Welfare state

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There are three main interpretations of the idea of a welfare state:

  • the provision of welfare services by the state.
  • an ideal model in which the state assumes primary responsibility for the welfare of its citizens. This responsibility is comprehensive, because all aspects of welfare are considered; a "safety net" is not enough, and nor are minimum standards. It is universal, because it covers every person as a matter of right.
  • the provision of welfare in society. In many "welfare states", especially in continental Europe, welfare is not actually provided by the state, but by a combination of independent, voluntary, mutualist and government services. The functional provider of benefits and services may be a central or state government, a state-sponsored company or agency, a private corporation, a charity or another form of non-profit organisation.

The term "welfare state" is believed to have been coined by Archbishop William Temple during the Second World War, contrasting wartime Britain with the "warfare state" of Nazi Germany.[1]


The development of welfare states

Modern welfare states developed through a gradual process beginning in the late 19th century and continuing through the 20th. They differed from previous schemes of poverty relief due to their relatively universal coverage. The development of social insurance in Germany under Bismarck was particularly influential. Some schemes, like those in Scandinavia, were based largely in the development of autonomous, mutualist provision of benefits. Others were founded on state provision. The term was not, however, applied to all states offering social protection. The sociologist T.H. Marshall identified the welfare state as a distinctive combination of democracy, welfare and capitalism.

Examples of early welfare states in the modern world are the Sweden and New Zealand of the 1930s. Changed attitudes in reaction to the Great Depression were instrumental in the move to the welfare state in many countries, a harbinger of new times where "cradle-to-grave" services became a reality after the poverty of the Depression. In the period following the Second World War, many countries in Europe moved from partial or selective provision of social services to relatively comprehensive coverage of the population.

Arguments for and against the Welfare State

The concept of the Welfare State remains extremely controversial, and there is continuing debate over governments' responsibility for their citizens' well being.

Arguments in favor

  • humanitarian - the idea that people should not suffer unnecessarily
  • democratic - voters in most countries have favoured the gradual extension of social protection
  • ethical - reciprocity (or exchange) is nearly universal as a moral principle, and most welfare systems are based around patterns of generalised exchange. Altruism, or helping others, is a moral obligation in most cultures, and charity and support for poorer people are also widely thought to be moral.
  • religious - most major world religions emphasise the importance of social organisation rather than personal development alone. Religious obligations include the duty of charity and the obligation for solidarity
  • mutual self-interest - several national systems have developed voluntarily through the growth of mutual insurance
  • economic - social programs perform a range of economic functions, including e.g. the regulation of demand and structuring the labour market.
  • social - social programs are used to promote objectives regarding education, family and work
  • the failure of the private sector - advocates of social provision argue that the private sector fails to meet social objectives or to deliver the efficient production that economic theory claims.

Arguments against

  • libertarian - state intervention infringes individual freedom; the individual should not rely on others to subsidize his own consumption
  • conservative - social spending has undesirable effects on behavior, fostering dependency and reducing incentives to work
  • economic - social spending is costly and requires high taxes. The welfare state has undesirable economic effects and thus, paradoxically, a negative effect on the welfare of its citizens
  • individualist - social spending reduces the freedom of wealthy or successful individuals by transferring some of their wealth to others (this argument is important also for libertarians and conservatives)
  • anti-regulatory - the welfare state is accused of greater state control over businesses, stifling growth and creating unemployment.
  • the free market - advocates of the market believe that it leads to more efficient and effective production and service delivery than state-run welfare programs.
  • Common Sense - In order to sustain a welfare state for long periods of time the growth rate must remain well above 0% because the population continues to become older and older. Fewer workers support more and more retired so taxes go up on the remaining workers until the point of collapse. It has been shown that without immigration the growth rates of the western welfare states are at or below 0%. This is a major cause for concern in those countries and this is why you see many talk about reform.
  • Hayekian - the institutions of government are unable to collect knowledge to respond to specific circumstances as well as civil society is.
  • Religious - Some christians are opposed to a welfare state since it compells people to generosity, in opposition to the christian concept of giving which has to be voluntary. The more people give in taxes, the less opportunity they have to give charitably.

The welfare state and social expenditure

Welfare provision in the contemporary world tends to be more advanced in the countries with stronger and more developed nations; very poor countries generally have more limited welfare services. Within developed economies in Western Europe, however, there is very little association between economic performance and welfare expenditure (see A. B. Atkinson, Incomes and the Welfare State, Cambridge University Press 1995). There are individual exceptions on both sides, but as the table below suggests, the higher levels of social expenditure in the European Union are not associated with lower growth, lower productivity or higher unemployment, while the pursuit of liberal free-market policies leads neither to guaranteed prosperity nor to social collapse. The table shows that countries with more limited expenditure, like Australia, Canada and Japan, do no better or worse economically than countries with high social expenditure, like Belgium, Germany and Denmark. (For more in-depth comparison, see R Goodin, B Headey, R Muffels, H Dirven, The real worlds of welfare capitalism, Cambridge University Press, 2000.)

The figures below show, first, welfare expenditure as a percentage of GDP for OECD member states, and second, GDP per capita (PPP US$)in 2001:

Denmark 29.2 | $29000
Sweden 28.9 | $24180
France 28.5 | $23990
Germany 27.4 | $25350
Belgium 27.2 | $25520
Switzerland 26.4 | $28100
Austria 26.0 | $26730
Finland 24.8 | $24430
Italy 24.4 | $24670
Greece 24.3 | $17440
Norway 23.9 | $29620
Poland 23.0 | $9450
United Kingdom 21.8 | $24160
Netherlands 21.8 | $27190
Portugal 21.1 | $18150
Luxembourg 20.8 | $53780
Czech Republic 20.1 | $14720
Hungary 20.1 | $12340
Iceland 19.8 | $29990
Spain 19.6 | $20150
New Zealand 18.5 | $19160
Australia 18.0 | $25370
Slovak Republic 17.9 | $11960
Canada 17.8 | $27130
Japan 16.9 | $25130
United States 14.8 | $34320
Ireland 13.8 | $32410
Mexico 11.8 | $8430
South Korea 6.1 | $15090

Figures from the OECD for 2001 [2] and UNDP Human Development Report 2003 [3]

Note: China, India, Indonesia, Brazil, Russia, and Pakistan have been left off because the OECD did not have welfare figures for them. However Russia GDP Per capita is $7100 and is a former Communist state, the ultimate "Welfare State". China is still considered mostly Communist and its per capita income is $2840.

See also

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