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福利国家的基础
这篇文章要处理的问题是经济增长和社会保障之间的权衡。基于提供公共服务或有工作积极性的好的意愿的想法，许多评论家已经移居到福利国家。
尤其是在八十年代，这个想法的出现连接了从凯恩斯主义到货币主义的一个经济理论的转变。
我将在本文接下来的部分首先分析现代福利国家的发展历史, 我的注意力将集中创造这样一个结构，不仅是在历史上产生的事件，而且还有产生它的理论基础。
进一步,我会观察新兴公共社会商品供应体系的技术优势。尽管社会责任的效率和公共干预之间的权衡的不一定是真实的，我也将探索一个福利国家如何导致在效率方面的优势。
福利国家的历史
在资本主义市场系统开发之前，在公共或宗教机构的支持下共同护理机构已经存在。虽然他们的组织和目标都与今天的福利制度相当不同。
Foundations Of The Welfare State Economics Essay
This essay is going to deal with the question of the existence of a trade-off between economic growth and social security. Many critics have been moved to the welfare state based on the idea that a public offered service or good would represent a disincentive to work.
This idea emerged especially is the eightys and is connected to a shift in economic theory, from Keynesianism to Monetarism.
In the following parts of this text I will first analyze the history of the development of modern welfare states, my attention will focus not only on the events which historically led to the creation of such a structure, but also on the theoretical foundations which generated it.
Further, I will observe technical advantages emerging from a system of public supply for social goods. I will examine how a welfare state also leads to advantages in terms of efficiency, and though that the trade-off between efficiency and public intervention for social responsibility is not necessarily true.
History of the welfare states
a British law from 1601 that provided some basic means to the poorest people. Although the beneficiaries of these services had to do a certain work and habit in a residence, so that it mostly offered cheap labor for landowners.
The creation of the welfare state begins with the changing of society towards a more capitalistic market economy. These changes started in the XVIII century with the industrial revolution and the capitalistic production means.
The timing, the forms and the places of the first models of welfare reflect the different social pressures behind them, the different cultures and national situations.
In 1883, the German chancellor Otto von Bismark tried to stabilize the social and economic pressures, with the intent to reduce the radicalization of the people. These pressures evolved from the new classes as an outcome of the fast industrialization the country experienced.
The result of his work was the introduction the first social insurance.
In Great Britain where the industrialization process had been more progressive and society more stable, the state still kept avoiding from offering social insurances, while this role was basically assumed by Trade Unions.
Further, after pressures from the workers and their unions, first Denmark (1907) and Britain afterward (1911), decided to introduce insurances against unemployment. The risk of unemployment is obviously much more a serious problem for working classes than for others.
Although it has to be remembered that welfare states have deeply different approaches concerning their action and the way they operate, it was only after WWII that the public activity regarding redistributive issues like the welfare state, assumed such a big dimension as known today.
Theoretical origins of the welfare state
Capitalism development, new social and productive needs
In the new social and productive environment created after the industrial revolution, some new problems and risks arose. If on one side new needs started to emerge, on the other, the capacity to fulfill them of traditional institutions (like the family) resulted insufficient.
For instance, we could consider the fact that before the creation of capitalistic economies the economic cycle was rather constant. There were periodic downturns like plagues or epidemics, however these events were rather rare compared to the simplicity and speed at which the capitalist economies went up and down. These oscillations of economies did not leave without consequences for citizens and mostly workers. Indeed, the social and individual risk of unemployment became an issue of quite high probability.
The urbanization, the shift of productive activity from campaigns to cities and the connected changes in social life led to determinant changes.
At first, we might note the bigger difference between active working life and retirement.
If earlier, after a life of work an old man was not in physical condition to carry it out anymore, he usually stayed at home, helped from his family and children. In this situation, the family assumed the role of a social insurance.
Although, this status quo began to vanish, families were not anymore such a strong core of relations and obligations. A quantitative distribution of wealth was to be organized: from working population to retirees.
With the new lifestyles imposed by industrialization, new productive needs, the demand for services started to change. Income and consumption were growing, things like health and knowledge became important. All in all a huge demand for goods and services such as healthcare, instruction and even forms of income insurances against risks such as illness, aging, unemployment and disability, appeared.
Given this new, increased needs, the solidarity role of the family got reduced. Previous forms of private and public aids became completely inadequate to respond to the huge social pressure of entire nations.
Historical economic reasons for welfare state
Even though there was a strong connection between the creation of the new industrial system and the new demand for social services, the latter one stayed rather unsupplied.
The offer of social services was still insufficiently ensured by the institution which is the central heart of a capitalistic society, the market.
(Indeed, economic reasons for social welfare systems to be supplied from the state are to be found in market failures.)
A market failure is the situation that arises when the market does not lead to an optimum outcome. The case of welfare systems is explanatory, since in this system we find many goods and services that represent a market failure.
The welfare state crisis
contextualization
The last decades of the XX century saw a progressive crisis of the previously developed system to take care of social issues. The welfare state had its huge expansion in the fifties, sixties and seventies of the past century, that reason also gave these times its nickname the golden age of the welfare state.
Indifferently of the public or private founding, the welfare state experienced a huge increase of its cost during the XX century, especially after the seventies. Not only an increase in the total cost was to be observed, but also and especially in relation to the GDP: Indeed, the average cost of the welfare state as a share of GDP, went from one fifth to about one third during the last decades of the twentieth century.
This situation of increasing costs was even worsened by another negative economic fact; the huge and increasing growth of the fifties and sixties was steadily slowing down, while the costs were becoming a larger and larger burden.
This situation forcibly induced governments to do reforms, trying to reduce the cost of this unsustainable apparatus; the consequences were cancelled pensions, reduced social insurances and privatizations in general.
Obviously, this led to massive protests, the largest of the past years, from the population of different counties, like France, Italy and Germany.
Although the topic is extremely important, there has not been a lot of research about it, on the other hand a vast research program has been performed concerning the evolution and growth of the welfare state.
Despite the poor academic research, some facts had been pointed out as determinants for the current crisis.
( All the following arguments are well analyzed and discussed in Paul Pierson’s essay Investigating the Welfare State at Century’s End - A .)
Explanations for the crisis#p#分页标题#e#
Globalization and shift in US political economy
A first explanation is the one given by Herman Schwartz; he argues that an important determinant in the crisis has been a very strong diplomatic and economic pressure. His argument is that a change in the United States of America’s political economy, inciting a progressive deregulation forced other nations to do likewise. Accordingly, several sectors of protected employment experienced a reduction of social security.
Change in employment structure
Further, another argument is the one supported by Torben Iversen. He supports the position that especially after the golden Age of the Welfare state, a shift in the employment structure was to be observed. Indeed a vast shift took place: many more people were employed in services rather than industry.
A perfect example of this history is given by Great Britain in the eighties under Margaret Thatcher. In these years the industry was deeply cut back and services were incentivized. The creation of London as one of the leading global marketplaces was one of its outcomes.
“There is no such thing as society: there are individual men and women, and there are families. “ M. Thatcher - B
The problem with this kind of policy is that the service sector is intrinsically less likely to experience technological innovation as industry is, therefore it is argued to be a sector which is less prone to innovation and productivity growth.
Increasing share of consumption absorbed by social services
This third argument is supported by Adolph Wagner’s law, which argues that public spending is constantly increasing because voters favor increasing public expenditures and technological innovations, especially research in sciences, require an increasing financial support from the state. C
Population aging
Finally, it has to be considered that an aging population because of increasing medical possibilities and technologies necessarily leads to higher costs. First, it is obvious that more advanced medical treatments are connected to very high costs. Secondly, these advanced treatments on average have the desired effect of increasing people’s lives, which again leads to a longer period of pension. This latter one, the longer pensions, turns out to be extremely costly.
C - A. Premchand
Efficient aspects of welfare states
As previously stated, many goods, which imply market failures, are more efficiently supplied as public goods trough the welfare state.
A typical example is given by compulsory instruction and social insurances. The only power able to impose these services is the state, this tends to resolve the problems connected with the evidence that individuals are usually badly informed about these services.
Another fact which makes services like medical insurance or instruction suitable for mandatory participation, is the huge time difference between the period in which the choice is made and the moment of necessity. This condition is known in economic theory as the metaphor of a shortsighted consumer. As a young, healthy person, one could be reluctant to subscribe to an expensive healthcare insurance that he might only use in forty years.
At the same time, the fact that everyone is participating in healthcare creates very important positive external economies.
“ External economies and diseconomies generally mean unpaid side effects of one producer's output or inputs on other producers. External economies in this sense imply as a rule that market prices in a competitive market economy will not reflect marginal social costs of production, giving rise to a ‘market failure’.”
From The New Palgrave Dictionary of Economics - D
As we see, the fact that everyone is healthier helps to prevent the spreading of diseases. This is only possible if all citizens participate in the healthcare system, for example by using vaccines against the same illnesses. Obviously if less people get sick, this helps to have a more stable workforce to organize production, which necessarily leads to a better and higher production. Therefore, we can claim that in this case the general health achieved through the welfare system leads to economic growth.
Although this is one of the major positive externalities related to the healthcare system, another relevant positive aspect is not to be forgotten.
If healthcare of a society is centrally organized, many practices and institutions of the system itself gain a significant economic advantage. The fact is known as economies of scale, they represent a situation in which the increase of production leads to lower per unit cost. Therefore, if more units are produced the cost of each additional unit will be cheaper. This is due to different reasons: technical, organizational or for a higher degree of market control.
A case, in which economies of scale are typically arising, is in those enterprises which have a high part of the total cost as a fixed cost and a small share of the cost as a variable cost.
Indeed if we consider a public hospital the cost to treat an additional patient is quite irrelevant, mostly because the biggest part of it is the fixed cost of the hospital itself, like its structure, technical devices and maintenance.
If we reason ad absurdum, imagining each person with its own hospital, we can easily see why it is more efficient to organize many people in a big one.
Additionally, still concerning the advantages of a public healthcare system against a market solution, we can note that the market mechanism by which the consumer chooses the good (in this case service) he prefers according to his preferences and information, does not work well in the case of healthcare.
This is because of two reasons: at first(as previously stated) the consumers do not have the necessary information to choose – since the medical field is technically very advanced and not everybody studied medicine and though have the knowledge which is necessary to choose a good doctor.
Usually the choice is then made trough reputation, this again proves to be a bad indicator of the actual professional performance delivered by a doctor or hospital. This because as humans we are emotional and value all sorts of different things which are not related to the scientific performance. Some irrelevant facts are considered by a person when he values a doctor, like its sympathy and humor or even the aesthetic beauty of the structure.
Another indicator is worth observing, since people use it to choose between these kinds of services: the price.
In a normal economic environment the price is negatively related to the demanded quantity, if the first increases the latter decreases. This happen with most economic goods.
The fact that a consumer might values a hospital according to the increasing price, means that he thinks that if the price is higher the service must be better. This is certainly a biased behavior since it contorts the whole demand and supply mechanism.
Secondly, the demand for health is inelastic, which means that there is (almost) no variation in the demanded quantity if the price increases. This because people are not willing to give up health for money: health is the first care.
It is well represented by the following graph:
We can observe that even a very large variation in the price does not necessarily lead to a change in the demanded quality. Therefore if a private hospital gains sufficient market power it will be able to set the price incredibly (theoretically infinitely) high. This obviously leads to a less efficient allocation of resources.
Additionally it has to be observed that the welfare state accounts for a relevant part of a country’s GDP, supplying social and productive needs by using a collective approach which is different from to the individualistic, profit maximizing theory founding modern capitalistic markets, therefore, in a certain way, it represents its overcoming.
Conclusion
As we saw, we tried to analyze the aspects that determine a trade of between efficiency and the development of the welfare state. Not only this idea proves to be shortsighted, but also wrong in most cases.
Empirical evidence to it consists in the welfare system developed by Nordic countries. In these nations, the welfare state assumes very important tasks, but on the contrary, this does not prove to be inefficient. Surprisingly these countries have among the most performing firms and more importantly, the highest degree of happiness.
Further, we shifted our attention towards the historical causes for the development of modern welfare states. Starting from known examples throughout history, like the Poor Law in Britain in 1601.#p#分页标题#e#
The most important fact we should remember is the creation of a capitalistic economy, it enforced the creation of welfare states to accomplish the new needs of (mostly) the working class.
After our historic excursus, we went through some analytical reasons like economies of scale, market failures, asymmetric information (in the case of healthcare).
Finally, we observed how the modern welfare systems went across a period of crises for different reasons: Globalization and shift in US political economy, change in employment structure, increasing share of consumption absorbed by social services and finally the well known population aging issue.
As stated in the paragraph about the efficient aspects of the welfare state, we can note that according to these observations the trade off among efficiency and public supply of welfare does not exist with such a strong relation, of course the welfare state should be well balanced with not to high (or long) unemployment insurances and incentives to work.
As previously stated a very interesting model is the one applied by Nordic countries, as it seems to be proven empirically. People in these countries manage to have a very secure job and a very productive economy at the same time.
“Ages of experience have taught humanity that the commitment of a husband and wife to love and to serve one another promotes the welfare of children and the stability of society.” Jack Kingston - F
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