Universal basic income

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Universal_basic_income 

In 2013, eight million 5-cent coins (one per inhabitant) were dumped on the Bundesplatz, Bern to support the 2016 Swiss referendum for a basic income (which was rejected, 75%–25%).

Universal basic income (UBI), also called unconditional basic income, citizen's basic income, basic income guarantee, basic living stipend, guaranteed annual income, universal income security program or universal demogrant, is a sociopolitical financial transfer concept in which all citizens of a given population regularly receive a legally stipulated and equal financial grant paid by the government without a means test. A basic income can be implemented nationally, regionally, or locally. If the level is sufficient to meet a person's basic needs (i.e., at or above the poverty line), it is sometimes called a full basic income; if it is less than that amount, it may be called a partial basic income.

There are several welfare arrangements that can be viewed as related to basic income. Many countries have something like a basic income for children. Pension may be partly similar to basic income. There are also quasi-basic income systems, like Bolsa Familia in Brazil, which is conditional and concentrated on the poor, or the Thamarat Program in Sudan, which was introduced by the transitional government to ease the effects of the economic crisis inherited from the Bashir regime. The Alaska Permanent Fund is essentially a partial basic income, which averages $1,600 annually per resident (in 2019 currency). The negative income tax (NIT) can be viewed as a basic income in which citizens receive less and less money until this effect is reversed the more a person earns.

Several political discussions are related to the basic income debate, including those regarding automation, artificial intelligence (AI), and the future of the necessity of work. A key issue in these debates is whether automation and AI will significantly reduce the number of available jobs and whether a basic income could help prevent or alleviate such problems by allowing everyone to benefit from a society's wealth, as well as whether a UBI could be a stepping stone to a resource-based or post-scarcity economy. The economic impact of the COVID-19 pandemic prompted some countries to send direct payments to citizens.

History

Antiquity

In an early example, Trajan, emperor of Rome from 98–117 AD, personally gave 650 denarii (equivalent to perhaps US$260 in 2002) to all common Roman citizens who applied.

16th to 18th century

In his Utopia (1516), English statesman and philosopher Sir Thomas More depicts a society in which every person receives a guaranteed income. Spanish scholar Johannes Ludovicus Vives (1492–1540) proposed that the municipal government should be responsible for securing a subsistence minimum to all its residents "not on the grounds of justice but for the sake of a more effective exercise of morally required charity." Vives also argued that to qualify for poor relief, the recipient must "deserve the help he or she gets by proving his or her willingness to work." In the late 18th century, English Radical Thomas Spence and English-born American philosopher Thomas Paine both had ideas in the same direction.

Paine authored Common Sense (1776) and The American Crisis (1776–1783), the two most influential pamphlets at the start of the American Revolution. He is also the author of Agrarian Justice, published in 1797. In it, he proposed concrete reforms to abolish poverty. In particular, he proposed a universal social insurance system comprising old-age pensions and disability support and universal stakeholder grants for young adults, funded by a 10% inheritance tax focused on land.

Early 20th century

Around 1920, support for basic income started growing, primarily in England.

Bertrand Russell (1872–1970) argued for a new social model that combined the advantages of socialism and anarchism, and that basic income should be a vital component in that new society.

Dennis and Mabel Milner, a Quaker married couple of the Labour Party, published a short pamphlet entitled "Scheme for a State Bonus" (1918) that argued for the "introduction of an income paid unconditionally on a weekly basis to all citizens of the United Kingdom." They considered it a moral right for everyone to have the means to subsistence, and thus it should not be conditional on work or willingness to work.

C. H. Douglas was an engineer who became concerned that most British citizens could not afford to buy the goods that were produced, despite the rising productivity in British industry. His solution to this paradox was a new social system he called social credit, a combination of monetary reform and basic income.

In 1944 and 1945, the Beveridge Committee, led by the British economist William Beveridge, developed a proposal for a comprehensive new welfare system of social insurance, means-tested benefits, and unconditional allowances for children. Committee member Lady Rhys-Williams argued that the incomes for adults should be more like a basic income. She was also the first to develop the negative income tax model. Her son Brandon Rhys Williams proposed a basic income to a parliamentary committee in 1982, and soon after that in 1984, the Basic Income Research Group, now the Citizen's Basic Income Trust, began to conduct and disseminate research on basic income.

Late 20th century

In his 1964 State of the Union address, U.S. President Lyndon B. Johnson introduced legislation to fight the "war on poverty". Johnson believed in expanding the federal government's roles in education and health care as poverty reduction strategies. In this political climate the idea of a guaranteed income for every American also took root. Notably, a document, signed by 1200 economists, called for a guaranteed income for every American. Six ambitious basic income experiments started up on the related concept of negative income tax. Succeeding President Richard Nixon explained its purpose as "to provide both a safety net for the poor and a financial incentive for welfare recipients to work." Congress eventually approved a guaranteed minimum income for the elderly and the disabled.

In the mid-1970s the main competitor to basic income and negative income tax, the Earned income tax credit (EITC), or its advocates, won over enough legislators for the US Congress to pass laws on that policy. In 1986, the Basic Income European Network, later renamed to Basic Income Earth Network (BIEN), was founded, with academic conferences every second year. Other advocates included the green political movement, as well as activists and some groups of unemployed people.

In the latter part of the 20th century, discussions were held around automatization and jobless growth, the possibility of combining economic growth with ecological sustainable development, and how to reform the welfare state bureaucracy. Basic income was interwoven in these and many other debates. During the BIEN academic conferences there were papers about basic income from a wide variety of perspectives, including economics, sociology, and human right approaches.

21st century

In recent years the idea has come to the forefront more than before. The Swiss referendum about basic income in Switzerland 2016 was covered in media worldwide, despite its rejection. Famous business people like Mark Zuckerberg and Elon Musk have lent their support, as have high-profile politicians like Jeremy Corbyn.

In the US Democratic Party primaries, a newcomer, Andrew Yang, touted basic income as his core policy. His policy, referred to as a "Freedom Dividend", would have provided American citizens US$1000 a month.

Response to COVID-19

As a response to the COVID-19 pandemic and related economic impact, basic income and similar proposals such as helicopter money and cash transfers were increasingly discussed across the world. Most countries have implemented forms of partial unemployment schemes, which effectively subsidized workers' incomes without work requirement. Some countries like the United States, Spain, Hong Kong and Japan introduced direct cash transfers to citizens.

In Europe, a petition calling for an "emergency basic income" gathered more than 200,000 signatures, and polls suggested widespread support in public opinion for it. Unlike the various stimulus packages of the US administration, the EU's stimulus plans did not include any form of income-support policies.

Differences from guaranteed minimum income

Basic income means the provision of identical payments from a government to all of its citizens. Guaranteed minimum income (GMI) is a system of payments (possibly only one) by a government to citizens who fail to meet one or more means tests. While most modern countries have some form of GMI, a basic income is rare.

Basic income vs negative income tax

Two ways of looking at basic income when combined with a flat income tax, both of which result in the same net income (orange line). 1. (red) stipend with conventional tax for income above the stipend. 2. (blue) Negative tax for low-income people and conventional tax for high-income people.

The diagram shows a basic income/negative tax system combined with flat income tax (the same percentage in tax for every income level).

Y is here the pre-tax salary given by the employer and y' is the net income.

Negative income tax

For low earnings there is no income tax in the negative income tax system. They receive money, in the form of a negative income tax, but they don't pay any tax. Then, as their labour income increases, this benefit, this money from the state, gradually decreases. That decrease is to be seen as a mechanism for the poor, instead of the poor paying tax.

Basic income

That is however not the case in the corresponding basic income system in the diagram. There everyone typically pays income taxes. But on the other hand everyone also gets the same amount in basic income.

But the net income is the same

But, as the orange line in the diagram shows, the net income is anyway the same. No matter how much or how little one earns, the amount of money one gets in one's pocket is the same, regardless of which of these two systems is used.

Basic income and negative income tax are generally seen to be similar in economic net effects, but there are some differences:

• Psychological. Philip Harvey accepts that "both systems would have the same redistributive effect and tax earned income at the same marginal rate" but does not agree that "the two systems would be perceived by taxpayers as costing the same".
• Tax profile. Tony Atkinson made a distinction based on whether the tax profile was flat (for basic income) or variable (for NIT).
• Timing. Philippe van Parijs states that "the economic equivalence between the two programs should not hide that the fact that they have different effects on recipients because of the different timing of payments: ex-ante in Basic Income, ex-post in Negative Income Tax".

When the level of the basic income is high enough for people to live purely from that income, it is sometimes referred to as a "full basic income". If not, it is often referred to as a "partial basic income". No country has yet introduced either to all its citizens.

Perspectives and arguments

Main themes

Basic income and automation

There is a prevailing opinion that we are in an era of technological unemployment – that technology is increasingly making skilled workers obsolete.

Prof. Mark MacCarthy (2014)

One central rationale for basic income is the belief that automation and robotisation could lead to a world with fewer paid jobs. U.S. presidential candidate and nonprofit founder Andrew Yang has stated that automation caused the loss of 4 million manufacturing jobs and advocated for a UBI (which he calls a Freedom Dividend) of $1,000/month rather than worker retraining programs. Yang has stated that he is heavily influenced by Martin Ford. Ford, in his turn, believes that the emerging technologies will fail to deliver a lot of employment; on the contrary, because the new industries will "rarely, if ever, be highly labor-intensive". Similar ideas have been debated many times before in history—that "the machines will take the jobs"—so the argument is not new. But what is quite new is the existence of several academic studies that do indeed forecast a future with substantially less employment, in the decades to come. Additionally, President Barack Obama has stated that he believes that the growth of artificial intelligence will lead to increased discussion around the idea of "unconditional free money for everyone".

Basic income and economics

Some proponents of UBI have argued that basic income could increase economic growth because it would sustain people while they invest in education to get higher-skilled and well-paid jobs. However, there is also a discussion of basic income within the degrowth movement, which argues against economic growth.

The cost of basic income is one of the biggest questions in the public debate as well as in the research. But the cost depends on many things. It first and foremost depends on the level of the basic income as such, and it also depends on many technical points regarding exactly how it is constructed. According to Karl Widerquist it also depends heavily on what one means with the concept of "cost".

Basic income and work

Many critics of basic income argue that people in general will work less, which in turn means less tax revenue and less money for the state and local governments. Although it is difficult to know for sure what will happen if a whole country introduces basic income, there are nevertheless some studies who have attempted to look at this question.

• In negative income tax experiments in the United States in the 1970 there was a five percent decline in the hours worked. The work reduction was largest for second earners in two-earner households and weakest for primary earners. The reduction in hours was higher when the benefit was higher.
• In the Mincome experiment in rural Dauphin, Manitoba, also in the 1970s, there were slight reductions in hours worked during the experiment. However, the only two groups who worked significantly less were new mothers, and teenagers working to support their families. New mothers spent this time with their infant children, and working teenagers put significant additional time into their schooling.
• A study from 2017 showed no evidence that people worked less because of the Iranian subsidy reform (a basic income-reform).

Regarding the question of basic income vs jobs there is also the aspect of so-called welfare traps. Proponents of basic income often argue that with a basic income, unattractive jobs would necessarily have to be better paid and their working conditions improved, so that people still do them without need, reducing these traps.

Philosophy and morality

By definition, universal basic income does not make a distinction between "deserving" and "undeserving" individuals when making payments. Opponents argue that this lack of discrimination is unfair: "Those who genuinely choose idleness or unproductive activities cannot expect those who have committed to doing productive work to subsidize their livelihood. Responsibility is central to fairness." Proponents argue that this lack of discrimination is a way to reduce social stigma.

Basic income, health and poverty

The first comprehensive systematic review of the health impact of basic income (or rather unconditional cash transfers in general) in low- and middle-income countries, a study which included 21 studies of which 16 were randomized controlled trials, found a clinically meaningful reduction in the likelihood of being sick by an estimated 27%. Unconditional cash transfers, according to the study, may also improve food security and dietary diversity. Children in recipient families are also more likely to attend school and the cash transfers may increase money spent on health care.

The Canadian Medical Association passed a motion in 2015 in clear support of basic income and for basic income trials in Canada.

Academics on basic income

Economists

• James Meade advocated for a social dividend scheme funded by publicly owned productive assets.
• Bertrand Russell argued for a basic income alongside public ownership as a means of shortening the average working day and achieving full employment.
• Guy Standing has proposed financing a social dividend from a democratically accountable sovereign wealth fund built up primarily from the proceeds of a tax on rentier income derived from ownership or control of assets—physical, financial, and intellectual. Standing also generally argues that basic income would be a much simpler and more transparent welfare system.
• Douglas Rushkoff, a professor of Media Theory and Digital Economics at the City University of New York, has stated that he sees basic income as a sophisticated way for corporations to get richer at the expense of public money.
• Milton Friedman, world famous economist, supported UBI by reasoning that it would help to reduce poverty. He said: "The virtue of [a negative income tax] is precisely that it treats everyone the same way. [...] [T]here's none of this unfortunate discrimination among people."
• Eric Maskin has stated that "a minimum income makes sense, but not at the cost of eliminating Social Security and Medicare".
  
• Simeon Djankov, professor at the London School of Economics, argues the costs of a generous system are prohibitive.
• Ailsa McKay, a Scottish economist, has argued that basic income is a way to promote gender equality. She has specifically argued that "social policy reform should take account of all gender inequalities and not just those relating to the traditional labor market" and that "the citizens' basic income model can be a tool for promoting gender-neutral social citizenship rights".

Other academics

• Erik Olin Wright argues that basic income will empower labor by giving the workers greater bargaining power.
• Harry Shutt proposed basic income and other measures to make most or all businesses collective rather than private. These measures would create a post-capitalist economic system.
• Philippe van Parijs, a Belgian philosopher, has argued that basic income at the highest sustainable level is needed to support real freedom, or the freedom to do whatever one "might want to do".
• Karl Widerquist and others have proposed a theory of freedom in which basic income is needed to protect the power to refuse work.
• Frances Fox Piven argues that an income guarantee would benefit all workers by liberating them from the anxiety that results from the "tyranny of wage slavery" and provide opportunities for people to pursue different occupations and develop untapped potentials for creativity.
• André Gorz, a French sociologist, saw basic income as a necessary adaptation to the increasing automation of work, yet basic income also enables workers to overcome alienation in work and life and to increase their amount of leisure time.

Pilot programs and experiments

Omitara, one of the two poor villages in Namibia where a local basic income was tested in 2008–2009

Since the 1960s, but in particular since 2010, several pilot programs and experiments on basic income have been conducted. Some examples include:

1960s−1970s

• Experiments with negative income tax in United States and Canada in the 1960s and 1970s.
• The province of Manitoba, Canada experimented with Mincome, a basic guaranteed income, in the 1970s. In the town of Dauphin, Manitoba, labor only decreased by 13%, much less than expected.

2000−2009

• The basic income grant in Namibia, launched in 2008 and ended in 2009.
• An independent pilot implemented in São Paulo, Brazil launched in 2009.

2010−2019

• Basic income trials run in 2011-2012 in several villages in India, whose government has proposed a guaranteed basic income for all citizens. It was found that basic income in the region raised the education rate of young people by 25%.
• Iran introduced a national basic income program in autumn 2010. It is paid to all citizens and replaces the gasoline subsidies, electricity and some food products, that the country applied for years to reduce inequalities and poverty. The sum corresponded in 2012 to approximately US$40 per person per month, US$480 per year for a single person and US$2,300 for a family of five people.
• In Spain, the ingreso mínimo vital, the income guarantee system, is an economic benefit guaranteed by the social security in Spain, but in 2016 was considered in need of reform.
• The GiveDirectly experiment in a disadvantaged village of Nairobi, Kenya, the longest-running basic income pilot as of November 2017, which is set to run for 12 years.
• A project called Eight in a village in Fort Portal, Uganda, that a nonprofit organization launched in January 2017, which provides income for 56 adults and 88 children through mobile money.
• A two-year pilot the Finnish government began in January 2017 which involved 2,000 subjects. In April 2018, the Finnish government rejected a request for funds to extend and expand the program from Kela (Finland's social security agency).
• An experiment in the city of Utrecht in the Netherlands, launched in early 2017, that is testing different rates of aid.
• A three-year basic income pilot that the Ontario provincial government, Canada, launched in the cities of Hamilton, Thunder Bay and Lindsay in July 2017. Although called basic income, it was only made available to those with a low income and funding would be removed if they obtained employment, making it more related to the current welfare system than true basic income. The pilot project was canceled on 31 July 2018 by the newly elected Progressive Conservative government under Ontario Premier Doug Ford.
• In Israel, in 2018 a non-profit initiative GoodDollar started with an objective to build a global economic framework for providing universal, sustainable and scalable basic income through new digital asset technology of blockchain. The non-profit aims to launch a peer-to-peer money transfer network in which money can be distributed to those most in need, regardless of their location, based on the principles of UBI. The project raised US$1 million from eToro.
• The Rythu Bandhu scheme is a welfare scheme started in the state of Telangana, India, in May 2018, aimed at helping farmers. Each farm owner receives 4,000 INR per acre twice a year for rabi and kharif harvests. To finance the program a budget allocation of 120 billion INR (US$1.6 million as of June 2020) was made in the 2018–2019 state budget.

2020−present

• Swiss non-profit Social Income started paying out basic incomes in the form of mobile money in 2020 to people in need in Sierra Leone. Contributions finance the international initiative from people worldwide, who donate 1% of their monthly paychecks.
• In May 2020 Spain introduced minimum basic income, reaching about 2% of the population, in response to COVID-19 in order to "fight a spike in poverty due to the coronavirus pandemic". It is expected to cost state coffers three billion euros ($3.5 billion) a year."
• In August 2020, a project in Germany started that gives a 1,200 Euros monthly basic income in a lottery system to citizens who apply online. The crowdsourced project will last three years and be compared against 1,380 people who do not receive basic income.
• In October 2020, HudsonUP was launched in Hudson, New York, by The Spark of Hudson and Humanity Forward Foundation to give $500 monthly basic income to 25 residents. It will last five years and be compared against 50 people who are not receiving basic income.
• In May 2021 the government of Wales, which has devolved powers in matters of Social Welfare within the UK, announced the trialling of a universal basic income scheme to "see whether the promises that basic income holds out are genuinely delivered".

Examples of payments with similarities

Alaska Permanent Fund

The Permanent Fund of Alaska in the United States provides a kind of yearly basic income based on the oil and gas revenues of the state to nearly all state residents. More precisely the fund resembles a sovereign wealth fund, investing resource revenues into bonds, stocks, and other conservative investment options with the intent to generate renewable revenue for future generations. The fund has had a noticeable yet diminishing effect on reducing poverty among rural Alaska Indigenous people, notably in the elderly population. However, the payment is not high enough to cover basic expenses (it has never exceeded $2,100) and is not a fixed, guaranteed amount. For these reasons, it is not considered a basic income.

Macau

Macau's Wealth Partaking Scheme provides some annual basic income to permanent residents, funded by revenues from the city's casinos. However, the amount disbursed is not sufficient to cover basic living expenses, so it is not considered a basic income.

Quasi-UBI programs

• Pension: A payment which in some countries is guaranteed to all citizens above a certain age. The difference from true basic income is that it is restricted to people over a certain age.
• Child benefit: A program similar to pensions but restricted to parents of children, usually allocated based on the number of children.
• Conditional cash transfer: A regular payment given to families, but only to the poor. It is usually dependent on basic conditions such as sending their children to school or having them vaccinated. Programs include Bolsa Família in Brazil and Programa Prospera in Mexico.
• Guaranteed minimum income differs from a basic income in that it is restricted to those in search of work and possibly other restrictions, such as savings being below a certain level. Example programs are unemployment benefits in the UK, the revenu de solidarité active in France and citizens' income in Italy.

Bolsa Familia

Bolsa Família is a large social welfare program in Brazil that provides money to many low-income families in the country. The system is related to basic income, but has more conditions, like asking the recipients to keep their children in school until graduation. As of March 2020, the program covers 13.8 million families, and pays an average of $34 per month, in a country where the minimum wage is $190 per month.

Petitions, polls and referendums

• 2008: An official petition for basic income was launched in Germany by Susanne Wiest. The petition was accepted, and Susanne Wiest was invited for a hearing at the German parliament's Commission of Petitions. After the hearing, the petition was closed as "unrealizable."
• 2013–2014: A European Citizens' Initiative collected 280,000 signatures demanding that the European Commission study the concept of an unconditional basic income.
• 2015: A citizen's initiative in Spain received 185,000 signatures, short of the required number to mandate that the Spanish parliament discuss the proposal.
• 2016: The world's first universal basic income referendum in Switzerland on 5 June 2016 was rejected with a 76.9% majority. Also in 2016, a poll showed that 58% of the EU's population is aware of basic income, and 65% would vote in favour of the idea.
• 2017: Politico/Morning Consult asked 1,994 Americans about their opinions on several political issues including national basic income; 43% either "strongly supported" or "somewhat supported" the idea.
• 2019: In a September poll conducted by The Hill and HarrisX, 49% of U.S. registered voters support basic income, up 6% from a similar survey conducted six months earlier.
• 2019: In November, an Austrian initiative received approximately 70,000 signatures but failed to reach the 100,000 signatures needed for a parliamentary discussion. The initiative was started by Peter Hofer. His proposal suggested a basic income of €1,200 for every Austrian citizen.
• 2020: A study by Oxford University found that 71% of Europeans are now in favour of basic income. The study was conducted in March, with 12,000 respondents and in 27 EU-member states and the UK. A YouGov-poll likewise found a majority for universal basic income in United Kingdom and a poll by University of Chicago found that 51% of Americans aged 18–36 support a monthly basic income of $1,000. In the UK there was also a letter, signed by over 170 MPs and Lords from multiple political parties, calling on the government to introduce a universal basic income during the COVID-19 pandemic.
• 2020: A Pew Research Center Survey, conducted online in August 2020, of 11,000 U.S. adults found that a majority (54%) oppose the federal government providing a guaranteed income of $1,000 per month to all adults, while 45% support it.
• By mid-2021, a Change.org petition calling for monthly stimulus checks in the amount of $2,000 per adult and $1,000 per child for the remainder of the COVID-19 pandemic had received almost 3 million signatures.

Welfare state

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Welfare_state#Criticism_and_response 

The welfare state is a form of government in which the state protects and promotes the economic and social well-being of the citizens, based upon the principles of equal opportunity, equitable distribution of wealth, and public responsibility for citizens unable to avail themselves of the minimal provisions for a good life. Sociologist T. H. Marshall described the modern welfare state as a distinctive combination of democracy, welfare, and capitalism.

As a type of mixed economy, the welfare state funds the governmental institutions for health care and education along with direct benefits given to individual citizens. Early features of the welfare state, such as public pensions and social insurance, developed from the 1880s onwards in industrializing Western countries. The Great Depression, World War I and World War II have been characterized as important events that ushered in expansions of the welfare state.

The modern welfare state emerged in a reactive way to the Great Depression of the 1930s as a form of state interventionism to address unemployment, lost output and collapse of the financial system. By the late 1970s, the contemporary capitalist welfare state began to decline, in part due to the economic crisis of post-World War II capitalism and Keynesianism and in part due to the lack of a well-articulated ideological foundation for the welfare state.

Etymology

The German term sozialstaat ("social state") has been used since 1870 to describe state support programs devised by German sozialpolitiker ("social politicians") and implemented as part of Bismarck's conservative reforms. In Germany, the term wohlfahrtsstaat, a direct translation of the English "welfare state", is used to describe Sweden's social insurance arrangements.

The literal English equivalent "social state" did not catch on in Anglophone countries. However, during the Second World War, Anglican Archbishop William Temple, author of the book Christianity and the Social Order (1942), popularized the concept using the phrase "welfare state". Bishop Temple's use of "welfare state" has been connected to Benjamin Disraeli's 1845 novel Sybil: or the Two Nations (in other words, the rich and the poor), where he writes "power has only one duty – to secure the social welfare of the PEOPLE". At the time he wrote Sybil, Disraeli (later a prime minister) belonged to Young England, a conservative group of youthful Tories who disagreed with how the Whigs dealt with the conditions of the industrial poor. Members of Young England attempted to garner support among the privileged classes to assist the less fortunate and to recognize the dignity of labor that they imagined had characterized England during the Feudal Middle Ages.

The Swedish welfare state is called folkhemmet ("the people's home") and goes back to the 1936 compromise, as well as to another important contract made in 1938 between Swedish trade unions and large corporations. Even though the country is often rated comparably economically free, Sweden's mixed economy remains heavily influenced by the legal framework and continual renegotiations of union contracts, a government-directed and municipality-administered system of social security, and a system of universal health care that is run by the more specialized and in theory more politically isolated county councils of Sweden.

The Italian term stato sociale ("social state") and the Turkish term sosyal devlet reproduces the original German term. In French, the concept is expressed as l'État-providence. Spanish and many other languages employ an analogous term: estado del bienestar – literally, "state of well-being". In Portuguese, two similar phrases exist: estado de bem-estar social, which means "state of social well-being", and estado de providência – "providing state", denoting the state's mission to ensure the basic well-being of the citizenry. In Brazil the concept is referred to as previdência social, or "social providence".

History

Ancient

Emperor Ashoka of India put forward his idea of a welfare state in the 3rd century BCE. He envisioned his dharma (religion or path) as not just a collection of high-sounding phrases. He consciously tried to adopt it as a matter of state policy; he declared that "all men are my children" and "whatever exertion I make, I strive only to discharge debt that I owe to all living creatures." It was a totally new ideal of kingship. Ashoka renounced war and conquest by violence and forbade the killing of many animals. Since he wanted to conquer the world through love and faith, he sent many missions to propagate Dharma. Such missions were sent to places like Egypt, Greece, and Sri Lanka. The propagation of Dharma included many measures of people's welfare. Centers of the treatment of men and beasts founded inside and outside of the empire. Shady groves, wells, orchards and rest houses were laid out. Ashoka also prohibited useless sacrifices and certain forms of gatherings which led to waste, indiscipline and superstition. To implement these policies he recruited a new cadre of officers called Dharmamahamattas. Part of this group's duties was to see that people of various sects were treated fairly. They were especially asked to look after the welfare of prisoners.

However, the historical record of Ashoka's character is conflicted. Ashoka's own inscriptions state that he converted to Buddhism after waging a destructive war. However, the Sri Lankan tradition claims that he had already converted to Buddhism in the 4th year of his reign, prior to the conquest of Kalinga. During this war, according to Ashoka's Major Rock Edict 13, his forces killed 100,000 men and animals and enslaved another 150,000. Some sources (particularly Buddhist oral legends) suggest that his conversion was dramatic and that he dedicated the rest of his life to the pursuit of peace and the common good. However, these sources frequently contradict each other, and sources soundly dated nearer to the Edicts (like Ashokavadana, circa 200 BCE at the earliest) describe Ashoka engaging in sectarian mass murder throughout his reign, and make no mention of the philanthropic efforts claimed by later legends. The interpretation of Ashoka's dharma after conversion is controversial, but in particular, the texts which describe him personally ordering the massacre of Buddhist heretics and Jains have been disputed by some fringe Buddhist scholars. They allege that these claims are propaganda, albeit without historical, archaeological, or linguistic evidence. It is unclear if they believe the entire Ashokavadana to be an ancient fabrication, or just the sections related to Ashoka's post-conversion violence.

The Roman Republic intervened sporadically to distribute free or subsidized grain to its population, through the program known as Cura Annonae. The city of Rome grew rapidly during the Roman Republic and Empire, reaching a population approaching one million in the second century AD. The population of the city grew beyond the capacity of the nearby rural areas to meet the food needs of the city.

Regular grain distribution began in 123 BC with a grain law proposed by Gaius Gracchus and approved by the Roman Plebeian Council (popular assembly). The numbers of those receiving free or subsidized grain expanded to a high of an estimated 320,000 people at one point. In the 3rd century AD, the dole of grain was replaced by bread, probably during the reign of Septimius Severus (193-211 AD). Severus also began providing olive oil to residents of Rome, and later the emperor Aurelian (270-275) ordered the distribution of wine and pork. The doles of bread, olive oil, wine, and pork apparently continued until near the end of the Western Roman Empire in 476 AD. The dole in the early Roman Empire is estimated to account for 15 to 33 percent of the total grain imported and consumed in Rome.

In addition to food, the Roman Republic also supplied free entertainment, through ludi (public games). Public money was allocated for the staging of ludi, but the presiding official increasingly came to augment the splendor of his games from personal funds as a form of public relations. The sponsor was able to cultivate the favor of the people of Rome.

The concept of states taxing for the welfare budget was introduced in early 7th century Islamic law. Zakat is one of the five pillars of Islam and is a mandatory form of 2.5% income tax to be paid by all individuals earning above a basic threshold to provide for the needy. Umar (584–644), leader of the Rashidun Caliphate (empire), established a welfare state through the Bayt al-mal (treasury), which for instance was used to stockpile food in every region of the Islamic Empire for disasters and emergencies.

Modern

Otto von Bismarck established the first welfare state in a modern industrial society, with social-welfare legislation, in 1880s Imperial Germany. Bismarck extended the privileges of the Junker social class to ordinary Germans. His 17 November 1881 Imperial Message to the Reichstag used the term "practical Christianity" to describe his program.

German laws from this era also insured workers against industrial risks inherent in the workplace.

In Switzerland, the Swiss Factory Act of 1877 limited working hours for everyone, and gave maternity benefits. The Swiss welfare state also arose in the late 19th century; its existence and depth varied individually by canton. Some of the programs first adopted within the Cantons of Switzerland were emergency relief, elementary schools, and homes for the elderly and children.

In the Austro-Hungarian Empire, a version was set up by Count Eduard von Taaffe a few years after Bismarck in Germany. Legislation to help the working class in Austria emerged from Catholic conservatives. Von Taffe used Swiss and German models of social reform, including the Swiss Factory Act of 1877 German laws that insured workers against industrial risks inherent in the workplace to create the 1885 Trade Code Amendment.

Analysis

Historian of the 20th Century fascist movement, Robert Paxton, observes that the provisions of the welfare state were enacted in the 19th century by religious conservatives to counteract appeals from trade unions and socialism.

Later, Paxton writes "All the modern twentieth-century European dictatorships of the right, both fascist and authoritarian, were welfare states… They all provided medical care, pensions, affordable housing, and mass transport as a matter of course, in order to maintain productivity, national unity, and social peace." Adolf Hitler's National Socialist German Workers' Party expanded the welfare state to the point where over 17 million German citizens were receiving assistance under the auspices of the National Socialist People's Welfare by 1939.

When social democratic parties abandoned Marxism after World War II, they increasingly accepted the welfare state as a political goal, either as a temporary goal within capitalism or an ultimate goal in itself.

Writing in 2005, Jacob Hacker said that there was "broad agreement" in research on the welfare that there had not been welfare state retrenchment. Instead, "social policy frameworks remain secure."

Modern forms

Modern welfare programs are chiefly distinguished from earlier forms of poverty relief by their universal, comprehensive character. The institution of social insurance in Germany under Bismarck was an influential example. Some schemes were based largely in the development of autonomous, mutualist provision of benefits. Others were founded on state provision. In a highly influential essay, "Citizenship and Social Class" (1949), British sociologist Thomas Humphrey Marshall identified modern welfare states as a distinctive combination of democracy, welfare, and capitalism, arguing that citizenship must encompass access to social, as well as to political and civil rights. Examples of such states are Germany, all of the Nordic countries, the Netherlands, France, Uruguay and New Zealand and the United Kingdom in the 1930s. Since that time, the term welfare state applies only to states where social rights are accompanied by civil and political rights.

Changed attitudes in reaction to the worldwide Great Depression, which brought unemployment and misery to millions, were instrumental in the move to the welfare state in many countries. During the Great Depression, the welfare state was seen as a "middle way" between the extremes of communism on the left and unregulated laissez-faire capitalism on the right. In the period following World War II, some countries in Western Europe moved from partial or selective provision of social services to relatively comprehensive "cradle-to-grave" coverage of the population. Other Western European states did not, such as the United Kingdom, Ireland, Spain and France. Political scientist Eileen McDonagh has argued that a major determinant of where welfare states arose is whether or not a country had a historical monarchy with familial foundations (a trait that Max Weber called patrimonialism); in places where the monarchic state was viewed as a parental steward of the populace, it was easier to shift into a mindset where the industrial state could also serve as a parental steward of the populace.

The activities of present-day welfare states extend to the provision of both cash welfare benefits (such as old-age pensions or unemployment benefits) and in-kind welfare services (such as health or childcare services). Through these provisions, welfare states can affect the distribution of wellbeing and personal autonomy among their citizens, as well as influencing how their citizens consume and how they spend their time.

Forms

Broadly speaking, welfare states are either universal, with provisions that cover everybody; or selective, with provisions covering only those deemed most needy. In his 1990 book, The Three Worlds of Welfare Capitalism, Danish sociologist Gøsta Esping-Andersen further identified three subtypes of welfare state models.

Since the building of the decommodification index is limited and the typology is debatable, these 18 countries could be ranked from most purely social-democratic (Sweden) to the most liberal (the United States). Ireland represents a near-hybrid model whereby two streams of unemployment benefit exist: contributory and means-tested. However, payments can begin immediately and are theoretically available to all Irish citizens even if they have never worked, provided they are habitually resident.

Social stigma varies across the three conceptual welfare states. Particularly, it is highest in liberal states, and lowest in social democratic states. Espring-Andersen proposes that the universalist nature of social democratic states eliminate the duality between beneficiaries and non-recipients, whereas in means-tested liberal states there is resentment towards redistribution efforts. That is to say, the lower the percent of GDP spent on welfare, the higher the stigma of the welfare state. Esping-Andersen also argues that welfare states set the stage for post-industrial employment evolution in terms of employment growth, structure, and stratification. He uses Germany, Sweden, and the United States to provide examples of the differing results of each of the three welfare states.

According to Evelyne Huber and John Stephens, different types of welfare states emerged as a result of prolonged government by different parties. They distinguish between social democratic welfare states, Christian democratic welfare states, and "wage earner" states.

According to the Swedish political scientist Bo Rothstein, in non-universal welfare states, the state is primarily concerned with directing resources to "the people most in need". This requires tight bureaucratic control in order to determine who is eligible for assistance and who is not. Under universal models such as Sweden, on the other hand, the state distributes welfare to all people who fulfill easily established criteria (e.g. having children, receiving medical treatment, etc.) with as little bureaucratic interference as possible. This, however, requires higher taxation due to the scale of services provided. This model was constructed by the Scandinavian ministers Karl Kristian Steincke and Gustav Möller in the 1930s and is dominant in Scandinavia.

Sociologist Lane Kenworthy argues that the Nordic experience demonstrates that the modern social democratic model can "promote economic security, expand opportunity, and ensure rising living standards for all ... while facilitating freedom, flexibility and market dynamism."

American political scientist Benjamin Radcliff has also argued that the universality and generosity of the welfare state (i.e. the extent of decommodification) is the single most important societal-level structural factor affecting the quality of human life, based on the analysis of time serial data across both the industrial democracies and the American States. He maintains that the welfare state improves life for everyone, regardless of social class (as do similar institutions, such as pro-worker labor market regulations and strong labor unions).

By country or region

Australia

Prior to 1900 in Australia, charitable assistance from benevolent societies, sometimes with financial contributions from the authorities, was the primary means of relief for people not able to support themselves. The 1890s economic depression and the rise of the trade unions and the Labor parties during this period led to a movement for welfare reform.

In 1900, the states of New South Wales and Victoria enacted legislation introducing non-contributory pensions for those aged 65 and over. Queensland legislated a similar system in 1907 before the federal labor government led by Andrew Fisher introduced a national aged pension under the Invalid and Old-Aged Pensions Act 1908. A national invalid disability pension was started in 1910, and a national maternity allowance was introduced in 1912.

During the Second World War, Australia under a labor government created a welfare state by enacting national schemes for: child endowment in 1941; a widows' pension in 1942; a wife’s allowance in 1943; additional allowances for the children of pensioners in 1943; and unemployment, sickness, and special benefits in 1945.

Canada

Canada's welfare programs are funded and administered at all levels of government (with 13 different provincial/territorial systems), and include health and medical care, public education (through graduate school), social housing and social services. Social support is given through programs including Social Assistance, Guaranteed Income Supplement, Child Tax Benefit, Old Age Security, Employment Insurance, Workers' Compensation, and the Canada/Quebec Pension Plans.

France

After 1830, French liberalism and economic modernization were key goals. While liberalism was individualistic and laissez-faire in Britain and the United States, in France liberalism was based instead on a solidaristic conception of society, following the theme of the French Revolution, Liberté, égalité, fraternité ("liberty, equality, fraternity"). In the Third Republic, especially between 1895 and 1914 "Solidarité" ["solidarism"] was the guiding concept of a liberal social policy, whose chief champions were the prime ministers Leon Bourgeois (1895–96) and Pierre Waldeck-Rousseau (1899-1902).The French welfare state expanded when it tried to follow some of Bismarck's policies. Poor relief was the starting point. More attention was paid to industrial labour in the 1930s during a short period of socialist political ascendency, with the Matignon Accords and the reforms of the Popular Front. Paxton points out these reforms were paralleled and even exceeded by measures taken by the Vichy regime in the 1940s.

Germany

Some policies enacted to enhance social welfare in Germany were Health Insurance 1883, Accident Insurance 1884, Old Age Pensions 1889 and National Unemployment Insurance 1927. Otto von Bismarck, the powerful Chancellor of Germany (in office 1871–90), developed the first modern welfare state by building on a tradition of welfare programs in Prussia and Saxony that had begun as early as in the 1840s. The measures that Bismarck introduced – old-age pensions, accident insurance, and employee health insurance – formed the basis of the modern European welfare state. His paternalistic programs aimed to forestall social unrest and to undercut the appeal of the new Social Democratic Party, and to secure the support of the working classes for the German Empire, as well as to reduce emigration to the United States, where wages were higher but welfare did not exist. Bismarck further won the support of both industry and skilled workers through his high-tariff policies, which protected profits and wages from American competition, although they alienated the liberal intellectuals who wanted free trade.

During the 12 years of rule by Adolf Hitler's Nazi Party the welfare state was expanded and extended to the point where over 17 million German citizens were receiving assistance under the auspices of the Nationalsozialistische Volkswohlfahrt (NSV) by 1939, an agency that projected a powerful image of caring and support.

India

The Directive Principles of State Policy, enshrined in Part IV of the Indian Constitution reflects that India is a welfare state. Food security to all Indians are guaranteed under the National Food Security Act, 2013 where the government provides food grains to people at a very subsidised rate. There are public health insurance schemes, social aid to families and new mothers, free school meals, pension schemes and unemployment benefit schemes run both at the federal and the state level. As of 2020, the government's expenditure on social security and welfare (direct cash transfers, financial inclusion, health insurance, subsidies, rural employment guarantee), was approximately ₹1,400,000 crore (US$200 billion), which was 7.3 percent of gross domestic product (GDP).

Latin America

Welfare states in Latin America have been considered as "welfare states in transition", or "emerging welfare states". Welfare states in Latin America have been described as "truncated": generous benefits for formal-sector workers, regressive subsidies and informal barriers for the poor to obtain benefits. Mesa-Lago has classified the countries taking into account the historical experience of their welfare systems. The pioneers were Uruguay, Chile and Argentina, as they started to develop the first welfare programs in the 1920s following a bismarckian model. Other countries such as Costa Rica developed a more universal welfare system (1960s–1970s) with social security programs based on the Beveridge model. Researchers such as Martinez-Franzoni and Barba-Solano have examined and identified several welfare regime models based on the typology of Esping-Andersen. Other scholars such as Riesco and Cruz-Martinez have examined the welfare state development in the region.

About welfare states in Latin America, Alex Segura-Ubiergo wrote:

Latin American countries can be unequivocally divided into two groups depending on their 'welfare effort' levels. The first group, which for convenience we may call welfare states, includes Uruguay, Argentina, Chile, Costa Rica, and Brazil. Within this group, average social spending per capita in the 1973–2000 period was around $532, while as a percentage of GDP and as a share of the budget, social spending reached 51.6 and 12.6 percent, respectively. In addition, between approximately 50 and 75 percent of the population is covered by the public health and pension social security system. In contrast, the second group of countries, which we call non-welfare states, has welfare-effort indices that range from 37 to 88. Within this second group, social spending per capita averaged $96.6, while social spending as a percentage of GDP and as a percentage of the budget averaged 5.2 and 34.7 percent, respectively. In terms of the percentage of the population actually covered, the percentage of the active population covered under some social security scheme does not even reach 10 percent.

Middle East

Saudi Arabia, Kuwait, United Arab Emirates, and Qatar have become welfare states and elaborate subsidies exclusively for their own citizens.

Nordic countries

The Nordic welfare model refers to the welfare policies of the Nordic countries, which also tie into their labor market policies. The Nordic model of welfare is distinguished from other types of welfare states by its emphasis on maximizing labor force participation, promoting gender equality, egalitarian and extensive benefit levels, the large magnitude of income redistribution and liberal use of the expansionary fiscal policy.

While there are differences among the Nordic countries, they all share a broad commitment to social cohesion, a universal nature of welfare provision in order to safeguard individualism by providing protection for vulnerable individuals and groups in society and maximizing public participation in social decision-making. It is characterized by flexibility and openness to innovation in the provision of welfare. The Nordic welfare systems are mainly funded through taxation.

People's Republic of China

China traditionally relied on the extended family to provide welfare services. The one-child policy introduced in 1978 has made that unrealistic, and new models have emerged since the 1980s as China has rapidly become richer and more urban. Much discussion is underway regarding China's proposed path toward a welfare state. Chinese policies have been incremental and fragmented in terms of social insurance, privatization, and targeting. In the cities, where the rapid economic development has centered, lines of cleavage have developed between state-sector and non-state-sector employees, and between labor-market insiders and outsiders.

Sri Lanka

Sri Lanka's welfare programs focus on free universal health care, free universal secondary education and free tertiary education which was started as part of state welfare in the 1930s and 1940s. In 1995, the government started the Samurdhi (Prosperity) program aimed at reducing poverty, having replaced the Jana Saviya poverty alleviation programme that was in place at the time.

United Kingdom

About the British welfare state, historian Derek Fraser wrote:

It germinated in the social thought of late Victorian liberalism, reached its infancy in the collectivism of the pre-and post-Great War statism, matured in the universalism of the 1940s and flowered in full bloom in the consensus and affluence of the 1950s and 1960s. By the 1970s it was in decline, like the faded rose of autumn. Both UK and US governments are pursuing in the 1980s monetarist policies inimical to welfare.

The modern welfare state in the United Kingdom began operations with the Liberal welfare reforms of 1906–1914 under Liberal Prime Minister H. H. Asquith. These included the passing of the Old-Age Pensions Act 1908, the introduction of free school meals in 1909, the Labour Exchanges Act 1909, the Development and Road Improvement Funds Act 1909, which heralded greater government intervention in economic development, and the National Insurance Act 1911 setting up a national insurance contribution for unemployment and health benefits from work.

The People's Budget was introduced by the Chancellor of the Exchequer, David Lloyd George, in 1909 to fund the welfare reforms. After much opposition, it was passed by the House of Lords on 29 April 1910.

The minimum wage was introduced in the United Kingdom in 1909 for certain low-wage industries and expanded to numerous industries, including farm labour, by 1920. However, by the 1920s, a new perspective was offered by reformers to emphasize the usefulness of family allowance targeted at low-income families was the alternative to relieving poverty without distorting the labour market. The trade unions and the Labour Party adopted this view. In 1945, family allowances were introduced; minimum wages faded from view. Talk resumed in the 1970s, but in the 1980s the Thatcher administration made it clear it would not accept a national minimum wage. Finally, with the return of Labour, the National Minimum Wage Act 1998 set a minimum of £3.60 per hour, with lower rates for younger workers. It largely affected workers in high turnover service industries such as fast food restaurants, and members of ethnic minorities.

December 1942 saw the publication of the Report of the Inter-Departmental Committee on Social Insurance and Allied Services, commonly known as the Beveridge Report after its chairman, Sir William Beveridge. The Beveridge Report proposed a series of measures to aid those who were in need of help, or in poverty and recommended that the government find ways of tackling what the report called "the five giants": Want, Disease, Ignorance, Squalor, and Idleness. It urged the government to take steps to provide citizens with adequate income, adequate health care, adequate education, adequate housing, and adequate employment, proposing that "[a]ll people of working age should pay a weekly National Insurance contribution. In return, benefits would be paid to people who were sick, unemployed, retired, or widowed." The Beveridge Report assumed that the National Health Service would provide free health care to all citizens and that a Universal Child Benefit would give benefits to parents, encouraging people to have children by enabling them to feed and support a family. The report stressed the lower costs and efficiency of universal benefits. Beveridge cited miners' pension schemes as examples of some of the most efficient available and argued that a universal state scheme would be cheaper than a myriad of individual friendly societies and private insurance schemes and also less expensive to administer than a means-tested government-run welfare system for the poor.

The Liberal Party, the Conservative Party, and then the Labour Party all adopted the Beveridge Report's recommendations. Following the Labour election victory in the 1945 general election many of Beveridge's reforms were implemented through a series of Acts of Parliament. On 5 July 1948, the National Insurance Act, National Assistance Act and National Health Service Act came into force, forming the key planks of the modern UK welfare state. In 1949, the Legal Aid and Advice Act was passed, providing the "fourth pillar" of the modern welfare state, access to advice for legal redress for all.

Before 1939, most health care had to be paid for through non-government organisations – through a vast network of friendly societies, trade unions, and other insurance companies, which counted the vast majority of the UK working population as members. These organizations provided insurance for sickness, unemployment, and disability, providing an income to people when they were unable to work. As part of the reforms, the Church of England also closed down its voluntary relief networks and passed the ownership of thousands of church schools, hospitals and other bodies to the state.

Welfare systems continued to develop over the following decades. By the end of the 20th-century parts of the welfare system had been restructured, with some provision channelled through non-governmental organizations which became important providers of social services.

United States

The United States developed a limited welfare state in the 1930s. The earliest and most comprehensive philosophical justification for the welfare state was produced by an American, the sociologist Lester Frank Ward (1841–1913), whom the historian Henry Steele Commager called "the father of the modern welfare state".

Ward saw social phenomena as amenable to human control. "It is only through the artificial control of natural phenomena that science is made to minister to human needs" he wrote, "and if social laws are really analogous to physical laws, there is no reason why social science should not receive practical application such as have been given to physical science." Ward wrote:

The charge of paternalism is chiefly made by the class that enjoys the largest share of government protection. Those who denounce it are those who most frequently and successfully invoke it. Nothing is more obvious today than the single inability of capital and private enterprise to take care of themselves unaided by the state; and while they are incessantly denouncing "paternalism," by which they mean the claim of the defenseless laborer and artisan to a share in this lavish state protection, they are all the while besieging legislatures for relief from their own incompetency, and "pleading the baby act" through a trained body of lawyers and lobbyists. The dispensing of national pap to this class should rather be called "maternalism," to which a square, open, and dignified paternalism would be infinitely preferable.

Ward's theories centred around his belief that a universal and comprehensive system of education was necessary if a democratic government was to function successfully. His writings profoundly influenced younger generations of progressive thinkers such as Theodore Roosevelt, Thomas Dewey, and Frances Perkins (1880–1965), among others.

The United States was the only industrialized country that went into the Great Depression of the 1930s with no social insurance policies in place. In 1935 Franklin D. Roosevelt's New Deal instituted significant social insurance policies. In 1938 Congress passed the Fair Labor Standards Act, limiting the work week to 40 hours and banning child labor for children under 16, over stiff congressional opposition from the low-wage South.

The Social Security law was very unpopular among many groups – especially farmers, who resented the additional taxes and feared they would never be made good. They lobbied hard for exclusion. Furthermore, the Treasury realized how difficult it would be to set up payroll deduction plans for farmers, for housekeepers who employed maids, and for non-profit groups; therefore they were excluded. State employees were excluded for constitutional reasons (the federal government in the United States cannot tax state governments). Federal employees were also excluded.

By 2013, the U.S. remained the only major industrial state without a uniform national sickness program. American spending on health care (as a percent of GDP) is the highest in the world, but it is a complex mix of federal, state, philanthropic, employer and individual funding. The US spent 16% of its GDP on health care in 2008, compared to 11% in France in second place.

Some scholars, such as Gerard Friedman, argue that labor-union weakness in the Southern United States undermined unionization and social reform throughout the United States as a whole, and is largely responsible for the anemic U.S. welfare state. Sociologists Loïc Wacquant and John L. Campbell contend that since the rise of neoliberal ideology in the late 1970s and early 1980s, an expanding carceral state, or government system of mass incarceration, has largely supplanted the increasingly retrenched social welfare state, which has been justified by its proponents with the argument that the citizenry must take on personal responsibility. Scholars assert that this transformation of the welfare state to a post-welfare punitive state, along with neoliberal structural adjustment policies and the globalization of the U.S. economy, have created more extreme forms of "destitute poverty" in the U.S. which must be contained and controlled by expanding the criminal justice system into every aspect of the lives of the poor.

Other scholars such as Esping-Andersen argue that the welfare state in the United States has been characterized by private provision because such a state would better reflect the racial and sexual biases within the private sector. The disproportionate number of racial and sexual minorities in private sector jobs with weaker benefits, he argues, is evidence that the American welfare state is not necessarily intended to improve the economic situation of such groups.

Effects

Effects of welfare on poverty

Empirical evidence suggests that taxes and transfers considerably reduce poverty in most countries whose welfare states constitute at least a fifth of GDP.

Country	Absolute poverty rate (1960–1991) (threshold set at 40% of U.S. median household income)		Relative poverty rate (1970–1997)
	Pre-welfare	Post-welfare	Pre-welfare	Post-welfare
Sweden	23.7	5.8	14.8	4.8
Norway	9.2	1.7	12.4	4.0
Netherlands	22.1	7.3	18.5	11.5
Finland	11.9	3.7	12.4	3.1
Denmark	26.4	5.9	17.4	4.8
Germany	15.2	4.3	9.7	5.1
Switzerland	12.5	3.8	10.9	9.1
Canada	22.5	6.5	17.1	11.9
France	36.1	9.8	21.8	6.1
Belgium	26.8	6.0	19.5	4.1
Australia	23.3	11.9	16.2	9.2
United Kingdom	16.8	8.7	16.4	8.2
United States	21.0	11.7	17.2	15.1
Italy	30.7	14.3	19.7	9.1

Effects of social expenditure on economic growth, public debt and education

Researchers have found very little correlation between economic performance and social expenditure. They also see little evidence that social expenditures contribute to losses in productivity; economist Peter Lindert of the University of California, Davis attributes this to policy innovations such as the implementation of "pro-growth" tax policies in real-world welfare states, nor have social expenses contributed significantly to public debt. Martin Eiermann wrote:

According to the OECD, social expenditures in its 34 member countries rose steadily between 1980 and 2007, but the increase in costs was almost completely offset by GDP growth. More money was spent on welfare because more money circulated in the economy and because government revenues increased. In 1980, the OECD averaged social expenditures equal to 16 percent of GDP. In 2007, just before the financial crisis kicked into full gear, they had risen to 19 percent – a manageable increase.

A Norwegian study covering the period 1980 to 2003 found welfare state spending correlated negatively with student achievement. However, many of the top-ranking OECD countries on the 2009 PISA tests are considered welfare states.

Social expenditure as a percentage of GDP

The table below shows social expenditure as a percentage of GDP for OECD member states in 2018:

Nation	Social expenditure (% of GDP)	Year
France	31.2	2018
Belgium	28.9	2018
Finland	28.7	2018
Denmark	28.0	2018
Italy	27.9	2018
Austria	26.6	2018
Sweden	26.1	2018
Germany	25.1	2018
Norway	25.0	2018
Spain	23.7	2018
Greece	23.5	2018
Portugal	22.6	2018
Luxembourg	22.4	2018
Japan	21.9	2015
Slovenia	21.2	2018
Poland	21.1	2018
United Kingdom	20.6	2018
Hungary	19.4	2018
New Zealand	18.9	2018
Czech Republic	18.7	2018
United States	18.7	2018
Estonia	18.4	2018
Australia	17.8	2016
Canada	17.3	2017
Netherlands	16.7	2018
Latvia	16.2	2018
Lithuania	16.2	2018
Israel	16.0	2017
Switzerland	16.0	2018
Iceland	16.0	2018
Ireland	14.4	2018
Turkey	12.5	2016
South Korea	11.1	2018
Chile	10.9	2017
India	7.5	2018
Mexico	7.5	2016

Criticism and response

Early conservatives, under the influence of Thomas Malthus, opposed every form of social insurance "root and branch". Malthus, a clergyman for whom birth control was anathema, believed that the poor needed to learn the hard way to practice frugality, self-control and chastity. Traditional conservatives also protested that the effect of social insurance would be to weaken private charity and loosen traditional social bonds of family, friends, religious and non-governmental welfare organisations.

On the other hand, Karl Marx opposed piecemeal reforms advanced by middle-class reformers out of a sense of duty. In his Address of the Central Committee to the Communist League, written after the failed revolution of 1848, he warned that measures designed to increase wages, improve working conditions and provide social insurance were merely bribes that would temporarily make the situation of working classes tolerable to weaken the revolutionary consciousness that was needed to achieve a socialist economy. Nevertheless, Marx also proclaimed that the Communists had to support the bourgeoisie wherever it acted as a revolutionary progressive class because "bourgeois liberties had first to be conquered and then criticised".

In the 20th century, opponents of the welfare state have expressed apprehension about the creation of a large, possibly self-interested, bureaucracy required to administer it and the tax burden on the wealthier citizens that this entailed.

In 2012, political historian Alan Ryan pointed out that the modern welfare state stops short of being an "advance in the direction of socialism. [...] [I]ts egalitarian elements are more minimal than either its defenders or its critics think". It does not entail advocacy for social ownership of industry. Ryan further wrote:

The modern welfare state, does not set out to make the poor richer and the rich poorer, which is a central element in socialism, but to help people to provide for themselves in sickness while they enjoy good health, to put money aside to cover unemployment while they are in work, and to have adults provide for the education of their own and other people's children, expecting those children's future taxes to pay in due course for the pensions of their parents' generation. These are devices for shifting income across different stages in life, not for shifting income across classes. Another distinct difference is that social insurance does not aim to transform work and working relations; employers and employees pay taxes at a level they would not have done in the nineteenth century, but owners are not expropriated, profits are not illegitimate, cooperativism does not replace hierarchical management.

In 2017, historian Walter Scheidel argued that the establishment of welfare states in the West in the early 20th century could be partly a reaction by elites to the Bolshevik Revolution and its violence against the bourgeoisie, which feared violent revolution in its own backyard. They were diminished decades later as the perceived threat receded. Scheidel wrote:

It's a little tricky because the US never really had any strong leftist movement. But if you look at Europe, after 1917 people were really scared about communism in all the Western European countries. You have all these poor people, they might rise up and kill us and take our stuff. That wasn't just a fantasy because it was happening next door. And that, we can show, did trigger steps in the direction of having more welfare programs and a rudimentary safety net in response to fear of communism. Not that they [the communists] would invade, but that there would be homegrown movements of this sort. American populism is a little different because it's more detached from that. But it happens roughly at the same time, and people in America are worried about communism, too – not necessarily very reasonably. But that was always in the background. And people have only begun to study systematically to what extent the threat, real or imagined, of this type of radical regime really influenced policy changes in Western democracies. You don't necessarily even have to go out and kill rich people – if there was some plausible alternative out there, it would arguably have an impact on policy making at home. That's certainly there in the 20s, 30s, 40s, 50s, and 60s. And there's a debate, right, because it becomes clear that the Soviet Union is really not in very good shape, and people don't really like to be there, and all these movements lost their appeal. That's a contributing factor, arguably, that the end of the Cold War coincides roughly with the time when inequality really starts going up again, because elites are much more relaxed about the possibility of credible alternatives or threats being out there.