What is social inclusion?

Judith Sloan wants the term banned, the editors of the Australian think it’s bureaucratic gibberish and even the new minister for social inclusion seems unsure about what it means. So what is social inclusion?

For the New Labour politicians who popularised the term social exclusion in the UK, the excluded are those whose behaviour makes them a burden on other citizens and the state. Social inclusion is about helping the excluded become contributing members of the community.

Early in his first term, Tony Blair began using the term as a synonym for underclass. Social inclusion policies aim to change behaviour rather than redistribute resources. This makes it possible for left-of-centre politicians to attack entrenched disadvantage while at the same time promising not to increase taxes.

So as Norwegian academic Else Øyen explains : "neither social exclusion, nor social inclusion, are analytical concepts. They are political concepts, and they have been introduced for political reasons." The key to understanding the terms social exclusion and social inclusion is to look at the problems politicians are using these terms to solve. Reading documents by academics and bureaucrats only leads to confusion.

The political problem

Going into the 1997 election, Labour’s shadow Chancellor of the Exchequer, Gordon Brown promised that Labour would not raise income taxes for five years if it won. "The Tories were pole-axed", writes Philip Gould in his book The Unfinished Revolution, "It was as though a political mallet had been smashed through their heads."

Based on opinion polling and focus group research, New Labour strategists were convinced that tax was the party’s achilles heel. To win in 1997 and hold office, they needed to persuade voters that the party had changed — that New Labour would not raise income taxes, even on the rich.

According to Gould, voters believed that those who worked hard and behaved responsibly should be rewarded. Fairness was about contribution and reward, not greater equality of income. In her book Talking to a Brick Wall, opinion researcher Deborah Mattinson writes about swing voters sense of alienation from politics:

They believe Labour looks after the poor (and is a soft touch for the undeserving), and the Conservatives look after the rich and that no one looks out for people like them.

These voters felt they were working hard but were being ignored. Feeling economically insecure, they worry about how they are going to provide for their families. They think Labour is taking their taxes and spending them on immigrants, teenage mothers and welfare cheats. As Mattinson writes, they see society as made up of three groups: "the rich, themselves and the undeserving poor."

When Blair took office in late 1990s, many voters believed that most unemployed people could get a job if they really wanted one. There was a feeling that too many people who could work were choosing to live on benefits instead. While most voters supported payments for the elderly and people with disabilities, there was a feeling that joblessness had become part of the culture for some families. And associated with joblessness were a range of other problems such as single parenthood, truancy, crime, alcohol abuse and homelessness.

At the same time as it needed to hold the support of swing voters, New Labour also needed to assure supporters it was not just a warmer, cuddlier version of the Conservative Party. Lifting up the disadvantaged was a core part of Labour identity. Because declaring war on poverty would create expectations of redistribution funded by large increases in government spending, Labour needed a new way of framing the problem of disadvantage.

The constraints on policy were clear. The government needed to help jobless families improve their incomes but it couldn’t do that by handing out money or anything else that might be seen as a reward for bad behaviour. Increases in income must be earned through work.

Before the election, Tony Blair spoke about the underclass. And in a press conference in Denver not long after winning office, he spoke about people who were long term unemployed and shut out of society. Asked if this was the problem of the underclass he said:

… the way to deal with the problems of the underclass is education and welfare reform. You have got to give people the education they require otherwise they are never going to be able to compete in today’s market.

‘Underclass’ was the term economist Gunnar Myrdal had used in the early 1960s to describe entrenched disadvantage in the United States. Myrdal argued that technological change had eroded demand for less educated, less skilled workers. Unable to educate or retrain themselves, these excluded workers become fatalistic. They adapt to slum life seeing no alternative for themselves or their children. When children drop out of school parents make no effort to stop them. A culture of joblessness and criminality begins to take hold.

Blair and his party had adopted a very similar view about what was happening in Britain and soon after winning office they found a new term to describe the problem — ‘social exclusion’. According to Peter Mandelson, the Tories had left a legacy of "people who have lost hope, trapped in fatalism. They are today’s and tomorrow’s underclass, shut out from society."

The term social exclusion was already being used in the European Union. According to Else Øyen:

The original concept launched by the European Union’s Targeted Socio-Economic Research (TSER) programme was poverty. Apparently the politicians found this concept too loaded, so they asked for another concept and were satisfied with social exclusion/inclusion.

For politicians, the problem of an underclass or socially excluded population within an affluent, otherwise well-functioning society demanded a different solution to the problem of poverty. And it was a solution that fitted better with the political constraints on governments like the UK’s new left-of-centre government.

Constraints on spending ruled out redistribution. But if jobless families were able to solve the problem by overcoming their fatalism, taking advantage of education and training opportunities and moving into to work, then redistribution would not be necessary. With more people in work and paying taxes, welfare to work programs might even pay for themselves.

If existing government programs turned out to be hugely inefficient, then intelligent reforms might achieve better outcomes at little extra cost. For example, if it turned out that problem families were receiving services from a large number of agencies but that none of these agencies were talking to each other, then ‘joining up’ services might get better results than pouring yet more money into an inefficient set of bureaucratic program ‘silos’.

And if issues like lack of skills, poor health, family breakdown and unemployment could be prevented, then the problem might be solved at a much lower cost than waiting to address them later. High cost interventions could be seen as ‘investment’ rather than spending. And if it happened that most of the problem families lived in a handful of neighbourhoods like large housing estates then preventative programs would be more affordable. The problem could be solved through a small number of geographically targeted interventions.

None of these policies could be seen as rewards for people who refused to act responsibly or contribute to society. The government would help people prepare for work, send their children to school and move off the streets. But it would also demand responsibility. There would be no handouts for people who refused to do the right thing.

And this is how social exclusion took hold in the UK. Questionable assumptions about causation were built into the concept. Social exclusion was about behaviour rather than a lack of money, the socially excluded struggled with multiple problems but the government programs that addressed these linked problems were disjointed and inefficient. Social exclusion was preventable and this could be done cost effectively because socially excluded households were geographically concentrated.

The bureaucratic response

The trouble with coherence began when politicians hand their new concept over to academics and bureaucrats. Reflecting on experience in the European Union, Else Øyen writes about the way researchers picked up the concept and were soon "running all over the place arranging seminars and conferences to find a researchable content in an umbrella concept for which there is limited theoretical underpinning."

Academics have different constraints to politicians so they question the assumptions politicians have built into the idea of social exclusion. They graft their own theories about disadvantage onto the concept and competing definitions proliferate (for example, an academic paper written for the Social Exclusion Unit in the UK lists 12 definitions). Researchers introduce ideas such as discrimination that locate the cause of the problem in politically awkward places.

Faced with demands to ‘join up’ services and improve efficiency, bureaucrats respond by commissioning research papers and forming committees. Departments re-badge existing and proposed programs as social exclusion initiatives and compete for funding. Pilot programs spring up in areas of concentrated disadvantage and evaluations are commissioned.

Efforts to create a single measure social exclusion or inclusion quickly become bogged down in definitional disputes. So researchers and bureaucrats respond by treating social exclusion as an umbrella term. Problems such as homelessness, truancy, drug and alcohol abuse and entrenched joblessness are all gathered together under the heading of social exclusion.

All that remains is a vague idea that these problems are somehow linked and that the best way to solve them is through a ‘joined up’ or ‘whole of government’ approach. But from joining up government is difficult when the entire apparatus of funding, accountability and performance management is designed to break responsibility down into discrete units. Each departmental program managers is responsible for delivering against a manageable number of key performance indicators. Each department is responsible for a clearly defined set of outcomes. And each government minister is responsible for making decisions in their own portfolio.

Departmental program managers are rewarded for the delivering the outcomes they are responsible for and ignoring everything else. Managers in the department of employment are not rewarded for reducing homelessness, substance abuse or domestic violence. They are rewarded for getting their clients off welfare and into work.

When the Howard government decided to take a whole of government approach to Indigenous disadvantage in 8 trial sites across Australia, the result ended up being branded "a complete debacle". According to a 2007 report by Stuart Rintoul in the Australian, an audit office investigation found that departmental culture, funding arrangements and program guidelines prevented managers on the ground from working together in an effective way.

The difficulty of getting government departments to work in a joined up way means that social inclusion policy risks ending up as a number of government departments pursuing separate problems while a central social inclusion unit or task force coordinates meetings by departmental managers, writes briefings, consults and commissions research.

Did it work?

When US President Lyndon Johnson declared war on poverty he declared: "We want to offer the forgotten fifth of our people opportunity and not doles." Instead of promising to redistribute income he promised to help poor Americans climb towards a better life through education, training and neighbourhood improvement. He pledged to root out pockets of poverty in both urban slums rural backwaters. And he assured voters that everything the government spent on the fight against poverty would "result in savings to the country and especially to the local taxpayers in the cost of crime, welfare, of health, and of police protection."

But to his conservative opponents, the war on poverty will always be identified with an explosion in welfare spending, with inefficiency, waste and a failure to come to grips with the causes of chronic welfare dependency.

New Labour’s struggle against social exclusion ended the same way. A 2008 policy paper by the Conservative Party declared that "Millions are trapped on benefits, reliant not on their own skills and endeavours to raise their standard of living but on state handouts." The Conservatives claimed that Labour relied too heavily on handouts, fostered an inefficient top-down bureaucracy and failed to come to grips with the causes of chronic welfare dependency.

But despite the attacks, New Labour’s efforts to lift up the poor (like Lyndon Johnson’s) have actually been reasonably successful. The only problem is, they succeeded by redistributing income rather than moving jobless people into work. As US academic Lane Kenworthy writes:

One of the most successful recent antipoverty efforts in affluent countries was that of the New Labour governments in the United Kingdom from the late 1990s through the late 2000s. Though Tony Blair and Gordon Brown’s governments focused much of their rhetoric and policy reform on improving employment and economic opportunity, they also increased net government transfers to low earners, single parents, and pensioners. Benefit and tax changes between 1997 and 2005 increased real disposable income for lowest income households by about 20 percent. This increase was one of the largest in any of the rich countries for which reliable data are available

Critics like Blue Labour’s Daniel Sage argue that the problem with New Labour’s redistribution by stealth is that "You can’t win an argument on fairness if you don’t allow the public to debate in the first place." At Open Democracy, British academic Simon Griffiths points out that the stealthy approach becomes vulnerable when the economy goes bad.

What next?

The political rhetoric of social exclusion and inclusion ensnares both politicians and bureaucrats in the pretence that the world works the way swing voters in focus groups think it works. It’s an approach that assumes debate is pointless because these voters won’t pay attention to anything that doesn’t directly affect their own families and neighbourhoods.

According to pollster Deborah Mattinson, politicians and voters are trapped in the never-never land of ‘Peter Pan politics’. It’s a "politics where the electorate never grows up. Instead the voter is indulged like a spoilt child by politicians desperately seeking their favour." Politics is something that’s done to voters who demand outcomes that deep down they know are not really achievable.

Perhaps it’s time both politicians expected more from voters and extended the idea of social inclusion to the political as well as the economic sphere.

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16 Responses to What is social inclusion?

  1. Paul Frijters says:

    The political rhetoric of social exclusion and inclusion ensnares both politicians and bureaucrats in the pretence that the world works the way swing voters in focus groups think it works. It’s an approach that assumes debate is pointless because these voters won’t pay attention to anything that doesn’t directly affect their own families and neighbourhoods.

    According to pollster Deborah Mattinson, politicians and voters are trapped in the never-never land of ‘Peter Pan politics’. It’s a “politics where the electorate never grows up. Instead the voter is indulged like a spoilt child by politicians desperately seeking their favour.” Politics is something that’s done to voters who demand outcomes that deep down they know are not really achievable.

    great paragraph. Exactly how I have come to see the current situation.

    Nice post. What your piece makes clear is that we are due a new term for poverty. Again.

  2. derrida derider says:

    What about using the word “poverty”, Paul? At least that doesn’t evade the fact that the best cure for a lack of money is money.

    And it lets us focus on the other fact that serious inequality of outcomes leads, as nigh the day, to serious inequality of opportunity. Even if swinging voters think the poor deserve bad outcomes (and I’m not convinced such downward envy is as widespread among the battlers as people assert), they’re much less likely to be convinced that they, and especially their offspring, deserve no opportunity.

  3. Corin says:

    Don, I had no idea when I wrote this I was channelling the politics of social inclusion so aptly: http://www.theaustralian.com.au/national-affairs/opinion/markets-bring-mobility/story-e6frgd0x-1225781310921

    It could almost be a case study of measures, except I think mine were more innovative! But you see, perhaps that is where those of the centrist market kind differ from the Thatcherite, we are more hopeful that people can grasp opportunity. But as mandelson said ‘we are all thatcherite now’ …

  4. Bruce Bradbury says:

    The main problem with the social exclusion/inclusion discussion is that it conflates the solution with the problem.

    It may well be the case that the most politically sustainable solution to disadvantage is via social inclusion-type policies of employment and human capital development. However, while employment might help bring meaning to some people’s lives, the main problem with being disadvantaged is, frankly, being poor itself.

  5. Patrick says:

    That’s a very nice piece Corin, I think that social democrats without union strings have a lot of promise! Or perhaps more pertinently, I think that the unions are the biggest obstacle to serious social democracy. The greens are doing ok at rivalling them though.

    But this is a dangerous sentence:

    It’s not an infrastructure deficit in Australia that’s the primary failing of the Howard government, at least to social democrats. It’s that the employment, income and wealth of the disadvantaged didn’t improve enough in that era and in many cases went backwards.

    Luckily you are arguing that the current Labor approach is not really on the right track because otherwise you would need to hope really really hard that Labor did better on this front!

  6. Don Arthur says:

    Sinclair Davidson has a different take on social inclusion: Finding friends for deadbeats, Catallaxy Files.


  7. JB Cairns says:

    DD makes excellent points.

    Davidson makes the same comments the Aristocrats made in England. This rationalisation was made so no policies could be made to make opportunity more available.

    Fortunately This is was one thing both Gladstone and Disraeli agreed on.

  8. Mr Denmore says:

    John Howard was the master of social inclusion. He made massive transfers to the comfortable middle class and created an entire generation of dependents with three-car garages, swimming pools and Plasmas. These are the people who on the one hand get exquisite pleasure by denying benefits to those who really need them while on the other whinging to the government every time it ponders kicking away another of the expensive crutches Howard gave them.

    Judith Sloan, the chief punisher and straightener, writes for those people – the tut-tutting, petit bourgeois, aspirationals and overnight capitalists who pride themselves on their ‘entrepreneurship’ because their houses doubled in price in 10 years.

  9. Mel says:

    Do Arthur:

    “Sinclair Davidson has a different take on social inclusion: Finding friends for deadbeats, Catallaxy Files.”

    Catallaxy is practically a match making site for deadbeats. Many a love has blossomed over their over the years. God bless ’em.

  10. Tel says:

    John Howard was the master of social inclusion. He made massive transfers to the comfortable middle class and created an entire generation of dependents with three-car garages, swimming pools and Plasmas.

    Do these people on nett pay more in tax than they collect back from the government? Or do they collect back more than they pay in tax?

  11. Marks says:

    I don’t know Tel, but I cannot imagine that the administrative costs of the churn involved in giving to the middle classes on one hand, and then taxing them to pay for it is insignificant.

  12. Peter Whiteford says:

    Tel and Marks

    There is a discussion of middle class welfare and net taxpayers in an article I wrote with Gerry Redmond and Elizabeth Adamson in the Australian Journal of Labour Economics at http://search.informit.com.au/documentSummary;dn=556711210676386;res=IELBUS

    If we define the Howard Government as covering the period 1996-97 to 2007-08 then the proportion of working age income units paying no net tax (i.e. their benefits equalled or exceeded their income taxes) remained the same at 27.7%.

    However, the proportion of zero net taxpayers fell in the bottom three deciles and rose in the next five deciles – although the proportions in the bottom three deciles are much higher than in the next five deciles (between 47% and 95% in the bottom three deciles compared to a maximum of 16% in the next five deciles.

    There are a number of complications and provisos. This calculation of zero net taxpayers doesn’t include the effects of introducing the GST – since a large part of the the reason for the extension of family payments was to compensate for the GST, if you took account of the GST this would reduce the share of zero net taxpayers across the board, and since the difference between benefits received and taxes paid will be less in the middle of the distribution then at the bottom, this could reduce the share of zero net taxpayers disproportionately in the middle of the distribution.

    Also the main reason why there is a lower share of zero net taxpayers in the bottom three deciles is that these groups had very large increases in their earnings, so their social security benefits fell and their taxes increased – but as Sellars and Yeatman put it – this was a good thing!

    Also, the middle 50% of the distribution are the middle by definition but they are not necessarily the people in large houses with swimming pools and three car garages. The Howard era changes to family benefits gave the greates increases to families with incomes between about $40,000 a year and $70,000 a year. These families are not poor, but I would not describe them as the comfortable middle class – more “battlers” actually.

  13. Marks says:

    Thanks Peter. Because I am mean and miserly and don’t want to pay $33.50 can you tell me what you concluded about the significance of ‘churn’. ie providing a ‘free’ service (for example) that could be paid for by the taxpayer in any case. Are the transaction costs of collecting from the taxpayer and then giving back to that taxpayer significant? I presume this was the idea of replacing ‘free’ university education with HECS etc charges.

  14. Don Arthur says:

    At #4 Bruce writes: “The main problem with the social exclusion/inclusion discussion is that it conflates the solution with the problem.”

    By insisting that participation in paid work is the only acceptable solution to the problem, policy makers imply that:

    1. This goal is achievable for the majority of the ‘excluded’; and

    2. It’s possible to help people move from welfare to work (and keep them there) at a relatively low cost.

    However, evaluations of welfare to work programs show that most participants don’t move off welfare and into employment as a result of participation.


    The programs are worthwhile, but they fall short of solving the problem and removing the need for income support.

    For a welfare to work approach to remove the need for income support, you’d need interventions that were much more effective and much more expensive in terms of cost per net impact(eg direct job creation).

    I suspect the cost of achieving welfare to work outcomes increases steeply as the net impact increases. The first impacts are relatively cheap. They come from nudging people to find work on their own. But each additional impact involves more and more effort and expenditure.

    What policy makers won’t disclose is the point at which they are no longer willing to purchase additional impacts. And until they do that, we’re not having a serious conversation.

  15. Tel says:

    Peter, I really like your article, because it makes me RICH, woo hoo! Not by a whole lot mind you, but it’s getting there that’s important, I doubt I’ll get much chance to look around and see anything. If it helps your stats any: I do pay more tax than my secretary, but in order to achieve this I was careful never to hire a secretary.

    Good article BTW. Keeping it real.

    I must admit that my mental image of the “class” system in Australia splits it into more groups:

    * The non-working poor.

    * The working poor.

    * The middle class.

    * The wealthy in private enterprise who actually work.

    * The wealthy bureaucratic government types who mind other people’s business.

    * The wealthy who don’t bother working.

    The last group being the best. Might also be fair to say that if you apply your definition of “middle class” on a global basis, all Australians are “rich”.

    I generally see these payments as government attempting to purchase certain types of behaviour. Although the common “welfare state” concept involves government buying good behaviour from the poor (cheaper than rattenkreig), in Australia we decided to buy middle class babies. I don’t really have a problem with that… I need to teach the message of freedom to someone *shrug*.

    There was a New Scientist article called, “Why it is hard to share the wealth” claiming that 3% of people follow Pareto’s Law, and 97% of people fit a pattern that is closer to gas particles (i.e. bumping around, randomly exchanging wealth). And there’s a gap between the two groups. Since most natural distributions are power laws, I’d guess that observing evidence of a gas law would say that an artificial ceiling exists keeping that 97% in a “boxed” condition. It also means you need to be approx in the top 3% (i.e. broken through that ceiling) to legitimately be wealthy, and it fits the intuitive observation that the system at the bottom-end is designed to keep people up, but as you move up it generally works to keep you down.

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