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Essay ni?? 4: Why have struggles over the nature and scope of welfare provision become such endemic features of contemporary societies? ‘many believe that the welfare state has become incompatible with other cherished goals, such as economic development, full employment, and even personal liberties’ (Welfare States in Transition, p.
1) The crisis of the welfare state cannot be attributed only to economic crisis. Since the mid-seventies, although the levels of growth never became as important as those attained during the post-war period, western economies have grown significantly, and steadily.
The conflict lays rather on the problems of equality vs. full-employment. There are three different ways in which the welfare state is generally thought to influence economies: according to the first, which Andersen calls ‘market-distortion views’, the welfare state stifles the market and erodes incentives to work, save and invest. A second popular interpretation says that the welfare state is unsustainable nowadays because of the problems of birth decline and greater life expectancy, which upset the ratio of contributors and that of dependent people.
The third widespread conception sees the welfare state as incompatible with the new global economy, which punishes profligate governments and uncompetitive economies. For Esping-Andersen, despite the fact that neither of these views is wrong, ‘the standard accounts are exaggerated and risk being misleading’ (Welfare States in Transition, p. 2). An argument commonly put forward by those who argue in favour of the welfare state is that it is necessary because ‘stable democracy demands a level of social integration that only genuine social citizenship can inculcate’ (Welfare States in Transition, p.
9). Indeed, Andersen points out that albeit heavy social contributions and taxes, high and rigid wages, and extensive job rights tends to favour high rates of unemployment (as we can see by the example of France, with a usual 10% minimum of unemployment rates), draconian roll-back policies also tend to prove counter-productive: they increase poverty and polarization, and disturb social order leading to rising expenditure on, for instance, prisons, law and public order maintain.
During the last two decades, policies of retrenchment have been taken in order to reduce the welfare state’s range of activities. It is necessary to examine some of the attempts to restructure the welfare states in the period since 1980. Why have many governments thought it necessary to reform welfare policies, and why do their attempts at reform so often encounter resistance? From the 1970’s on, pressures were exerted on the welfare state because demand for welfare provision increased, while the financial ability of governments to provide for it had been reduced.
The increasing demand was due to the rise of unemployment rates; the demographic problems of an ageing population (double weight: on health and pensions); and to the fact that the relation between those who are paying taxes and those depending on welfare provision is changing: the proportion of working population is not growing as fast as that of dependent population. This is enhanced by the increasing pressure on governments not to increase taxes (if not to cut them). Such were the main causes that led to the roll-back policies of the 1970s and 1980s, championed by the Thatcher and Reagan administrations.
Before analysing the different pathways of retrenchment taken by different countries, I shall look more carefully at the challenges they were trying to overcome. For Esping-Andersen, the new challenges to the welfare state are of two kinds: those of the first type are specific to the welfare state itself; the second type ones are provoked by exogenous forces. The former express the growing disjuncture between the existing social protection schemes and evolving needs and risks.
This is due to the fact that welfare states, today, are not prepared to respond to the new demands caused by changes in society structure, such as, for instance, the increasing number of single-parent households: ‘the contemporary welfare state addresses a past social order; its ideals of universalism and equality emerged with reference to a relatively homogenous working class. ‘(The Three Worlds of The Welfare Capitalism, p. 9). The latter, the exogenous forces, are the changing economic conditions themselves, such as slower economic growth and deindustrialization, and the unfavourable demographic changes I have already mentioned.
These trends, as we have seen, have often been said to condemn the welfare state in the long run. However, as Andersen points out, one should note that ageing population does not necessarily imply crisis: its costs depend on long-run productivity growth. What is more, demographic growth is subject to political management, and measures such as higher retirement ages, restraining black-market employment and irregular market, and promoting full female employment can help to prevent the negative consequences of this demographic burden.
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