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The Welfare State Has Failed

BigRat
Posts: 465
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4/3/2013 7:29:12 PM
Posted: 3 years ago
What has happened after the creation of the welfare state:

1.) Unwed childbirth has skyrocketed.

2.) Economic growth has slowed.

3.) Income and wealth inequality have (ironically) increased while poverty has stopped decreasing.

4.) Debt has exploded.

The welfare state is partially to blame for the rise in unwed childbirth (perverse incentives in the welfare system) and almost entirely to blame for the slowdown in growth and the explosion of debt (it is spending of the welfare state that has exploded and the deadweight loss of the taxation used to finance as well as the bad incentives in the welfare state depress growth). The welfare state is not to blame for rising inequality or stagnation in poverty reduction. However, one of the supposed goals of the welfare state was to reduce inequality and poverty which it has failed to do.

In other words, the welfare state has failed to achieve what supporters said it would, but it has caused all of the problems that critics said it would. In other words, those "regressive", "right wing", "backwards", "reactionary", or whatever you want to call them critics of the supposed "progress" the welfare state would bring about were entirely right and the "progressive" welfare statists were entirely wrong. Odd how history has a way of making progressivism look so silly.
darkkermit
Posts: 11,204
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4/3/2013 8:32:06 PM
Posted: 3 years ago
At 4/3/2013 7:29:12 PM, BigRat wrote:
What has happened after the creation of the welfare state:

1.) Unwed childbirth has skyrocketed.

Yes, that's an effect of welfare.

2.) Economic growth has slowed.

Debatable effect of welfare but unlikely a significant factor in economic growth. Sweden has welfare and high economic growth

3.) Income and wealth inequality have (ironically) increased while poverty has stopped decreasing.


Not an effect of welfare. Nations with more welfare have lower income inequality. Although there is a sort of measurement problem whether you consider welfare payments a form of income or not, and before-tax vs. after-tax income.

4.) Debt has exploded.

No an effect of welfare.


The welfare state is partially to blame for the rise in unwed childbirth (perverse incentives in the welfare system) and almost entirely to blame for the slowdown in growth and the explosion of debt (it is spending of the welfare state that has exploded and the deadweight loss of the taxation used to finance as well as the bad incentives in the welfare state depress growth).

Spending is mainly dedicated to social security, medicaid, medicare, and military. Only medicaid is really welfare.

The welfare state is not to blame for rising inequality or stagnation in poverty reduction. However, one of the supposed goals of the welfare state was to reduce inequality and poverty which it has failed to do.

I've seen the chart that poverty hasn't changed. But i'm wondering if that's a measurement of absolute vs. relative poverty (definiton of poverty has changed).

Other causes of income inequility. You just have to look at other countries welfare spending and see their gini coefficient.

In other words, the welfare state has failed to achieve what supporters said it would, but it has caused all of the problems that critics said it would. In other words, those "regressive", "right wing", "backwards", "reactionary", or whatever you want to call them critics of the supposed "progress" the welfare state would bring about were entirely right and the "progressive" welfare statists were entirely wrong. Odd how history has a way of making progressivism look so silly.
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BigRat
Posts: 465
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4/3/2013 11:40:13 PM
Posted: 3 years ago
At 4/3/2013 8:32:06 PM, darkkermit wrote:
At 4/3/2013 7:29:12 PM, BigRat wrote:
What has happened after the creation of the welfare state:

1.) Unwed childbirth has skyrocketed.

Yes, that's an effect of welfare.

Glad we agree.


2.) Economic growth has slowed.

Debatable effect of welfare but unlikely a significant factor in economic growth. Sweden has welfare and high economic growth

Sweden's economic growth was awful in the 1980s through the early 1990s. Sweden adopted neoliberal reforms (lowered marginal tax rates, privatized, cut spending, got rid of many regulations, etc.) and began having very solid gowth.

If you want to see the negative effect that welfare states have on growth, look at Edward Prescott's work (he's won a nobel prize if that's worth anything). Differences in tax rates have led to lower labor force participation in some countries than in others which explains, for instance, the difference in GDP per capita in the USA and various European countries (GDP per hour worked is about the same). High tax rates are a necessity to pay for a welfare state.


3.) Income and wealth inequality have (ironically) increased while poverty has stopped decreasing.


Not an effect of welfare. Nations with more welfare have lower income inequality. Although there is a sort of measurement problem whether you consider welfare payments a form of income or not, and before-tax vs. after-tax income.

Don't disagree here per say. Ceteris paribus, the welfare state probably reduces inequity. But, the effect isn't all that large

However, it does not reduce poverty (at least not in a cost effective way). This was the point I was trying to make and the point I should've stuck with. Welfare states make after tax income slightly more equal but also reduce the total amount of after tax income (through the reduction in productivity).


4.) Debt has exploded.

No an effect of welfare.

Not the program welfare. But, it is an effect of the welfare state. The welfare state consists of all the social insurance programs (social security and medicare) as well as anti poverty programs.



The welfare state is partially to blame for the rise in unwed childbirth (perverse incentives in the welfare system) and almost entirely to blame for the slowdown in growth and the explosion of debt (it is spending of the welfare state that has exploded and the deadweight loss of the taxation used to finance as well as the bad incentives in the welfare state depress growth).

Spending is mainly dedicated to social security, medicaid, medicare, and military. Only medicaid is really welfare.

I see the problem here. We are talking about different things. You are talking about welfare while I am talking about the welfare state. When I talk about the welfare state, I am including all of the so called social insurance programs (and even things like labor market regulations).


The welfare state is not to blame for rising inequality or stagnation in poverty reduction. However, one of the supposed goals of the welfare state was to reduce inequality and poverty which it has failed to do.

I've seen the chart that poverty hasn't changed. But i'm wondering if that's a measurement of absolute vs. relative poverty (definiton of poverty has changed).

I believe it is absolute.


Other causes of income inequility. You just have to look at other countries welfare spending and see their gini coefficient.

Okay.


In other words, the welfare state has failed to achieve what supporters said it would, but it has caused all of the problems that critics said it would. In other words, those "regressive", "right wing", "backwards", "reactionary", or whatever you want to call them critics of the supposed "progress" the welfare state would bring about were entirely right and the "progressive" welfare statists were entirely wrong. Odd how history has a way of making progressivism look so silly.