The Paradox of the Welfare State

Americans may complain about health care, schools, and crime, but they seem to have “difficulty even imagining a different sort of society,” contends historian Tony Judt. Their thinking is biased by what Judt calls “economism”—“the invocation of economics in all discussions of public affairs.” He calls for a “moral critique of the inadequacies of the unrestricted market.”

The “propensity to avoid moral considerations” in our public discourse is “an acquired taste,” Judt writes, and one that developed relatively recently. Classical economists of the 18th century were greatly interested in what Adam Smith called “moral sentiments.” Smith wrote that the “disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition . . . is . . . the great and most universal cause of the corruption of our moral sentiments.” He could have been describing America today, Judt despairs.

Ironically, this “corruption” stems from the success of the welfare state. Social democratic policies enacted in the years following the Great Depression and World War II built the middle class and reduced inequality. People began to feel that the safety nets provided by the state were no longer necessary. “The paradox” of welfare states in America, as well as Europe, “was quite simply that their success would over time undermine their appeal.”

By the early 1980s, Washington was at work undoing the welfare state, beginning with Reagan-era tax and employment reforms, followed by the deregulation of the financial sector, and culminating with welfare reform, in the shape of the Personal Responsibility and Work Opportunity Act of 1996 (“a more Orwellian title would be hard to conceive,” Judt says). A “cult of privatization” promised efficiencies and profits that have proved illusory. Inequality grew, and today the United States has a distribution of wealth comparable to China’s.

Judt says that the provisions of the welfare state—such as support for the needy and investments in public transit—do not always have to make economic sense in order to make “social sense.” The benefits are not in dollars, but in the value of having a “good society”—which undeniably comes at a price. He heralds a new era of social democracy, designed to reassure people in what is an “age of insecurity.” Imagining what such a society would look like shouldn't be so ­hard—the “remarkable achievements” of the 20th-century welfare state are an excellent model.

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The Source: "What Is Living and What Is Dead in Social Democracy?" by Tony Judt, in The New York Review of Books, December 17, 2009. 

Photo courtesy of Flickr/Russell Shaw Higgs