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Welfare State

American Exceptionalism, Welfare-state Contraction Begins, The Generational Equity Debate, The Trend Toward Privatization

The term welfare state originated in the wartime Britain of the 1940s. The term initially contrasted the ideals of the British ‘‘welfare state’’ with those of Nazi Germany’s ‘‘Warfare State.’’ First used by William Temple, Archbishop of York, it signified a commitment to ensuring basic social protections for all citizens, rather than a commitment to waging war. The most basic definition of the welfare state refers to government responsibility for tending to its people’s welfare.

It is not an accident that, in all postwar capitalist democracies, the government has instituted some type of welfare-state programs. Go/sta Esping-Anderson suggests that capitalist economies create pressure for the development of the welfare state. In a capitalist economy, commodities such as food, clothing, and shelter are bought and sold on the market. Individuals and families cannot survive without purchasing these commodities. In order to obtain money to purchase goods and services, they must sell their labor power to an employer. If they cannot find an employer, they cannot purchase the commodities to satisfy their wants. The capitalist economy, making it impossible for most individuals and families to survive without employment, puts people at the mercy of economic misfortune. The resulting human misery creates pressure for public policies that cushion the negative effects of unemployment. Welfare-state policies can help to fill this gap, allowing people to maintain an acceptable standard of living outside the market. For instance, public pension programs and means-tested welfare programs both allow individuals to survive without selling their labor.

However, some analysts, particularly those working within the Marxist tradition, argue that these programs allow the state to deflect demands for the more fundamental (radical) changes they believe are needed. In Regulating the Poor, Francis Fox Piven and Richard Cloward contend that welfare-state programs expand in times of high unemployment, controlling the widespread discontent that threatens the established capitalist order.

The term welfare state is broad and encompasses many government programs designed to meet needs with respect to housing, education, transportation, nutrition, and social services; but the reference is most typically to programs designed to meet needs with respect to social insurance, social assistance (welfare), and health care. Social insurance programs, such as Social Security, are considered middle-class programs. They protect primarily working- and middle-class workers from the loss of income due to such contingencies as old age, unemployment, and disability. These programs are often associated with entitlements that are awarded independent of any proof of economic need. In contrast, welfare programs, such as Supplementary Security Income, provide benefits that are means-tested, that is, awarded after proof of economic need. Typically, these benefits are restricted to those with very low income and asset levels.

Welfare states differ widely in the scope of their means-tested and entitlement programs and their mix of private and public provision. Esping-Anderson (1990) differentiates between three types of welfare states. The first, found in France, Germany, and several other Western European nations, is designed to preserve preretirement status differences. Germany has, since the inception of its old-age pension program in 1889, relied heavily upon public pension benefits that were closely linked to payroll contributions over the years. The second type of welfare state, illustrated by Norway, puts greater emphasis on the principle of the universal rights of citizenship. In addition to its earnings-related pension, Norway provides a generous universal flat-rate old-age pension. The third type of welfare state generally found in Anglo-Saxon nations tend to be more residual in nature, being means tested, as with the old-age pension in Australia. Similarly, approximately one-third of British pensioners rely on means-tested benefits for at least part of their income.

Although most advanced welfare states have come to include a variety of different programs designed to meet the needs of different segments of society, including different age groups, programs for the older population have often played an important role during the early stages of welfare-state development. The early welfare-state programs in prewar Europe generally focused on social insurance benefits. Although pension programs were among the first of these programs, during the prewar years most nations provided relatively meager benefits intended primarily to protect workers against destitution in old age. During the decades following World War II most industrial nations enacted pension reforms calling for much more generous benefits; in many cases these pensions eventually came to replace a substantial fraction of the worker’s pre-retirement standard of living.

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