Welfare State

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The welfare state is a political system based on the premise that the government (and not the individual, corporations, or the local community) has the responsibility for the well being of its citizens, by ensuring that a minimum standard of living is within everyone's reach.

1 Early Welfare State
2 Modern Welfare States
3 External links
4 Relevant Discussion Threads
- 4.1 Data and statistics

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Early Welfare State

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.

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Modern 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.

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. 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.

A redistributive welfare state infringes upon individual freedom and forces the individual to subsidize the consumption of others. Social spending reduces the right of individuals to transfer some of their wealth to others, and is tantamount to a seizure of private property.

Formerly, and in a market context, welfare is privately provided. The welfare state diminishes the capacity of individuals to develop this function. A welfare state imposes greater burdens on private businesses. More efficient and effective production and service delivery is accomplished in the market than state-run welfare programs. 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.

The welfare state also has undesirable effects on behavior, fostering dependency, destroying incentives and sapping motivation to work. When the state assumes a larger burden for the financial care of people, individuals begin to feel that it is no longer necessary for them to donate to charities or give to philanthropies. A welfare state also makes citizens dependent and less inclined to work.

The welfare 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.

Another criticism comes from Classical Liberalism. Namely, that Welfare is theft of Property or Labor. A citizen owns his body & owns the product of his body's labor (i.e. goods, services, or money). To remove money from the working citizen and give it to a non-working citizen is theft of the worker's property and/or labor & a violation of his most basic bodily rights.

The welfare state results in high taxes. In Denmark, the tax level was 50.4% of GDP in 2002, and in Sweden, the tax level was at 50.3% of GDP in 2002.

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.

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