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Crisis of the Welfare State?

By Matthew Yglesias  

"Crisis of the Welfare State?"

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(my photo, available under cc license)

(my photo, available under cc license)

Ross Douthat’s column yesterday on liberal intellectuals complaining about Barack Obama made a number of interesting points, but then it veered into weird terrain:

But it’s here, with the looming fiscal crisis, that the more legitimate liberal fear comes in. Liberals had hoped that Obama’s election marked the beginning of a long progressive era — a new New Deal, a greater Great Society. Instead, from the West Coast to Western Europe, the welfare state is in crisis everywhere they look. The future suddenly seems to belong to austerity and retrenchment — and even, perhaps, to conservatism.

This is a reminder that conservatives have this weirdly schizophrenic relationship with the modern mixed economy. Five years ago, I think Douthat would have been writing columns looking at the success of market capitalism from California to the Carinthians in contrast to the desperate failure of Soviet Communism.

If you’re trying to posit a crisis of the welfare state, you have to ask compared to what? Among American states, high-tax California is in bad shape but the unemployment rate is higher in small government Nevada. Conditions are terrible in South Carolina. Spain is a mess, but so is Estonia. Australia and Canada are doing much better than the USA, but surely not because we’re a “welfare state” and they aren’t. I believe that if you want to find an example of a major developed economy with a minimal welfare state you have to look toward Japan, which is nobody’s idea of a robust economy.

Now I’m not going to try to argue that the fact that the developed country weathering the crisis best is Norway proves that the welfare state is in great shape—obviously Norway has oil—the point is that the economically advanced liberal democracies of the world are almost all in a state of economic crisis. It’s true that you could say this set of nations constitutes the leading examples of “the welfare state” but it’s also the set of nations that constitutes the leading examples of free market capitalism.

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