Mark W. Frazier: Socialist Insecurity: Pensions and the Politics of Uneven Development in China

Abstract

Mark Frazier offers a great example of how to do comparative political science well with this book on the development of the pension system in China. He analyzes the development of the pension system in China in light of the existing literatures on institutional change and the welfare state, and also uses his analysis of China to add to our understanding of welfare policy development especially in other large, uneven developers. In addition to this explicitly comparative approach, Frazier uses both process tracing and household surveys to provide evidence of how existing institutions helped shape the nature of the pension system. He argues that historical institutionalism is the appropriate lens through which to understand why pension reform after the collapse of the danwei system took the path it did despite other available options. Specifically, for local state officials facing the loss of state-owned enterprise revenues, using the fiscal decentralization inherent in the governing structure to design a fragmented and localized pension system allowed for the retention of a taxation mechanism and the use of pensions to avoid unrest caused by the privatization of local SOEs. While the institutions of fiscal decentralization shaped local officials’ choices for a new pension system, Frazier finds through household surveys that both the former danwei system and the experience of privatization helped influence workers’ perceptions of responsibility for pensions. Overwhelmingly, different types of laborers all expect the state to provide for retired workers. Frazier makes a very strong case about how institutions shape preferences for pensions, and also highlights the dangers of the way the system has developed. These pension benefits now account for the single largest source of spending for local governments, and many of the taxes taken from employers and employees to fund these accounts have been misappropriated by local Social Insurance Agencies (SIAs) for development or other corrupt purposes. These missing funds create the danger of unrest and loss of trust in the government in the event that retiring workers cannot be paid the funds that were taken from their salaries throughout their working lives. As J OF CHIN POLIT SCI (2012) 17:337–338 DOI 10.1007/s11366-012-9207-1