliable. By covering the entire history of Social Security, Béland rightly stresses that the 1977 and 1983 amendments predate most other countries' attempts to improve the system's financial situation through relatively painless (if ideologically charged) remedies. Because Social Security is not in any imminent danger of bankruptcy, "Social Security privatization remains a risky business"... though "the strong ideological commitment in favor of Social Security privatization among conservative ranks and the demographic aging and fiscal constraints could keep the issue on the federal agenda, in one way or another" (pp. 183–184).
Schuldi, in contrast, selects both his time frame (the late 1980s to the present) and his five European case studies (Austria, France, Germany, Italy, and Sweden) "to hold a number of potential explanatory variables for different degrees of retrenchment (relatively) constant" and to "control for a great deal of programme-specific variations" (p. 10). Like Béland, Schuldi is a data maven: the second half of his book assesses the "specific capabilities, perceptions, preferences, and interaction orientations" (p. 221) of the government camp, parliamentary opposition, and trade unions in every institutional effort to cut back programs. Because of the resiliency of the welfare state in post-war Europe, Schuldi reports considerable variation within as well as across nations in The Reform of Bismarckian Pension Systems in terms of timing and speed of reform.
The analyses of Béland and Schuldi sometimes complement one another, such as through the attention they give to the place of unions in the political arena. Unions have lost numbers and influence in the United States, making them less influential advocates of social insurance. Union strength varies in Europe, and its priorities reflect the political economy. Far-reaching reform efforts initiated by government prove more efficacious, Schuldi claims, when labor is in a bad bargaining position. But the two authors generally go about their business differently. Schuldi pays more attention than Béland to the specter of population aging in policymakers' thinking. In Béland's account, unlike Schuldi's, the gray lobby, trade associations, insurance companies, the media, and the courts are important policy actors. Historical analyses and cross-national comparisons do not link naturally. The fit is contingent on the complementariness of the independent and dependent variables brought into play—and why.
Individually and together, Martin Schuldi's The Reform of Bismarckian Pension Systems and Daniel Béland's Social Security help us to understand the context in which the politics of social-security retrenchment is taking place. It is disappointing, however, that neither author chose to extend his comparative analysis to grapple with health-care reform. FDR, it is worth recalling, opted not to include health insurance in his 1935 omnibus legislation, lest Congress defeat the entire package. I suspect that Béland and Schuldi would have had to create far more complex theoretical frameworks and proffer (too much) information in order to explicate the health-related policy conundrums besetting lawmakers, health officials, and ordinary citizens in each country. The effort nonetheless would have been worthwhile: the broader the canvas we draw around fundamental policy issues, the more likely we are to find similarities and differences in possible options.
References
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