Welfare States


Welfare states ensure the economic security of its citizens by utilizing vehicles such as free higher education, universal health care, day care, etc. In other words, how Bernie Sanders plans to run the United States, if elected.

In this country, Welfare based policies have long been a polarizing issue between Democrats and Republicans. Many conservative politicians support their argument against free hand outs on the basis that by doing so the government misaligns incentives for its citizens to succeed. On the other hand, liberal policy makers generally argue that these policies provide a needed helping hand to the most vulnerable citizens within a society.

James Bartholomew, Author and Journalist, recently published his book The Welfare State, where he argues that the British Welfare State has done more harm to the country than good. For example, he claims that by assisting single parents with financial support the British government sent the number of single parents skyrocketing by misaligning the incentives. He gave Japan as an example to further his idea. According to Bartholomew, Japan saw the number of its single parent families fall to a lower number because it did not support single families with a Welfare policy.

While Bartholomew’s approach is data driven, in my opinion some of its assumptions are questionable. For instance, assuming that having a high single parent rate is bad for an economy does not telling the whole story. An educated individual, who is in a suitable financial situation, deciding to raise a child is a much different scenario than a young teen having an unplanned child and being held responsible for raising it.

Nevertheless, Bartholomew’s book raises interesting points about the effects of the Welfare State on unemployment rates and, contrary to what liberals may believe, the data shows that significant hand outs from the government can cause spikes in a country’s unemployment rate. Germany in the earlier part of the 2000s is a testimony to this case.

I believe there does need to be a social safety net for societies most vulnerable members, however, implementing a radical upheaval of a political system as large as the United States does not seem to me to be a rational idea. This is one of the reasons I don’t think Sanders will get elected and why Jeremy Corbyn, a socialist British politician, will struggle to effectively govern. Sanders’ ideologies are based on a socio-economic system like Denmark, where there is a much less diverse population that is a little more than one 60th of the size of the United States.

Furthermore, even Denmark experiences difficulties with its welfare state. According to an article from The New York Times, the Danes’ recovery from the financial crisis has been sluggish compared to much of the developed world. In fact, Denmark’s GDP per capita has actually shrunk by 5.5 percent since 2007.

The reality is that policy makers face an uphill task of providing the right amount of assistance, balancing budgets and putting the correct incentives in place for people to achieve whatever level of success they desire. Some bureaucrats are better at some aspects of the job than others. Setting aside biases in policy decision making, and letting reason rather than political affiliation guide these decisions is the best way to move forward. In my opinion, black listing an idea due to the name attached only produces inefficiencies; therefore, I’d advise policy makers to keep an open mind to aspects of both laissez-faire and Keynesian policies because you never know where a good idea may come from.