Topic: The welfare state is like a beached whale: slowly expiring but impossible to move” – Discuss.
Length: 1477 Words


The issue of whether the welfare state is necessary or indeed justifiable has been something of a hot topic since the late 70’s and early 80’s when cracks in welfare state began to intensity. However how do we define what a welfare state is? The ‘Oxford Concise Dictionary of Politics’ gives a somewhat lengthy definition and short history of the welfare state, the first sentence of which reads thus…

“Welfare State – A system in which the government undertakes the main responsibility for providing the social and economic security of the states population by means of pensions, social security benefits, free health care, and so forth.” (McLean and McMillan, 2003 p570).

It is important to take into account the differences in the nature of the welfare state and the reasons for these variants if we are to properly discuss the proposed statement. Like almost all questions raised in comparative politics there is no clear answer to a question, in this case the statement may be correct in the examples of some welfare states yet grossly untrue in other manifestations. Therefore it becomes important to look at two welfare states which vary greatly in their nature, in this essay I will investigate the advantages and disadvantages of the welfare systems in USA and Sweden.

Forms and applications of the welfare state vary immensely from country to country, particularly those of different heritages. In ‘Comparative Government and Politics: An Introduction’ Hague and Harrop identify five reasons why the level of welfare differs in this fashion, three of these reasons are relevant to my comparison. Firstly unitary states (e.g. Sweden) tend to be high spenders than in federal states (e.g. USA), ‘Unitary states permit national welfare schemes to be set and administered, often through local government’ (Hague and Harrop, 2003, p316). Secondly welfare spending is higher in countries where parties on the left of the political spectrum are in government or have a large share of political control (Hague and Harrop, 2003, p316), in Sweden the Social Democrat party is extremely successful while in the American party political system there is a stronger centre-right tradition. Lastly ‘low spenders include countries where collective provision is still seen as ‘state welfare’ rather than a ‘welfare state’. The USA is still seen as an example of this ‘residual’ or ‘liberal’ welfare state’. (Hague and Harrop, 2003, p316).

Evidence of problems with most welfare states are fairly easy to find. ‘The expansion of the state proved to be expensive and ultimately unaffordable.” (Hague and Harrop, 2003, p20) considering the percentage of national income spent on welfare by West European states raised from 3% in 1900 to 30% in 1975 (Pierson, 1998). In fact these same West European states had a top rate of income tax that ‘reached an inhibiting 63% by the mid 1970’s’ (Steinmo, 2003, p221). The main sources of these problems were an increasingly growing public sector, a shift of population demographics towards dependants and a decline in working populations who are the contributors, through tax, of the welfare state system (Hague and Harrop, 2003, p21). However it was not only Sweden with their highly funded welfare state system that was to suffer in this fashion. The US has had a functioning (if slightly minimalised) state welfare plan since the New Deal in the thirties, the US was described by one academic as ‘a giant insurance company with a small defence affiliate’ (Plender, 2003) (Hague and Harrop, 2003, p317).

Economic pressures also put stress on a country like Sweden with a high spending on welfare. Resources that could be invested in making the state economically competitive are instead injected into the welfare system. Where contacts would be sold to private businesses in the US they are handed to the public sector in Sweden, discouraging competition and therefore damaging efficiency, productivity and the quality of the goods or services produced. However ‘even strong supporters of the welfare state may come to acknowledge the need for adjustment, and even severe critics may need to face the political realities of continuing popular enthusiasm for social provision’ (Pierson, 1996, p14).

Now we have identified the common problems and flaws of the welfare state, thus identifying it as a ‘beached whale’ we can now look into whether it is indeed ‘impossible to move’. The two options a state can choose between when faced with the challenges of an increasingly dependant welfare state is to either ‘Retrench’ or ‘Reform’. In the US (and most other English speaking democracies) Ronald Regan (American President, 1980-1988) began to deconstruct the states role in the provision of state welfare, this was matched by his conservative counterparts throughout the Anglo-American world, most notably Margaret Thatcher (UK Prime Minister, 1979-1990) (Hague and Harrop, 2003, p21). ‘But there are reasons to be sceptical of (1) whether the US model was that successful and, if so, whether it was due to increased wage dispersion, (2) whether movement in this direction by the Christian democratic and social democratic welfare states would have large employment creation effects, (3) if they did, whether it would be worth the social costs of doing so, and (4) whether it is politically feasible for European governments to move in this direction even if it were deemed desirable.’ (Pierson, 1996, p142).

R. B. Freeman, an academic defender of the welfare state provided many reasons to be sceptical of the Angelo-American policy of retrenchment being better than a reformation policy or one of ‘live and let live’. He points to two countries which aimed to replicate the retrenchment seen in the US, ‘the United Kingdom and New Zealand, do not support the view that the American experience is replicable. Both countries have had modest upturns in employment recently but both are still above 6 per cent unemployment and thus are not faring better than the Netherlands, Denmark, or Sweden.’ (Pierson, 1996, p142).

Another problem faced by those nations which opt for retrenchment is the mounting social costs that the welfare state combats. ‘Despite the decline in unemployment in the USA, poverty increased modestly from 16.4 per cent of households in 1979 to 17.9 per cent in 1994, and inequality increased substantially, with the gini index for disposable income rising from the 0.31 shown in Table 4.3 for 1979 to 0.37 in 1994’. (Pierson, 1996, p142/143). Indeed, table 4.3 in ‘The New Politics of the Welfare State’ shows an alarming proportion of dependants with ‘disposable incomes below 50% of the average disposable (post-tax and post-transfer) household income’ (Pierson, 1996, 120). In Sweden (1981) 0.3% of ‘households in which the household head is over 65 with disposable incomes below 50% of the average disposable household income’ but in the US (1979) this figure is a staggering 21.8%, it is possible that these values has changes in the last 25 or so years but since policy changes on welfare have been few and far between in both states there it is unlikely there has been much of a swing in either direction.

In Sweden the general consensus is that an individuals right to welfare is tantamount to his or her right to vote or be treated justly, there is a belief that this right to welfare is representative of the individuals citizenship and this makes Swedes critical of any change what may take this protection away from them, even to the extent of further integration towards continental Europe. In the US the opposite is true, those who use state welfare are (if unfairly) sometimes viewed as an ‘underclass’, merely the bottom caste of an otherwise healthy and functioning capitalist society. Any possible tax raises to support welfare are fiercely opposed by the majority of the US population, the Americans view that their right to welfare is not as important as a lack of state interference over as many aspects of their lives as possible.

In balance I support the welfare state in the majority of cases, the social benefits of a functioning welfare state outweigh the monetary drain inflicted upon the state. I would say that that statement proffered by the question is extremely exaggerated at the least. The welfare state in most cases in no way represents a beached whale, in most cases the ‘problem’ of an unaffordable welfare state can be handled by policy reform such as switching from Pay-As-You-Go pension schemes to Funded pension schemes. In extreme cases like those seem in America and the UK during the late 70s retrenchment is also an option, which discredits the notion that the welfare state is ‘impossible to move’.


Bibliography

Hague, R. and Harrop, M.
Comparative Government and Politics 6th Edition
New York, Palgrave Macmillan, 2004

Heywood, A. (Used for Reference)
Macmillan Foundations, Politics
London, Macmillan Press Ltd, 1997

McLean, I. and McMillan, A.
Oxford Concise Dictionary of Politics
Oxford, Oxford University Press, 2003

Pierson, P.
The New Politics of the Welfare State
http://www.oxfordscholarship.com/oso/public/content/politicalscience/0198297564/toc.html


(c)2004 Dave Randall