Reforming the American Welfare State

by Henry Farrell on February 12, 2013 · 6 comments

in Comparative Politics

Kimberly Morgan (GWU) has a new Foreign Affairs article that draws on the comparative welfare state literature to present two novel propositions to American policy makers – that the modern American welfare state currently helps the well off much more than the poor, and that making it better would involve learning from other countries.

. The United States does tax less and spend less on social programs than most of the rich democracies with which it is usually compared. But even so, the country has developed a large and complex system of social protection, one that involves a mix of government spending, tax-based subsidies, and private social spending. In its own way, the U.S. welfare system delivers many of the same benefits as the systems in other developed countries, including health insurance, pensions, housing support, and child care. And when added together, the amount of resources the public and private sectors commit to all these forms of welfare is massive: as a percentage of GDP, for example, spending on the health and welfare of citizens is greater in the United States than in most advanced industrial economies. … Yet the American way of distributing welfare is lopsided and incomplete. … In essence, Washington’s reliance on private social benefits and services—often provided by businesses to their employees rather than by the government to everybody—ensures good coverage for some but poor coverage for others. Those with well-paying jobs usually get the best benefits, and those with low-paying or no jobs get worse ones. … many other countries rely on a diverse mix of public and private welfare and tax subsidies, often leading to more equality and efficiency. The difference is that their systems consciously strive for those goals and are deliberately designed to ensure broad public access to benefits. It is time for Washington to take those models seriously in figuring out how to fix its own.
…only about seven percent of direct public spending goes to means-tested benefit programs. … Indirect benefits in the United States flow disproportionately to those in the middle and at the top of the income ladder. … Private social benefits in the United States, finally, also tend to accrue to middle- and upper-income people, since better-paying jobs usually come with more extensive benefit packages. … Since U.S. social welfare spending is not directed primarily at the poor, it does little to reduce the country’s rate of poverty or inequality. … social welfare spending is comparatively high but only minimally redistributive.
Most other rich nations not only spend less than the United States does on health care; they also achieve better outcomes in both coverage and quality. … Americans like to tell horror stories about waiting lists for medical procedures in other nations, and some of those stories are true, especially when it comes to elective procedures, such as hip replacements. … But the United States falls short when it comes to access to basic care … only 43 percent of American adults could get a same- or next-day appointment to see a doctor about a medical condition, compared with 80 percent in the Netherlands, 62 percent in France, and 61 percent in the United Kingdom. … Several OECD countries have found ways to ensure widespread access to benefits and services without “socializing” the sectors in question. … in Canada, Japan, and much of continental Europe, although the government mostly pays for public health care, it is private actors and organizations that provide the health care itself. And in the continental European countries, private insurance either supplements a public insurance system … or is the dominant source of coverage. … rather than leaving it up to employers and individuals to take care of pension benefits, the government could mandate their provision, making them a required supplement on top of existing Social Security benefits. Washington might also consider requiring all employers to provide three months of paid family leave, with the benefits paid for by a combination of employer and employee contributions. A similar measure could mandate that employers offer paid sick days to all employees.

{ 6 comments }

RobC February 12, 2013 at 5:31 pm

Professor Morgan is right, and her article is consciousness-raising. For example, she points out, ” Those with well-paying jobs usually get the best benefits, and those with low-paying or no jobs get worse ones.” How true. For example, university professors enjoy not just well-paying jobs but also a ton of benefits. There’s health care and pensions of course, but it doesn’t stop there. There are housing benefits, tuition benefits, books and magazines paid for by the university, travel to conferences, sodas and coffee and snacks, and wine and cheese receptions up the wazoo. I pray for the day when all those benefits will be provided or paid for by the Government and provided equally to all of us, whether we’re university professors or happily unemployed. Sure, it’s only a dream, but to quote Ted Kennedy paraphrasing Robert Kennedy paraphrasing a Shaw character, “Some men see things as they are and say why? I dream things that never were and say why not?”

imrichapparently February 13, 2013 at 6:19 am

how much do you think university professors make? the average pay of an associate professor in the social sciences in the US is about 69,064.

Given that they went to school for roughly 9 years and work at minimum 50 hours a week, I’d say that professors deserve some benefits.

Adam Schaeffer February 12, 2013 at 8:08 pm

RobC … Your comment is satire, yes?

RobC February 12, 2013 at 9:04 pm

Adam, it’s an attempt to point out the irony of an associate professor discussing the inequality of benefits, when university faculty enjoy a panoply of benefits that is available to very few in the society. Other than corporate CEO’s and, of course, university presidents, can you think of any category of employees which enjoys so generous a package of benefits?

Probably most of the readers of this blog are academics. The employment benefits they’re most familiar with are those they receive. So let’s discuss Professor Morgan’s concerns about America’s misguided approach to social welfare by specifically looking at the social welfare benefits received by academics and considering whether those benefits should be distributed as she suggests, provided by Government or paid for by Government and available to all, including those in low-paying jobs and those who are unemployed.

My suspicion is that when the discussion moves from the abstract to the particular, many readers of this blog will find good reasons to defend receiving employer-provided social welfare benefits that are not available to all, since they represent their profession’s choice to forgo some current income in favor of a rich package of benefits.

idiot February 12, 2013 at 11:18 pm

I’m an academic and I would rather NOT forgo some current income in favor of a potential rich package of benefits, especially because I might not get said package of benefits if the stock market crashes or some government comes in to cut my pension or, you know, I die before the package of benefits come due. The only reason I do is because I’m forced to give up part of my paycheck to pay for retirement, but I don’t pay up willingly.

At the very least, paying more in taxes assures me that my money is being spent to help someone else who may be more in need of that money than I do. Maybe I might not like that money being wasted on corporate welfare bailouts or bridges to nowhere, but at least it’s being used for something that theoretically could help the nation, as opposed to being squirrel away in some private retirement account that may never live up to its promised hype.

Josh McCabe February 13, 2013 at 9:29 am

Rob: As the article points out, these benefits do not “represent their profession’s choice to forgo some current income in favor of a rich package of benefits” but rather are the result of a tax code which favors benefit compensation over cash compensation. I think Morgan would agree that those benefits should be redistributed insofar as that means eliminating tax breaks for such benefits and redirecting the new tax revenues to government social programs.

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