The Myth of the Exploding Welfare State
Public debt has become the main argument against the welfare state. But the two are barely related.
Five years have passed since the advent of the current crisis, and while the beast has since morphed from a financial crisis into a confidence and debt crisis, some mantras have become so deeply engrained into our collective psyche after loud proclamations and endless repetitions that they feature is almost any discussion about the future of the economy or, for that matter, the future role of the state. They have assumed the status of self-evident truths and have reduced public discourse to the squabble over fitting solutions. The mantra itself is taken for granted.
The myth of the link between the welfare state and the debt crisis is one such mantra. It posits, roughly, that the excessive welfare state has been responsible for out-of-control public spending and must be cut back down to size in the name of fiscal sustainability. This discussion is especially nascent in Europe, where austerity has become the name of the political game. Already in February 2010, the German foreign minister Guido Westerwelle proclaimed (to a domestic audience): “Those who promise effortless prosperity to the people are inviting late-Roman decadence. This is the kind of thinking which will lead to Germany’s decline.” Philipp Rösler, another German politician and the head of the liberal Free Democrats, likewise proclaimed that crisis must not result in increasing burdens for the well-to-do. Similar sentiments are echoed by leaders across Europe: We must look no further than across the English Channel, where British Prime Minister David Cameron recently argued in a speech on the welfare state that “for far too long in this country, people who can work, people who are able to work, and people who choose not to work: you cannot go on claiming welfare like you are now.”
An important component of international conditions imposed on countries like Greece (and, to a lesser and less formal extent, on Spain or Portugal) is to ensure precisely that: People won’t be able to go on claiming welfare like they are now. In Greece, the government has stated that it will more thoroughly examine the wealth of welfare claimants, which sounds legitimate and reasonable but is usually a euphemism for hidden welfare cuts: For the reduction of the size and duration of unemployment benefits, for the Greek 22 percent cut to the minimum wage, for the restriction of collective bargaining powers in the US on the state level, for the privatization of health care in Britain or for health care cuts in Ireland.
The argument is always the same: In light of heavy public debt, such welfare expenditures have allegedly become unsustainable. For too long, the people have apparently lived above their pay grade and have relied on the state to provide for them (cue in Romney’s “47 percent” comment here) without considering whether the benefits are financially sustainable. The welfare state entrenched promises and entitlements that it cannot guarantee any longer. The cuts, we hear, are no vicious payback campaign against the working class but simply a reminder of harsh realities. In London, Labour leader Ed Miliband accomplished the rhetorical feat of condemning the government’s welfare cuts and warning against “tough choices” almost in the same sentence.