Reform of the welfare state POLI 352A

Hard times for the welfare state Since the 1970s, several pressures on welfare states Economic Demographic Maturation Ideological

To each welfare state, its own woes Social democratic: Fiscal –High budget deficits –High taxation Conservative: Employment –High non-wage labour costs –Low public-sector employment –Barriers to female employment Liberal: Ideology and poverty –Strongest neo-liberal movements –Highest levels of inequality

Reform outcomes Remarkably modest cutbacks –Exceptions: U.K. and N.Z. Spending levels continue to rise

Reform outcomes Common strategies of reform: Reducing benefit rates Tightening eligibility requirements Increasing contribution rates

Reform outcomes Common strategies of reform: Market mechanisms Enhancements for working poor Expansion of some services

Explanation? Economy High correlation between unemployment and cutbacks.

Explanation? Institutions A paradox: Logic of power: –Few veto points makes it possible to impose losses BUT Logic of blame-avoidance: –Few veto veto makes it riskier to do so.

Explanation? Organization of Interests Complex effects: Neo-corporatism as venue for consensual bargains BUT Neo-corporatism as veto point for labor

Explanation? Public opinion Key fact: Reform of the welfare state is almost never popular.  Limited cutbacks  Widespread strategies of blame avoidance Delay Low-visibility Passing the buck

Policy feedback Powerful feedback effects: Past choices shape current welfare-state woes Legacy of entitlement / obligation Policy structure shapes blame-avoidance opportunities Programs generate interest groups

Conclusion Welfare states are under pressure BUT Welfare state reform has usually been modest – at least in the short term The imperative of blame-avoidance dominates politicians’ choices Current options sharply constrained by past choices