Welfare-State Survival

Chris asks in a comment to an earlier post about "Swedish consensus in favor of government at or above 50% of GDP? Why do Swedes not talk of 'welfare queens' etc?". Now, there are lots of such talk, but still the welfare-state survives because its popular support. How come?

From my everyday experience of being a welfare-state citizen, two explanations pop up on the top of my head. The first one is about psychology. You somehow come to think of things as being you own if you have regular access to them. I sometimes think some of the income stream I receive from the Government as mine, though it actually belongs to the other taxpayers. Even though they could easily cut of that flow, they don't, because they too have somehow come to think of that money as belonging to parents, farmers, fishermen, the disabled, the poor, car drivers north of the Dalecarlia river etc...

Even in the USA I think people have become to think of taxpayer's belongings as their own. In a free market economy you don't really expect roads serving large population centers to be entirely government subsidized. Yet toll-free roads are common, which actually leads to sub-optimal investment and consumption, producing Soviet-style queues (except that the people in it sit in expensive cars rather than stand outside in poor clothing). The road simply belongs to you because it always has. The Government cannot take back things it has already given away - it has given us a finger and soon we will take the whole hand.

The other reason is about politics. The non-socialist parties keep explaining that a smaller Government yields higher growth and in the end more rather than less welfare. But the socialist voters don't trust them, and they have really no reason to do so. As long as the non-socialists focus on tax-cuts for the rich and leave questions of growth enhancement as something to decorate their speeches with, they really have a credibility issue. Recently though, the Swedish conservatives have tried to change this. Incentives to work should be enhanced through tax-cuts for the poor and benefit reductions for the unemployed. Interesting initiative (in Swedish), and a quite promising one too!

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