Implications for Social Policy in an Age of Austerity - Coursework Example

Implications for Social Policy in an Age of Austerity Implications for Social Policy in an Age of Austerity Governments around the world are implementing measures to reduce the budget deficits that their economies face. They are, therefore, reducing the quantity and quality of most of the government funded services to their people. This has been received with much criticism and resentment. However, they are doing this to cut back on the credit crises they face as a country. Austerity is the state of reducing spending because of the increased frugality in the fiscal division (Pierson 2001). Governments and monetary bodies take to such measures to cut on the expenditures they incur, and reduce the expanding budget scarcities. All these measures, eventually, have an impact on the socio-economic environment. Social policy has been identified as the need to alter the social order by trying to modify the market forces in place, and redistributing some of the resources an economy possesses (Krugman 2012). This paper will examine some of the implications, and how governments are handling the situations in their countries. Governments around the world are looking out for the interests of their nations by implementing some of these measures. However, many economists believe that these strategies and policies might damage the social environment, in the long run. The future of economies, around the world, is at the mercy of these policies and strategies (Kilkey, Ramia & Farnsworth 2012). The austerity policies might be reducing the deficit budgets that these economies have suffered. However, many folks believe that, the scarring effects in the many regions where these cuts occur will be much worse (Pierson 2001). This is the problem with looking at the situation for the short term period the economies are facing (Exadaktylos & Zahariadis 2012). Britain is a perfect example of a nation that is experiencing these policies. Greece is known to owe Germany a tremendous debt, and is also implementing these strategies. These strategies come with a number of implications in the manner and way of life of individuals in these regions (Pierson 2001). One of the ways folks may be affected is through the medical care they receive. The governments in many regions, especially first world countries, offer their citizens universal medical cover. The quality of this insurance cover may reduce, thus; prove a daunting task to acquire the most basic medical attention (Kilkey, Ramia & Farnsworth 2012). In many areas, this may not be a problem. However, in countries where a majority of individuals are living below the poverty line, medical attention may be a top priority. If these services were reduced, then the health care givers may find it an uphill task trying to give individuals the proper attention they need (Exadaktylos & Zahariadis 2012). This is while on low salary, reduced medical equipment and drugs. The health care sector is the most crucial public sector in every part of the world (Pierson 2001). If austerity measures were to be taken to raise a falling economy and its budget, then the sector may feel the brunt of these measures (Levin & Shapiro 2004). These measures are proving to have unintended consequences on individuals in these regions. It is meant to be a sustainable investment, but the problem is the rigidity these sectors may face, in the long run (Kilkey, Ramia & Farnsworth 2012). Energy reforms in many regions are also facing cuts. This is as governments try to think of sustainable methods of gaining subsidies from other sectors of the economy. These areas are based on artificial pricing motivations (Exadaktylos & Zahariadis 2012). The rates of returns on such areas are meant to be more, or in line with other areas, which the economy boosts. However, in the case of renewable energy, this is not possible (Pierson 2001). This means that the austerity measures have to cater to the reduction in the amount of revenue that is brought in through the renewable energy sector (Kilkey, Ramia & Farnsworth 2012). They, therefore, have to find another area to capitalise on, and bring in the revenue that is needed to make the economic scale balanced. This means that taxes will be higher on other businesses in the area. The effects of an increase in taxes in businesses, both locally and internationally owned, may discourage individuals from investing in the region. This often brings down the economy and the revenue that a region may rake in at the end of a fiscal year (Exadaktylos & Zahariadis 2012). This implication has a negative impact on the people in the region because the employment rate may reduce significantly. This is as investors take their businesses to regions they feel safer while conducting business (Farnsworth & Irving 2012). Governments have to start figuring out ways in which to integrate the new costs into the programs without hurting other areas, and the citizens involved. The social welfare model may be affected if such measures were taken without proper consultation and consideration (Kilkey, Ramia & Farnsworth 2012). Some of the austerity measures created work to create an underlying mistrust among the government and its citizens. It is impossible for citizens in a region that is filled with debts to comprehend why their government did not address the credit issue (Exadaktylos & Zahariadis 2012). This is while there was still a chance, even before the economic recession hit the world some time back. The inability to create the much needed, well-planned, austerity measures has led to many governments being accused of complacency over the issue of repaying debts (Ellison & Brogden 2012). This is by their creditors who tend to take advantage of the situation, and exploit it to the best of their knowledge. This has happened to Greece, which owes Germany almost 90% of its debts. Economists believe that the failure to come up with contingency plans leads to the failure to repay their debts (Kilkey, Ramia & Farnsworth 2012). Austerity measures are not a guarantee that government borrowing reduces with each fiscal year. A reduction in government spending, many critics argue, leads to a high possibility of an increase in the unemployment rate. This then pushes for safety net spending among individuals, which reduces tax revenue in the economy (Exadaktylos & Zahariadis 2012). Typically, the measures in place may force the government to reduce its spending on the services it renders. This may reduce, or bring down the regions GDP (Farnsworth & Irving 2012). Many economists believe that the debt to GDP ratio does not improve even with a reduction in spending. There is a positive side that comes with short-term spending. This positive side comes in the form of economic growth through spending the deficits (Pierson 2001). However, business owners, industries, and consumers will be unwilling to spend their capital doing this. Another implication that is brought on by these austerity measures is the increase in retirement ages. Economists believe that pension in old age does not guarantee a senior citizen exceptional retirement benefits. This may be true as governments may try to find that extra fee to pay up their debts (Kilkey, Ramia & Farnsworth 2012). The pension fund that many retirees receive may be deducted to reduce the debts the region faces. Other development programs and projects may receive cuts from the government to cater to the need to adjust the budget deficits the government may incur (Edsall 2012). An increase in tax, port, airport, and bus fees is a likely option for governments to recover some revenue from its citizens (Ellison & Brogden 2012). There is a common belief that if this is allowed to continue for long, there is a chance that individuals in these regions may have reduced standards of living (Exadaktylos & Zahariadis 2012). Representatives from the UN claim that some of the measures in favour of austerity may lead to a gross violation of human rights. In Greece, for example, it was difficult for the citizens not to go up in arms against the measures in place (Kilkey, Ramia & Farnsworth 2012). There were strikes that were out to pressure congress not to agree to the austerity packages that were being proposed. This is one way in which citizens can display their anger towards some of the policies that politicians come up with to reduce the debt they incur in a financial year. The social order in the political, economic, and social surrounding is disturbed in the process of these changes and alterations (Ellison & Brogden 2012). To prevent or reduce the occurrence of such disturbances, it is imperative that politicians and world leaders focus on measures that can reduce their budget deficits (Exadaktylos & Zahariadis 2012). At the same time, they need to protect their citizens from the effects of these budget deficits. Moreover, the implications that austerity may have on social policy is the problem that arises when everyone is reducing their spending. It is common knowledge that; one person’s expenses are another person’s income (Kilkey, Ramia & Farnsworth 2012). If everyone tried to reduce their spending, then the economy will be at a phase known to many as; a paradox of thrift. This may worsen the situation as the Gross Domestic Product reduces significantly (Edsall 2012). Everyone, this includes the private sector, may be unwilling to spend to increase the GDP. This may prove problematic for the government and the employment level (Exadaktylos & Zahariadis 2012). Often, this pushes the government to spend more than it is willing to spend. Austerity measures are counterproductive in the financial sector. If, for instance, individuals invest in financial institutions, in a healthy economy, industries and companies should borrow and invest that capital (Kilkey, Ramia & Farnsworth 2012). Austerity may push individuals to save, but may force companies and industries not to invest that capital. This leads to a surplus in the financial sector. Eventually, business institutions may find it difficult to ensure a fixed rate of return on their customers’ capital (Exadaktylos & Zahariadis 2012). In the long run, the austerity policies in place do not have the interests of the region’s economy at heart, or the people’s welfare. Theories brought forth in modern time claim that taxation and bond issuance do not provide the government with a funding mechanism. When all is said and done, banks and financial institutions have their accounts credited, therefore, governments cannot run out of capital. It is next to impossible to have a stable economic growth in a region with austerity measures in place (Kilkey, Ramia & Farnsworth 2012). In this age, there is neither a decrease nor an increase in the economic standing of the region. When governments use up some of their revenue to bail out the banks in their regions using the deficits in their budgets, they are preventing a stable podium for the growth of their economy (Edsall 2012). To the social welfare of citizens in these regions, it gets harder and harder to satisfy the standards of living. State-funded housing systems are likely to be affected through austerity measures. If people rely on the government for their housing arrangements, during the implementation of such measures, it may be hard for them to find suitable standards (Kilkey, Ramia & Farnsworth 2012). This is because; the government may not be willing to cater to the needs of every individual in these housing schemes. There may be capital for them, but it may be allocated differently from how they would allocate it, in a healthy economy (Edsall 2012). These issues arise in the form of water supply to these project and development areas, protection from the police, among other basic things that individuals require. It is these cut-backs that prevent the continuous, stable growth of the economy in regions that experience austerity (Edsall 2012). State education can largely be affected by austerity. In these modern times, it is normal to hear of regions that offer free education to children (Kilkey, Ramia & Farnsworth 2012). There is a twist to this as the situation in public-funded schools is different from the situation in private institutions. The funding for the public system may be flawed, and this might be evident with the poor learning conditions students might be subjected to everyday (Edsall 2012). It might be a daunting task for teachers in public schools to cater to the large number of students it admits into its care. Children in these schools are different, and some may need that extra attention from their teachers. Cut-backs in the cost of state-funded education do not provide educators with enough to ensure everyone gets the care and attention they require (Edsall 2012). In conclusion, it is imperative that governments and financial institutions in diverse regions have plans that prepare their economies for the future. In this day and age, austerity should not be considered as a means of improving the region’s budget. There are many disadvantages that come with austerity to a majority of individuals in any regions that facing these measures. To promote the safety and well-being of citizens, it is crucial that well-devised plans make part of the economic structure in all regions. Debts should not be dealt with in this manner because it places the region and its economy in a precarious position (Edsall 2012). This is with their debtors, and everyone interested in making investments in these areas. References Edsall, TB 2012, The age of austerity: how scarcity will remake American politics, Bantam Books, New York. Ellison, G & Brogden, M 2012, Policing in an age of austerity, Peacock Publishers, Chicago. Exadaktylos, T & Zahariadis, N 2012, Policy implementation and political trust: Greece in the age of austerity, pp. 1-30, in The London School of Economics and Political Science, Author, Hellenic Observatory, European Institute. Farnsworth, K & Irving, Z 2012, Social policy in challenging times: economic crisis and welfare, Macmillan Publishers, London. Kilkey, M, Ramia, G & Farnsworth, K 2012, Analysis and debate in social policy, 2012, Oxford University Press, Oxford. Krugman, P 2012, ‘Europe’s economic suicide’, The New York Times, 15 April, p. 1. Levin, MA & Shapiro, MM 2004, Transatlantic policymaking in an age of austerity: diversity and drift, PULP, New York. Pierson, P 2001, The new politics of the welfare state, Sage Publishers, London. Read More