Beyond the Welfare State?

Friday, 11. October 2013


Daniel Kestenholz


Student of Economics University of Berne

The other night, as I was browsing through a series of TED talks on the Internet, this one speech by Jonathan Haidt on the topic of “how common threats can make common political ground” really intrigued me. The speaker’s first point was an actual comparison of graphs on two seemingly different issues: one chart showing data of the concentration of greenhouse gases in the atmosphere, the other one accumulation of national debt in the United States during the twentieth century and a forecast for the coming decades. What’s striking is that the shapes of the two graphs mirror each other almost perfectly. Of late, national debt in the U.S. as well as greenhouse gases in the atmosphere have soared to new heights. And the statisticians predict that this trend will continue.

Haidt argues that a substantial amount of the U.S. national debt has been accumulated because of an unsustainably large welfare state. He refers to an article by Yuval Levin titled “Beyond the Welfare State”, which was published in the American political journal “National Affairs” in early 2011. Levin in his writing raises harsh criticism against the current model of the U.S. welfare state. His ideas obviously drawn from the political Right, Levin offers valuable insight into the Republican position in the persistent stand-off between Left and Right in Washington, D.C. these days.

Levin’s writing intends to seek new answers to the fundamental question, by what means we can balance our aspirations to prosperity and build a society that makes its wealth accessible to all. In the past, the answer to this question has been the welfare state with its social insurance programs. Yet, these programs are no longer economically sustainable in an aging population. Statistical evaluation by the Congressional Budget Office suggests that, if current policies in the US remain unchanged, by 2030 U.S. national debt will be nearly twice the size of the economy.

But the author goes beyond just criticizing economic flaws of the welfare state. He argues that by burdening a share of the citizen’s responsibility, the welfare state undermines a sense of self-reliance and self-government among citizens, but also weakens social networks: because the institutions of the welfare state are intended to partially substitute for familial, social, religious and cultural institutions, these structures, which serve to balance the society as a whole, suffer from the mere existence of the welfare state. Levin argues that especially among the poor in the United States, the institution of the family has collapsed in recent decades, not least because of the ethic of social democracy. This evolution is to blame for increasing social and economic inequality in the U.S.. In hand with the opinions mentioned goes the author’s generally pessimistic view of the administrative state; which according to Levin doesn’t respond to people’s real needs and is in any case inefficient and therefore doesn’t quite fit into the picture of a modern society.

So how to answer the initial question, according to Mr. Levin? Not surprisingly, the author sees capitalism as the driving economic model for prosperity. He rejects the argument that capitalism is dehumanizing; instead he admits that too many people nowadays don’t benefit from capitalism’s merits. Instead of father state, family, church and civil society should counterweight market forces where they are harmful. Underlying these suggestions is Levin’s concept that “only self-reliance, responsibility and discipline can build mutual respect and character in a free society.”

Now, even though Mr. Levin seems to have a point in criticizing the welfare state, his suggestions to a certain extent certainly interfere with our perception of the role of the state and other institutions such as the church. Wih this backdrop, it will be interesting to see what ideas the speakers will present next week at the 12th Dialogue on Science of the Academia Engelberg Foundation in support of the welfare state.

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