The Welfare State in Europe

The Welfare State

• Background– OvB - Germany introduced social welfare in the 1880s to

undermine the left wing Social Democratic Party.• Social insurance provided to workers in case of unemployment.

Meant to undermine their participation in the government

– Labor Party in Great Britain David Lloyd George introduced social insurance for the poor. The “Peoples Budget” called for higher taxes on the wealth to pay for programs. King denounced Lloyd George for inciting class warfare.

– Social welfare insurance was to guard against risk of disease, injury on the job, and old age.

The Welfare State

• The Depression in the 1930s increased the rise of the welfare state.– Scandinavian nations, which had a tradition of

communities working together for survival in extreme weather, unveiled an extensive network of social welfare reforms

The Welfare State

• Post WWII– Nations shifted expenses from war and militaries to social

welfare. Militarism gave way to investment in the population. Devastation from WWII led some governments like Britain’s to consider need to cover all people.

– G.B. expands social welfare insurance. The welfare state became universal instead of targeted towards the poor.

– Medical care, old age pensions, limited university costs– Universal social welfare was a way of combatting the

promises of social security and full employment in communist states

– The welfare state helped combat class tension.

The Welfare State

• The rise of the welfare state shows a shift in how people view the role of the government from one that is very limited, to one that plays a role in social and economic aspects of the life of a nation.

• This is a rejection of 19th century Social Darwinism and the ideas of people like Herbert Spencer

• “Mixed Economies” developed after WWII in many Western European nations and they are based on Keynesian economics which calls for government involvement.– Mercantilism, capitalism, socialism, communism, mixed

• Fabian socialists

The Welfare State

• Great Britain became a model of the mixed economic system with a welfare state under Clement Atlee.– Gov’t nationalized the Bank of England, coal mines,

electricity, gas, iron, and steel.– 80% of industry remained private.– Expanded the progressive income tax and inheritance

taxes to cover costs.– Conservatives have argued against the expansion of

social welfare as the high taxes are the cause of economic stagnation in their POV.

The Welfare State

• Christian Democratic Parties in France, West Germany, and Italy played a role in expanding the welfare state in their respective nations.

The Welfare State

• Challenges of the Welfare State– Very costly.– Funded through taxes paid by a growing, working

population.– From the 70s-90s, population in Europe stagnated, as

did their economies. Countries with stagnant, low-growth population and economies are having trouble paying the cost of vast social welfare programs.

– In the 1950s, the average Euro woman had 2.1 kids. That fell to 1.9 by the 80s and 1.4 today.

– An aging population is costly!