Friday, March 14, 2014
Palladian (Omni Shoreham)
Many believe that the welfare state undermines productivity and economic growth and that compared to European nations, the United States was a welfare state laggard, and the current American welfare state is unusually small. All three propositions are at the very least highly questionable and indeed, we argue, false. This paper debunks these three central myths by showing how very reasonable changes in measurement reverse the myths. The socialized programs that constitute the welfare state—public education and health and social insurance—enhance the productivity of capitalism and spur economic development. In provision of mass public elementary and secondary education, for most of the nineteenth and twentieth century the United States was the world leader. European welfare states appear to be much larger only when very selective measures of size are employed.
In the first section of the paper, we discuss measurement, including the definition and boundaries of the welfare state and the sources for our data. The second, third, and fourth sections show respectively that welfare states enrich rather than impoverish nations, that the contemporary American welfare state is not unusually small and that for most of its history, the United States was a leader in the provision of mass public education. The last section concludes with some policy implications for the US, other rich nations, and developing nations.
