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^{[citation needed]}, because all aspects of welfare are considered; a "safety net" is not enough, nor are minimum standards.^{[citation needed]} 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.

Contents 1 Etymology 2 The development of welfare states 3 Arguments for and against the welfare state 3.1 Arguments in favor 3.2 Arguments against 3.3 Criticisms 4 The welfare state and social expenditure 5 See also 6 References 7 External links 7.1 Data and statistics

[edit] Etymology

The English 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]

In German, a roughly equivalent term (Sozialstaat, "social state") had been in use since 1870. There had been earlier attempts to use the same phrase in English, for example in Munroe Smith's text "Four German Jurists",^[2] but the term did not enter common use until William Temple popularized it.

In French, the synonymous term "providence state" (État-providence) was originally coined as a sarcastic pejorative remark used by opponents of welfare state policies during the Second Empire (1854-1870).

In Spanish and many other languages, an analogous term is used: estado del bienestar.

[edit] The development of welfare states

An early version of the welfare state appeared in China during the Song Dynasty in the 11th century. Prime Minister Wang Anshi believed that the state was responsible for providing its citizens the essentials for a decent living standard. Accordingly, under his direction the state initiated agricultural loans to relieve the farming peasants. He appointed boards to regulate wages and plan pensions for the aged and unemployed. These reforms were known as the "new laws," New Policies, or xin fa.

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 Sweden (Folkhemmet), Germany, the Netherlands, and New Zealand in the 1930s. Germany is generally held to be the first social welfare state. 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. During the Great Depression, it was seen as an alternative "middle way" between communism and fascism.^[3] 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.

The activities of present-day welfare states extend to the provision of both cash welfare benefits (such as old-age pensions or unemployment benefits) and in-kind welfare services (such as health or childcare services). Through these provisions, welfare states can affect the distribution of wellbeing and personal autonomy among their citizens, as well as influencing how their citizens consume and how they spend their time.^[4][5]

After the discovery and inflow of the oil revenue, Saudi Arabia,^[6][7] Kuwait, and United Arab Emirates all became welfare states. However, the services are strictly for citizens and these countries do not accept immigrants; even those born in these countries do not qualify for citizenship unless of they are of the parentage belonging to the respective countries.

[edit] Arguments for and against the welfare state

The concept of the welfare state remains controversial, and there is continuing debate over governments' responsibility for their citizens' welfare.

[edit] Arguments in favor

• humanitarian - the right to the basic necessities of life is a fundamental human right, and people should not be allowed to suffer unnecessarily through lack of provision.
• democratic - the gradual extension of social protection is increasingly favoured by the citizens of mature economies, who have approved these as part of political election campaign promises.
• ethical - reciprocity (or fair exchange) is nearly universal as a moral principle, and most welfare systems are based around patterns of generalised exchange.
• altruism - helping others is a moral obligation in most cultures; charity and support for people who cannot help themselves are also widely thought to be moral choices.
• utilitarian - the same amount of money will produce greater happiness in the hands of a less well-off person than if given to a well-off person; thus, redistributing wealth from the rich to the poor will increase the total happiness in society.
• religious - most major world religions emphasize the importance of social organization 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.
• market failure – in certain cases, the private sector fails to meet social objectives or to deliver efficient production, due to such things as monopolies, oligopolies, or asymmetric information.
• economies of scale - some services can be more efficiently paid for when bought "in bulk" by the government for the public, rather than purchased by individual consumers. The highway system, water distribution, the fire department, universal health, and national defense might be some examples.
• anti-criminal - people with low-income do not need to resort to crime to stay alive, thus reducing crime rate

[edit] Arguments against

• moral (compulsion) – libertarians believe that the "nanny state" infringes upon individual freedom, forcing the individual to subsidize the consumption of others. They argue that social spending reduces the right of individuals to transfer some of their wealth to others, and is tantamount to a seizure of private property.
• religious/paternalism – Some Protestant Christians also believe that only voluntary giving (through private charities) is virtuous. They hold personal responsibility to be a virtue, and they believe that a welfare state diminishes the capacity of individuals to develop this virtue.
• anti-regulatory - the welfare state is accused of imposing greater burdens on private businesses, of potentially slowing growth and creating unemployment.
• efficiency - advocates of the free market believe that it leads to more efficient and effective production and service delivery than state-run welfare programs. They argue that high social spending is costly and must be funded out of higher levels of taxation. According to Friedrich Hayek, the market mechanism is much more efficient and able to respond to specific circumstances of a large number of individuals than the State.
• motivation and incentives - the welfare state may have undesirable effects on behavior, fostering dependency, destroying incentives and sapping motivation to work.
• charitable - by the state assuming a larger burden for the financial care of people, individuals may feel it is no longer necessary for them to donate to charities or give to philanthropies.
• managerial statecraft - this paleoconservative view posits the welfate state is part of an ongoing regime that remains in power, regardless of what political party holds a majority. It acts in the name of abstract goals, such as equality or positive rights, and uses its claim of moral superiority, power of taxation and wealth redistribution to keep itself in power.

[edit] Criticisms

Arguably, the idea of a welfare state receives most of its criticism in the United States, which has much more limited welfare services than most developed countries. Some of this criticism concerns the idea that a welfare state makes citizens dependent and less inclined to work. This is unsupported by the economic evidence; there is no association between economic performance and welfare expenditure in developed countries (see A. B. Atkinson, Incomes and the Welfare State, Cambridge University Press, 1995). Similarly, there is no evidence for the contention that welfare states impede progressive social development. R. E. Goodin et al, in The Real Worlds of Welfare Capitalism (Cambridge University Press, 1999), show that on major economic and social indicators the United States performs worse than the Netherlands, which has a high commitment to welfare provision.

Another criticism is that the welfare state allegedly provides its dependents with a similar level of income to the minimum wage. Critics argue that fraud and economic inactivity are apparently quite common now in the United Kingdom and France. Some conservatives in the UK claim that the welfare state has produced a generation of dependents who rely solely upon the state for income and support instead of working. They believe that the welfare state was created (in 1948 in the UK) to provide a carefully selected number of people with a subsistence level of benefits in order to alleviate poverty, but that it has been overly expanded to provide a large number of people indiscriminately with more money than the country can afford. Some feel that this argument is demonstrably false: the benefits system in the UK hands out considerably less money than the national minimum wage, and receipt of benefits is dependent on the regular submission of proof that the beneficiary deserves the money, either as a result of genuine incapacity or as a reward for seeking employment.

A third criticism of the welfare state is that it results in high taxes. This is sometimes true, as evidenced by places like Denmark (tax level at 50.4% of GDP in 2002) and Sweden (tax level at 50.3% of GDP in 2002). However, these countries also have high wage economies and high GNPs; high taxes do not imply poor economic performance. In addition, they have a strong system of progressive taxation, which ensures that less burden falls on the poor and middle classes. Lowering taxes would not necessarily result in more spending money for the average citizen (since a lot of free services would no longer be free).

A fourth criticism of the welfare state is the belief that welfare services provided by the state are more expensive and less efficient than the same services would be if provided by private businesses. In 2000, Professors Louis Kaplow and Steven Shafell published two papers, arguing that any social policy based on such concepts as justice or fairness would result in an economy which is Pareto inefficient. Anything which is supplied free at the point of consumption would be subject to artificially high demand, whereas resources would be more properly allocated if provision reflected the cost. A first response might be that the purpose of state-provided welfare is to respond to social needs, not necessarily to be cheaper overall. In a welfare state, the poor and lower-middle classes receive certain services free of charge, whereas in non-welfare states they would have to pay for those services, and could possibly not afford them. More fundamentally, although private provision can reduce unit costs, it often does so through adverse selection, or exclusion of disproportionately expensive cases.

The assumption that public provision of social services is more costly overall is often backed by examples of very large public institutions - such as the British National Health Service, which is the third greatest employer in the world. However, several studies have shown that national health care systems tend to be cheaper than equivalent provision through private care.

The most extreme criticisms of states and governments, are from anarchists, who believe that all states and governments are undesirable and/or unnecessary. Nonetheless "social democrats and anarchists always agreed, fairly generally, on so-called 'welfare state measures'" in preference to the 'free market'.^[8]

[edit] 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 economies. Poor countries, on the other hand, tend to have limited social services.

Within developed economies, however, there is very little correlation between economic performance and welfare expenditure.^[9] 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, nor with higher growth, higher productivity or lower unemployment. Likewise, the pursuit of 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. The table does not show the effect of expenditure on income inequalities, and does not encompass some other forms of welfare provision (such as occupational welfare).

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

Nation	% of GDP	Per capita
Denmark	29.2	$29,000
Sweden	28.9	$24,180
France	28.5	$23,990
Germany	27.4	$25,350
Belgium	27.2	$25,520
Switzerland	26.4	$28,100
Austria	26.0	$26,730
Finland	24.8	$24,430
Netherlands	24.3	$35,184
Italy	24.4	$24,670
Greece	24.3	$17,440
Norway	23.9	$29,620
Poland	23.0	$9,450
United Kingdom	21.8	$24,160
Portugal	21.1	$18,150
Luxembourg	20.8	$53,780
Czech Republic	20.1	$14,720
Hungary	20.1	$12,340
Iceland	19.8	$29,990
Spain	19.6	$20,150
New Zealand	18.5	$19,160
Australia	18.0	$25,370
Slovak Republic	17.9	$11,960
Canada	17.8	$27,130
Japan	16.9	$25,130
United States	14.8	$34,320
Ireland	13.8	$32,410
Mexico	11.8	$8,430
South Korea	6.1	$15,090

Figures from the OECD^[10] and the UNDP.^[11]

Note: no data for China, India, Indonesia, Brazil, Russia, and Pakistan, who are not members of the OECD.

[edit] See also

• Health care
• Mixed economy
• National Health Service
• Nationalization
• Public ownership
• Privatization
• Social security
• Social stratification
• Social welfare
• Social work
• Swedish welfare
• Folkhemmet
• Corporate welfare
• Social Protection
• Fifth power

[edit] References

[edit] External links

• Center for Public Policy
• Social Policy Virtual Library
• Social Sciences Information Gateway
• The Welfare State in Australia
• Race and Welfare in the United States
• The Welfare State: A Critique
• Shavell's criticism of social justice programmes
• Kaplow's criticism of social justice programmes.
• World report on Welfare State

[edit] Data and statistics

• OECD - Health Policy and Data: Health Division Website
• OECD - National Accounts: Statistics Portal