How has inflation affected people? And, to the extent it has, what can governments do to support them? I believe that inflation has made it more difficult for people to reach the social minimum – a standard of life everybody should be entitled to. It is governments’ responsibility to ensure everybody has this social minimum. Why? I think because they have the capacity to do so – as argued by Simon Caney: ‘with power comes responsibility’ – and because it would be inconsistent not to – ‘you’ll never walk alone…’.
The social minimum in terms of capabilities
The social minimum, I propose, is best understood in terms of capabilities. Imagine we understood it in terms of resources. This is arguably the current reality of social policy. Then, we would argue that an individual has enough if she has a certain level of resources, e.g. two dollars per day. We would focus on the resource level that an individual has, not the individual that has the resource level. The capabilities approach, on the other hand, emphasizes the individual and her needs. Under the capabilities approach we take an individual to have enough, if she has a certain set of capabilities. We ask: what is an individual able to do with her two dollars? Therefore, under the capabilities approach, we acknowledge two things: 1) the diversity of humans and 2) ends matter, not means. Firstly, people differ in needs and abilities and might not attain an end with given means. It is easy to see that two dollars are different when one is disabled compared to if one were not. Secondly, important ends, such as self-respect or friendship, do not depend directly on material means and are, thus, not picked up if we focus on material means as a proxy for these ends. If we really care for human beings having enough, we should not blind ourselves to the reality of human diversity and to what really matters.
Now, spelling out clear criteria for the social minimum is rather easy for the resourcist: She can say, e.g. “the social minimum is two dollars a day”. I believe this ease could be the reason for why the resource framework is more popular. How could we spell out the social minimum using the capabilities approach? This is more difficult. The criteria should be neutral enough to allow for individual liberty, yet detailed enough to have practical relevance. Martha Nussbaum arguably reconciled both demands. She lists the following ten capabilities: 1) Life, 2) Bodily Health, 3) Bodily Integrity, 4) Senses, Imagination, and Thought, 5) Emotions, 6) Practical Reason, 7) Affiliation, 8) Other Species, 9) Play, 10) Control over One’s Environment. To meet the social minimum, an individual has to have each of these to a sufficient extent.
Cost of living crisis and the attainment of the social minimum
Inflation affects our ability to attain the social minimum understood in terms of these ten capabilities. Inflation is generally defined as the broad increase of prices for goods and services over time. If wages do not keep up, and inflation is substantial, we have a cost-of-living crisis. I believe the cost-of-living crisis prevents many people from attaining the social minimum because it necessitates budget cuts from less essential expenses, such as fun activities, to more essential ones.
But, following the capabilities approach, non-essentials also make up the social minimum. Capability 9) Play requires that individuals can “laugh, play, and […] enjoy recreational activities.” Thus, if individuals are unable to do these things – because budget shifts to costly energy, foods, and housing do not allow it – then, individuals are unable to attain the social minimum. Thus, the cost-of-living crisis hinders individuals in attaining a social minimum.
The cost-of-living crisis differs from the more general phenomenon of poverty, which also, of course, hinders many people from attaining the social minimum. This is because inflation includes an element of change that is out of an individual’s control. A benefit receiver whose benefits are not pegged to inflation indices might be able to pursue Play activities at one timebut is unable to do so at another after prices have risen. Thus, the cost-of-living crisis creates profound insecurities for individuals because they are unsure whether they can sustain capabilities that they once had. Avner De-Shalit and Jonathan Wolff have argued that secure capabilities are crucial for most disadvantaged people and that uncertainty impairs these people severely.
Government response: vouchers to safeguard the social minimum
Governments have the responsibility to secure the social minimum. How should they respond to the cost-of-living crisis? I believe governments should not provide disadvantaged individuals with direct cash payments but rather support them with voucher programs.
Specifically, I think introducing vouchers is especially important regarding the capacity that is sacrificed first when budgets tighten, namely Play. By voucher programs I mean extensive lists of vouchers or coupons for ‘fun activities’ that low-income households, and benefit-receivers would receive monthly and that they could use to pay for all sorts of recreational activities, goods, and services. These vouchers would be highly targeted on ‘fun activities’, and, therefore, on capability 9) Play, which would enable governments to secure their citizens the social minimum with respect to this capability.
Vouchers would ensure the security and certainty of the social minimum that inflation undermines. Despite low budgets, voucher-receivers would have the security and certainty to be able to perform activities that enable them to “laugh, play, and to enjoy recreational activities.” I believe, this would make an important psychological difference for many.
The crucial advantage of vouchers in times of inflation is the following. Vouchers can be constructed so that receivers do not have to use their own money at all but that they can redeem the voucher and purchase a good or service. In this way, voucher receivers would be immune to price increases of a good that is purchasable with a voucher. This is an important difference to direct cash payments. Here, receivers carry a risk that if prices increase, then their purchasing power decreases. With vouchers, receivers do not carry this risk because governments pay for the goods and services. Thus, vouchers shift the inflationary risk from individuals to governments, providing security and certainty to low-income individuals. Despite low budgets and despite price increases, voucher-receivers would have the security and certainty to be able to perform activities that enable them to “laugh, play, and to enjoy recreational activities.” In this way, vouchers help to safeguard the social minimum.
Potential Problems
However, there are two problems with vouchers. I argued that this program targets ‘fun activities’. But, in this way, vouchers restrict the realm of possible purchases compared with direct cash payments. For instance, it is unlikely that receivers will be able to purchase goods from online international retailers. The virtue of being highly targeted might also be regarded as a vice. Vouchers are also often regarded as being paternalistic, since they prescribe the receiver what is good for them – here, ‘fun activities’.
But I think that both restrictiveness and paternalism can be mitigated. Firstly, restrictiveness can be mitigated if the list of vouchers and coupons encompasses a wide range of different activities, goods, and services. For instance, the program could be handled by municipalities who know about the available fun activities in their communities best. Additionally, vouchers could also contain an option for a free activity. They could not only encompass a diverse range of the usual recreational activities but also allow for purchases that are shown to increase capability 9). For instance, if I enjoy supporting the local volunteer gardening project, then I should be allowed to use a voucher to purchase a new spade. In this way, I believe, the worry about restrictiveness can be answered. Secondly, I think that if the voucher list is diverse, then vouchers are paternalistic only in a very mild way. Yes, it is the case that vouchers prescribe fun activities, but I think they are sufficiently neutral to allow individuals their own understanding of what this means for them.
Leave a Reply