The US Growth Model and Welfare State

The US growth model and welfare state have three features that render the United States sui generis with respect to other welfare states:  size, scope and status. The US economy is between 3.5 (Japan) and 125 (New Zealand) times as large as the other rich OECD economies on a PPP basis. Consequently the US economy is considerably more sectorally diverse than the average OECD economy. Second, the United States is also unlike the other rich OECD states in that it is an imperial state, whose politico-military influence is global, and whose firms’ ambit is likewise global. The empire generated immigrant backwash further divides the already fragmented constituency for a welfare state providing citizenship based protection. An imperial role also means that US firms’ growth strategies rest on global production chains, protection for intellectual property, and the re-location of revenue to reduce taxes to the minimum level needed to fund the public goods they desire. Third, unlike most OECD welfare states, the fragmented and tax expenditure based US welfare state has started redistribute income upwards in the 2000s as a consequence of worsening income inequality. Thinking about the US welfare state and growth regime this way shows the limits of existing typologies, helps make sense of sectoral level welfare states, and helps illuminate the economic and social contradictions currently playing out in the US empire.