Welfare State

DEFINITION of 'Welfare State'

The welfare state refers to a type of governing in which the national government plays a key role in the protection and promotion of the economic and social well-being of its citizens. A welfare state is based on the principles of equality of opportunity, equitable distribution of wealth and public responsibility for those unable to avail themselves of the minimal provisions of a good life. Social security, federally mandated unemployment insurance programs and welfare payments to people unable to work are all examples of the welfare state. Most modern countries practice some elements of what is considered the welfare state. That said, the term is frequently used in a derogatory sense to describe a state of affairs where the government in question creates incentives that are beyond reason, resulting in an unemployed person on welfare payments earning more than a struggling worker. The welfare state is sometimes criticized as being a "nanny state" in which adults are coddled and treated like children.  

BREAKING DOWN 'Welfare State'

The welfare state, as mentioned above, has become a target of derision. Under this system, the welfare of its citizens is the responsibility of the state. Some countries take this to mean offering unemployment benefits and base level welfare payments, while others take it much further with universal healthcare, free university and so on. Despite most nations falling on a spectrum of welfare state activity with few holdouts amongst the most developed nations, there is a lot of charged rhetoric when the term comes up in conversation. A lot of this owes to the history of the welfare state. 

The History of the Welfare State

Although fair treatment of citizens and a state provided standard of living for the poor dates back further than the Roman Empire, the modern welfare states that best exemplifies the historical rise and fall of this concept are Britain and the United States. From the 1940s to the 1970s, the welfare state in Britain based off the Beveridge Report took hold, leading to a growth in the government to replace the services that were once provided by charities, trade unions and the church. In the U.S., the groundwork for the welfare state grew out of the Great Depression and the massive price paid by the poor and the working poor during this period.

Britain's system grew despite some spirited opposition by Margaret Thatcher in the 1980s, and it continues today although it frequently needs restructuring and adjustments to keep it from getting too unwieldily. The U.S. never went to the extent of the U.K., let alone somewhere like Germany or Denmark, and Ronald Reagan had much more success than Thatcher in shrinking government. Many people look at the differing economic growth rates of the U.S. and the U.K. throughout periods where the welfare state flourished and floundered to make conclusions on whether it is good or bad for a nation as a whole. While it is true that government is rarely the most cost effective agent to deliver a program, it is also true that government is the only organization that can potentially care for all its citizens without being driven to do so as part of another agenda. Running a welfare state is fraught with difficulties, but it is also difficult to run a nation where large swaths of the population struggle to get the food, education and care to better their personal situation.