I recently listened enthralled to Simon Szreter of Cambridge University at an ODI conference on growth and equity (more on that later). Simon set out some of the history of social protection in the UK and its possible implications for today’s developing countries.
For the two centuries before the industrial revolution, the UK had a universal system of decentralized social protection backed by national regulatory institutions, which began with two acts passed by Elizabeth I in 1598 and 1601. This system consisted of:
– Progressive taxation through a local property tax that was paid into about 14,000 local parish funds covering the whole of the UK, covering orphans, widows, the old, disabled and the unemployed
– A ‘settlement law’ that defined the criteria for eligibility – you were eligible in the parish where you were born, or for women, the parish of your husband. If you moved, a one year qualification period applied
– Parish registers that ensured everyone had a form of ‘identity rights’ which facilitated dispute resolution and reduced transaction costs
– Justices of the Peace, appointed by the crown, were independent of local elites and so were able to keep an eye on corruption
Results were spectacular: at its height in the early 19th Century, the system accounted for 2% of GNP and affected about a third of the population during the course of their lives – up to 10% of individuals at any one time were receiving benefits. It severed the link between food price rises and famine two centuries before the rest of Europe. It also played an unheralded part in ensuring Britain’s growth outpaced that of its rivals France and Holland:
– the existence of a safety net eased the shedding of labour and so made productivity improvements less disruptive
– labour mobility went up because people did not have to stay on the land to look after elderly relatives, and were willing to urbanize or move rather than cling on to small plots of land as security
– property rights facilitated trust, commerce and growth of markets
Relevance to today?
– social security is vital to achieving growth with equity
– it takes time – minimum of two generations, to establish
– identity rights are as important as property rights. 36% of the world’s population have unregistered births.
This was just one more example of the unmined seam that is history, which I’ve written about before here on this blog.