3. A New Washington
i. The regional social policy debate.
The "Washington Consensus" avoided the debate on social
issues and social sector reform as issues that were beyond the
scope of structural economic reform (Williamson,
1990). After the
Washington consensus, we have witnessed the attempt by MLA´s,
the US governments and part of Latin American domestic elites
to develop a new Washington consensus regarding social policies.
If the original consensus concerned itself with economic reform
of the liberal kind, social sector reform chooses similar paths
and contents, and is basically supported by the same doctrines
and theories that underpinned the economic market revolution
that Latin America has undergone in the last twenty years.
These turn of events and renewed interest in social development
and social policies responds to a number of reasons. Social development
has stagnated or critically slowed down in most of Latin America
for the last decade and a half. Consistently, social protests
and turmoil have increased significantly. Also, there is a widespread
perception of the inadequacy of the traditional model of social
policy in Latin America, and thus the need to reform it. Thirdly,
social policy, has achieved a new status.
One that fits better with the dominant economic ideology and
with economists hegemony over the social sciences and the issues
of development in general: certain social policies have become
forms of investment, rather than simply expenditure. We now make
social investment in human capital, instead of simply providing
services to those in need or redistributing income.
In any case, this new found interest of the international community
in social development and people's welfare should be welcome
after too many years of a narrow economic focus regarding development
strategies. A different problem refers to the content of this
new concern; both in the diagnosis of social ills and social
sector inefficiency, and in the proposed solutions to those problems.
Traditional social policies (those
associated with the import substitution model) have been criticized as inefficient,
expensive, unfair and rigid. This critique correctly pointed
out that the supposedly universal system of social services never
reached those truly in need, especially people in situations
of extreme poverty. It was also correct at calling our attention
to the administrative costs of state run social provision, its
centralized nature with its effect on incorrect resource allocation,
and its clear cut stratified nature, in the coverage, range and
quality of social services and transfers.
While this criticism vary in how well they apply to different
Latin American countries, and also in their fairness regarding
differential shortcomings of health, education and social security
protection, they are in most cases, certainly well taken.
ii. Structural Forces
This diagnosis was
not only shared by most decision makers and MLA's, there also
were structural forces at play pushing social sector reform and
making the inadequacy and costs of previous traditional systems
more acute and visible.
In the first place economic openness placed new strains on entrepreneurs
need for competitiveness and increasing costs on economies that
run fiscal deficits, high and unstable rates of inflation and
overall macroeconomic instability. These factors in turn pressed
towards lowering the fiscal burden of exporters and at the same
time keeping the strictest possible fiscal discipline in a time
of few state resources.
This implied among other things controlling social expenditure,
and prioritizing fiscal discipline over social needs.
Secondly, and especially in the most "modern social structures",
the mature social security systems had to cope with the aging
of the population which meant that less people were working to
sustain the lives of more older people that were not. At the
same time health costs skyrocketed as older people required longer
and more expensive treatments for cancer and cardiovascular diseases.
Also the educational system had almost complete primary level
coverage, pushing for the expansion of secondary and later tertiary
iii. An agenda for social sector reform
Thus, both the diagnosis
and the international and internal forces pushed for social policy
reform. The content of such a reform should, in the eyes of those
who criticized the old model, be able to avoid the problems and
inefficiencies of traditional social policies. In order to do
so certain basic features of what the new social policy system
should look like slowly took shape in the minds and documents
of market oriented social reformers. An overview of what the
transition from the old to the new model should be, would give
the following synoptic table:
||taxes and printing
|| neutral taxes
|| accepts deficit
|| Private and
|| Human Capital
While some of these critiques depicted above are certainly welcome,
and reform is needed, the new wisdom on social policies is not
free of problems, and clearly less consensual.
Social security systems that had moved from public pay as you
go systems to privately administered capitalization funds have
increased domestic savings and are so far promising in regard
to the level of benefits they will be able to provide.
Yet, coverage has suffered and state administrative costs have
been replaced by marketing and private administration costs.
Also, women, in most simulated models run by analysts seem to
end up with a far worse deal than men, and purely redistributional
mechanisms almost disappear or are left orphan of powerful groups
and coalitions to defend them. Finally, in the process of reform,
retired persons have many times suffered further devaluation
of their benefits (Lo Vuolo,
1997, Kay, 1997).
Decentralization also brings with it the promise of participation
and better resource allocation. The flip side is no less threatening
than the promises. Neolocalism, new form of clientelism, increasing
regional inequality, fiscal loss of coordination and control
between central and local governments, and inefficiency due to
the absence of adequate human resources at the local and municipal
level, have been some of the perverse effects of decentralization
(De Melo, 1997; Filgueira,
Focalization rested on the idea of doing more with less and increasing
the progressive aspects of social expenditure. To a large extent
it has done just so. In other cases it has been unable as the
previous systems to reach those truly in need. It has also been
clientelized since it is, in the institutional form it has assumed
in the region, a highly discretionary tool of the executive.
Furthermore it has created what some analysts have termed "vigilantism".
A case in which means-tested policies and instruments destroyed
basic forms of solidarity among the poor, making themselves distinguish
between deserving and undeserving poor. Stigmato the recipient
and the breakdown of inter and intraclass solidarity is as the
US is well aware of, an additional risk of focalization, targeting,
and means tested programs (Filgueira,
Yet, besides these dangers, no one would deny the need for reform,
and most analysts would also agree on a large part of the diagnosis
of previous inefficiencies. While consensus is less clear on
the direction of reform, the fact that there are those that have
an alternative and those that simply warn decision makers about
the risks involved, pushes the general direction of reform along
the lines of the only alternative paradigm that is actually on
Most countries in Latin America have indeed started to move from
one model to the other. Especially in mature social states, there
has been a clear trend in which universalistic, centralized,
state-run social policy has shifted to a public-private mix of
targeted and decentralized social policies. In less developed
social states, the need to dismantle old social programs has
been less important for the simple reason that they were not
there to begin with, but the ones being implemented now, follow
the new social policy paradigm.
Uruguay is, today, no exception. Yet, it has undertaken and pushed
forward in these types of reform with a timing and shape of its
own. One that has given society time to absorb the harshest costs
of economic adjustment and structural reform, in a rather uncruel
form, and that we claim has ingredients that promise to attempt
the rescue of solidarity and social integration aims of the social
Uruguay's history, anatomy and search for solutions, and very
especially the political logic of such search, constitutes the
key to understand our successes and shortcomings.