History 240 Weeks 1 and 2 Notes
- Rise of the state and the replacing of religious charity with civic welfare assistance.
- Rise of mass schooling, universal male suffrage, and universal suffrage.
- Links between industrialization, welfare, and the growth of the state.
- Impact of great depression between wars.
- Intellectually, economically, as well as policy based.
- Ex. The introduction of “temporary” taxes
- Changing attitudes towards the welfare of the state.
- Modern unemployment rates are tolerated at levels unacceptable 40 years ago.
- The role of the state in the economy:
- Post-WWII economy.
- The rise, fall, and rebirth of statism.
- Economic planning.
- The Glory of Capitalism (1945-1973ish)
- Also, life in the shadow of the glory
- The Great Compression.
- Industrialization and de-industrialization
- The condition of the working class (15% Primary Service workers).
- The degree to which public policy has kept up to economic and social change.
- The role and prominence of unions in society.
- Changing status of women and family patterns.
- Ex. Most students in Canada are women.
- Ex. Wage differential between men and women of approx. 18% in most countries.
- Ex. You are 5x more likely to be poor if you grow up in a one-income family.
- Many are single mothers.
- The role of the middle class and its influence on public policy.
- What it wants and gets from the state.
- Its attitude towards the government.
- Its attitude towards the poor.
- Its attitude towards the level of tax they pay.
- Its attitude towards the idea of redistribution of wealth.
- Ex. In Canada “there’s very little for the middle”.
- With the exception of healthcare, the middle class gets very little in return
for their taxes.
- Note: in Canada, growth of high paying and low paying jobs, but dwindling of
jobs in the middle.
- Trust, happiness, and expectations.
- Declining levels of trust in government coinciding with rising expectations.
- Is it a threat to the welfare state?
- Is it a threat to the poor and working class in rich nations?
- Is it a threat to the middle class?
- Note: one third of rich nations unaffected. - Trends in minimum wage, average wages, and in taxes.
- From the Great Compression to the Great Divergence.
- Rise (or fall in some cases) of job protection legislation.
- Trends in labor law, job dismissal rules, severance pay, etc.
- Ex. 75% of new job contracts are part time in France
- Rise (and slow decline) of private, hidden welfare state.
- Ex. Company pensions.
- How the boom years of the Golden Age negatively affected us?
- Blank cheques to the older generation.
- Is high spending harmful for economic growth?
- Why are Sweden and Denmark not in the same situation as Italy and Greece?
- Can we still afford the welfare state in rich nations?
- If we can afford 10%, can we afford 15 or 20?
- Medical inflation
- The Gray Dawn
- Demographics: the rise of the elderly.
- Trends in the percentage of social spending devoted to those over 65.
- Approx. 70%.
- The Baby Boom (1945-64)
- A huge demographic blip.
- Its effects on society
- The end of the Cold War (early 1990’s)
- How does it affect western public policy?
- The rise of finance
- Financial sector, growth of banks, mutual funds, etc.
- The demographic roots of the growth.
- Huge surplus of spending money of the baby boomers.
- Money to invest.
- Their need to save for retirement, etc.
- Rising pension costs.
- The strength of the US dollar vs. Canadian dollar.
- The rising cost of housing.
- The doubling of the real cost of housing since 1970.
- Family policy.
- Cost of daycare.
- The welfare state and redistribution:
- Who benefits?
- How does the state influence redistribution?
- How has this changed over time?
- How does it vary from nation to nation?
- The link between education and social mobility.
- Access to education.
- Link between education and economic growth.
- Housing/spatial layout of cities and suburbs, and the impact on social mobility, political
attitudes, support for the welfare. - 50/60% of high paying white-collar jobs are attained through personal referrals.
- The rise in individualism.
- The apparent fall in social capital.
- The more wealth we acquire, the more we will withdraw from society.
- Isolating media (iPhones, Netflix, etc.)
- The fall of blue-collar man; the rise of pink-collar occupational ghettoes.
- Glad to be unhappy?
- ‘First world problems’.
- The top 3/4 in rich countries has it very good and is doing better than the previous
- The loss of happiness amidst the rise of affluence.
- Happiness peaks at mid-level countries (approx. $10 000 GDP/capita)
- The relative decline of organized labor.
- The fall of unions in many nations, especially UK, USA, and Canada.
- Especially in the UK under Margaret Thatcher.
- 5 million people transferred from public to private sector.
- The continuing strength of organized labor in a few rich nations.
- The ability for organized labor to frustrate reform.
- “In this class unions are neither good nor bad... it depends which union,
and when and where”
- Deficits and bond raters.
- Immigration and multicultural societies.
- Do they make redistribution more difficult?
- The 1% issue
- No truly egalitarian and successful society focuses on the top third.
- Is this a fruitful way of looking at inequality?
- Does it absolve responsibility from the rest?
- Should it be top 10 or 30 percent?
What is Public Policy?
- What the government chooses to do, or chooses not to do.
- More generally the former as opposed to the latter.
- Especially domestic social and economic policy.
- The welfare state is considered a relatively new phenomenon of the 20th Century.
- Initially with French Revolution, followed by industrial revolution, and
movements of socialism and communism.
- The adoption of universal suffrage (gradual from 1810-1945) linked.
- 1900 typical rich industrialized state.
- Consumed 3-5% of GDP
- By 1937 just 9%.
- Currently 49%. - About 25% of all spending went to the military with only 3-5% going to all things
- Today only 1-4% goes towards the military.
- This transition is what the course is about.
- “There is no society. Only individuals.” -Margaret Thatcher
- Where do we draw the line?
- What do individuals owe the state?
- What does the state owe to individuals?
- The “Big State” is here to stay
- Provide services and public goods, which are vital to society and would be
virtually impossible to charge for privately (ex. sidewalks, etc.).
- Public goods:
- Legal system.
- Defense and law enforcement.
- The big state does its best to smooth out the highs and lows of the business cycle.
- The European Union is viewed as the triumph of the market over society.
- Spending has increased from 43% in 1980 to about 50% in 2010 (in Europe).
- Many states increased 10-fold.
- Only three countries to dramatically cut: Sweden (from 70-50), Netherlands, and New
Zealand... Canada had a brief point, but found a way to spend again.
- Further Reading: Why Welfare States Persist by. Clem Brooks and Jeff Manza.
- Though most people wish to reduce welfare spending, they actually wish to benefit from
such programs; welfare systems are what the people want.
- There has been a renaissance in national spending since 2008.
- If in the 80’s, 90’s, and early 21st century the trend was to move away from government
control, the trend today is to move towards state involvement in the free markets.
- Often pay homage to John Maynard Keynes.
- Stimulating the economy
- Margaret Thatcher (A.K.A. “Milk Snatcher”)
- Spending is 43% of GDP in 1979.
- Spending is 42% of GDP in 1990 when she leaves office.
- Her cutting was very selective.
- Huge reshuffling in where spending went, but no overall contraction.
- “The tyranny of the majority” – de Tocqueville.
- The lowest quarter of the income bracket is the easiest to cut from spending.
- The path of least resistance
- “When government was small there was little to put pressure on... now you have a recipe
for interest group accumulation” -James M. Buchanan and Gordon Tullock, The Calculus
of Consent (1962)
- If the state lived up to its ideal it should be an impartial player... protecting its citizens
from abuse, and ensuring basic requirements of life and comfort for the poor Indispensable Functions of the State Isaiah Berlin
- Negative liberty
- Freedom from abuse.
- Freedom of religion, etc.
- Basically, freedoms from arbitrary violations upon your liberty (such as violence).
- Positive liberty
- Social/economic benefits.
- The right to university, etc.
- Infrastructure; “greasing the wheels of capitalism”
- Uncorrupt political and legal systems.
- Stable and predictable system enforcing the rule of law.
- Guarantees safety of investments.
- Welcomes economic growth.
- Without this you get extortion and corruption; cartels and “gangsterism”.
- Connection to family unit and community has an influence on need for social welfare.
- Germany was the most industrialized nation.
- Only 1/8 lived in the city of their birth; this led to a great increase in need for
social welfare programs.
- Look for a country with a strong legitimate centralized government, which hasn’t
monopolized the use of violence.
- Without such a monopoly, chaos ensues.
- Private militias, guerillas, and mafias; the Wild West takes hold.
- Building up the power of the state can be in the interest of the citizens for the benefit of
- It must be strong enough to protect and police its citizens, but restrained by
constitutions and laws in order to ensure it can’t abuse the rights of its citizens.
- The government is the guarantor of the freedoms and rights of the people, but
gone wrong is the greatest weapon and murderer of the 20th Century.
- The Swedish model works not just because they spend the most, but, because they work
- Economists agree that when taxes exceed 50% of nations wealth, negative factors begin
to affect the work force and the nation; unemployment increases.
- Without a law, which is upheld by the state, there is no freedom.
- Without a government there is no law.
Four Major Interpretations of the State
- Big government with complete control.
- Uprisings repressed by Pinkertons in the US, Chartist movement in 19th Century
Britain, late 19th Century France (commune massacre), and Canada’s dealing
with the Winnipeg General Strike.
2) Social Democratic
- A positive force in the name of greater equality. - Build up social programs and extend what the upper classes take for granted to the
lower classes (retirement, vacations, etc.).
- Most western governments exhibit this to some extent, whether they call
themselves this or not.
- The state is there to safeguard liberties.
- Provide equality of opportunity, but not of outcome.
- The state has no business producing consumer products (such as TVs).
4) Conservative (North American)
- Supported by big business.
- Shrinking of the state and taxation.
- Privatization of as many things as possible.
Theories of the Welfare State:
- A process of looking back upon history in light of the present.
- What are the historical roots of a present phenomenon?
- Seek bring about a linear progression from past to present.
- Logic of industrialization.
- Nations that industrialize, tend to feel a need for social insurance.
- Connected to work of Harold Wilensky.
- Even the most Laissez-Faire economies need some type of welfare net
- State officials not of the capitalist class.
- Look after their best interests.
- CRITIQUE OF BUREAUCRATIC AND PRAGMATIC: they undervalue the
importance of the ideas and social attitudes/values, which brought about policy
reforms. (Fraser 6)
- A well-organized political party will bring forth welfare developments.
- Notional that the gov’t uses such benefits to appease the lower classes.
- Associated with Michel Foucault.
- The role welfare is “regulating the poor” and “controlling the dangerous classes”
– “Attempt to control societies most potentially dissident members, the people
who are not sharing in the benefits of prosperity, the deviants, and the non-
conformists.” (Fraser 8)
- The welfare state compliments capitalism.
- Such spending creates a better work force.
- Associated with Ellis Hawley.
7) Social Democratic
- Associated with most academics.
- Welfare states emerge with the strength of the left wing.
- Strong unionization. - Associated with John Stephens.
- Historically, key developments were brought about by conservatives (in interwar
years especially. Ex. Charles Degaulle).
- When the right is strong it is able to prevent the left from doing whatever it would
like; when it is weak it cannot oppose the left.
- Looked at the conception of citizenship rights of not just men, but of women too.
- Promotion of family allowances, pro-natalism, etc.
- View that the welfare state had been put in place to maintain sexual inequality.
- Ex. Post-war year’s family allowances were put in place to “bribe”
women to stay in the home.
- Associated with Carole Pateman, Pat Thane, and Jane Lewis
9) Public Choice
- Cynical view of social policy.
- Gives the people what they want/buys their votes.
- National wealth goes to the greatest sector of society.
- A generation (the baby boomers) has more control and voting power in the
- The interests of the older generations overshadow that of the younger.
- Older generations burden the younger.
- Will pay more in taxes than they will receive in benefits or services.
- Associated with David Willetts (The Pinch... recommended!) and David Thomson
T.H. Marshall’s Theory of the Rise of Citizenship Rights:
- 18th Century: Civil Rights
- Freedom of press, association, religion, occupation.
- End to privilege of nobility.
- Note: process takes until mid-19th century in Eastern/Central Europe.
- 19th Century: Political Rights
- Vote, secret ballot, salaried MP’s, male suffrage.
- Universal suffrage in most of western world by 1920.
- 20th Century: Social-Economic Rights
- Welfare, health, housing, unemployment insurance, pensions, etc.
- Labour laws.
- Free education up to university (or beyond).
- The model above gives way to...
Gosta Esping-Anderson’s “Three Worlds of Welfare Capitalism”:
1) Liberal-Residual (Canada, USA, Australia, etc.).
- Liberal in the traditional, not American, sense.
- Welfare system is not just influenced by society, but can in turn influence the society
- Ex. Southern Florida or Spain as retirement meccas.
- Favors the “larger” demographics; can cause as many projects as they solve - There’s not much for most
- Your wealth is taken according to your income and targeted to the poor
- Canadian pensions are the lowest in the G8 ($900/month)
- There is welfare for the poor at the bottom who don’t deserve it, and benefits for the
middle who have earned it.
2) Corporalist (France, Italy, Austria, Germany, Belgium, Greece, Spain, etc.)
- Social benefits reaffirm class distinctions.
- This model in nations in which labor movements failed to mobilize behind
one main group or party.