Welfare State: Objectives, Expansion, and Key Actions
Objectives of the Welfare State: Key Actions
Safety and equality are two basic dimensions that have historically served three priorities: providing economic security, reducing inequality, and fighting poverty.
The balance of resources allocated to these objectives has varied throughout the different stages of welfare system development across countries.
The three objectives can be summarized as follows:
Objective: Financial Security
Maintaining a standard of living for citizens, not as a charitable gesture, but as a political right. This includes a guaranteed minimum income and reduced social and economic insecurity related to contingencies like illness and unemployment. This is a shared goal of both the Bismarckian Welfare State and the universal model championed by Lord Beveridge.
Objective: Reduction of Inequality
Redistributing income among members of society through taxes and transfers, and through the public provision of certain goods that meet basic needs. These goods, called merit goods, should be ensured by the state (e.g., education, health) because they generate positive externalities that the market does not internalize.
Inequality reduction can be achieved vertically (towards lower incomes) and horizontally (recognizing differences in welfare benefits based on relevant individual factors).
Objective: Fighting Poverty
Enabling social integration of the excluded. This involves:
- Economic Benefits: Pensions for security, unemployment benefits, family assistance, education, free healthcare, etc.
- Benefits to Reduce Inequality: Reducing income concentration, increasing income in lower-income groups, and achieving equality of opportunity.
- Benefits to Combat Poverty: Promoting the integration of the socially excluded through programs to combat poverty, non-contributory benefits, and recognition of minimum welfare payments or unemployment benefits.
The extension of these policies often benefits the middle classes more, as they have three types of interests in the welfare state: as taxpayers, suppliers, and consumers. They have strong connections with political power, allowing them to maintain or expand welfare state services aimed at them. This is less true for marginalized individuals (Matthew effect) who are excluded due to lack of information. Spending on education, healthcare, and transportation often benefits higher-income groups, while only direct municipal housing costs primarily favor the poor. When spending is universalized, more people must be coerced into paying higher taxes, which has consequences for the legitimacy of the welfare state.
The rationale for these actions lies in the importance of altruism and the positive externalities resulting from eliminating poverty and achieving social and political stability.
Expansion of the Welfare State
Reasons for the Expansion
Economic Factors
After World War II, developed countries experienced a period of economic expansion and growth. This facilitated the achievement of the welfare state in a less costly and more durable manner than if it were left solely to the market, significantly improving the unequal distribution of income derived from the capitalist mode of production. The welfare state also helped reduce labor costs from capital by socializing the cost of education, health, technical training, and a high degree of direct wage replacement through the free supply of goods and services. The success of Keynesian theory demonstrated the results arising from increased government intervention.