Social Policy Financing A case for employer of last resort programs - PowerPoint PPT Presentation

Social Policy Financing A case for employer of last resort programs in South Africa

Social Policy Decisions Steered economy Free market forces Pro Government Anti Government Human suffering Entrepreneurship Job protection Economic stability

Conflicting Goals Universities run as II Pursue economic corporate transformation I enterprises (R) (A) Increased international V competitiveness (G) III Pursue social Universities run as transformation public enterprises IV (R’) (¬A) Wentzel, A. (2015). Analysis of creative reasoning in economics: a scientific approach (Doctoral Thesis). Chapter 6: How to construct an economic problem as a conflict. pp.63-72

Conflicting Values

1. Knowledge Sharing and Creation Open dissemination Ownership New research Control Publication Profitability

2. Academic Duties and Public Interest High quality education Economic value for investors Well functioning members of Exchange value for customers society New knowledge and unbiased Prosperity for society information

3. Distribution of power and resources Well rounded education Most economically productive uses Competitive market-based As many members of society selection Diversity of disciplines and Creative destruction perspectives

Lack of Policy Choice

Current Financial Model South African Reserve Bank. (2015). Quarterly Bulletin: December 2015 . pp.71

Social Policy Financing Some form of tax financing is necessary... (Belkovicsová, 2012; Boldea, 2016 and Demange, Fenge & Uebelmesser, 2014)

Tax Funding and Deferred Charges Income contingent loans Repayment problems Graduate tax Most equitable Human capital contracts Skewed Belkovicsová (2012:49) and Demange et.al (2014:343)

Theoretical Limitations South Africa National Treasury. (2015). People’s Guide to the Budget . National Treasury, pp.3

Functional Finance

Government Spending Government Central bank Banks Private sector A L A L A L A L + Loan + Loan + Res + Res + Dep + Dep

Types of Money Name Description Central bank reserves Central bank IOUs to commercial bank Bank deposits Commercial bank IOUs to private sector Currency Central bank IOU to currency holder Fiat money Irredeemable money Commodity money Commodity with intrinsic value used as money Base money Central bank reserves + Central bank currency Broad money Central bank reserves + bank deposits

Government Taxation Government Central bank Banks Private sector A L A L A L A L - Dep - Dep - Res - Res - Loan - Loan

Employer of Last Resort Programs

Price Stability

Full employment

Criticisms

Case Study 1: Argentina Head-of-Household Program Negatives Positives Reduced indigence rates: Foreign debt Individual = 18% Household = 25% Restrictive participation Women = 60% of program ELR wage < poverty line Government cost < 1% of GDP

Case Study 2: India National Rural Employment Guarantee Cost = 1.3% of GDP Benefit = decreased the number of poor households and increased GDP

Case Study 3: France Professional Transition Contracts Cost Benefit Guaranteed activity income Job training component 4% of GDP Financed by unemployment insurance

Recommendations Current paradigm NSFAS withdrawal payments/graduate tax Heterodox paradigm NSFAS as a funding pool for ELR program

Thank you Questions?