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Five key lessons about the welfare state

- April 6, 2015

(Howard L. Sachs/AP)
During the 1980s, Ronald Reagan and Margaret Thatcher won elections while promising to curb spending on social programs. The conditions seemed right: liberals had lost power, and organized labor was in decline. Yet both Reagan and Thatcher largely failed.
In 1994, Paul Pierson published a terrific book, “Dismantling the Welfare State,” that explained why. Pierson showed how social programs generate their own constituencies. Defenders of these programs, such as the AARP. become powerful because they represent beneficiaries who have more to lose from reform than taxpayers stand to gain. Hemmed in by the long-term commitments these programs have made and by their devoted supporters, politicians find they have limited maneuvering room.
Yet the belief that welfare state spending is unsustainable and that programs must be retrenched lives on. Earlier this month, House and Senate Republicans passed budget resolutions that would block grant Medicaid, cut food stamps, and restructure Medicare. Budget resolutions do not have the force of law, but they signal a desired policy direction. Is the welfare state as resilient as it was back in the 1980s? Or are things different today?
In the new issue of the journal PS, I edited a symposium celebrating the 20th anniversary of Pierson’s book. Leading scholars took a fresh look at the durability of the welfare state. Here are five lessons they draw.
1) Radical reform rarely happens. Reform is unpopular not only with beneficiaries but also with interest groups that have a stake in the programs, such as hospitals who receive Medicaid funding. Frontal assaults on core social entitlements seldom succeed, and spending in wealthy democracies on health and old age continues to climb, as this graph from Jane Gingrich demonstrates:
gingrich_welfareAs Gingrich observes, the increase in social spending is all the more remarkable given that governments have divested themselves of many other responsibilities during this time — such as by reducing state ownership of industries.
To be sure, some countries have imposed cutbacks in social spending. But retrenchment initiatives have not always been durable. For example, cuts that were introduced in Sweden in reaction to an economic crisis in the early and mid-1990s were restored several years later. As John Stephens writes:

The central insight that strong public support for the welfare state makes it an “immovable object,” which however, is confronted with an ‘irresistible force’ in demographic and economic change, is as true now as it was 20 years ago.

2) Successful reform entails avoiding blame. While most social programs have remained stable, some have been vulnerable to reform. Building on the pioneering work of R. Kent Weaver, scholars have identified strategies that retrenchment advocates can use to escape blame for negative outcomes. The keys are to reduce the visibility of cutbacks, divide constituencies, and diffuse political accountability. For example, Andrea Campbell suggests that decentralization — pushing program responsibility down from the federal to state and local governments — can decrease benefits.
3) Failed reforms don’t mean no changes at all. While few social programs have been dismantled, Peter Hall argues that the welfare states in the United States and Britain nonetheless look different today than they did in the early 1980s:

In particular, ‘welfare’ has been replaced by ‘workfare’ in both the United States and Britain—and in many European states where the receipt of social benefits has been tied to participation in training or employment.

Hall observes that the rhetoric of social policy has been transformed as well: debates about social policy today focus more on efficiency, and less on social justice, than they used to. As Pierson argues, “To say that the assault on welfare state largely failed is not to say that neoliberalism did.”
4) Critics of the welfare state sometimes “win” simply by preventing change. The structure of welfare state programs may remain constant, but the social world is constantly evolving. Jacob Hacker introduced the concept of “policy drift” to describe the failure to revise a policy to keep its effects constant in the face of environmental change.
Welfare state opponents sometimes can achieve their goals simply by blocking efforts to combat drift, such as preventing hikes in the federal minimum wage (which is not indexed for inflation). And as Suzanne Mettler notes, many major social welfare programs were created by Congresses with large Democratic majorities. The current Republican Congress is less inclined to renew and repair programs whose basic purposes its members may not support.
In sum, even when a social program lives on, its social impact may diminish.
5) The welfare state can be outflanked.  The welfare state contains important programs, but it is still only a small piece of the American political economy.  Reflecting on changes since the 1980s, Pierson argues that the “solidity” of the welfare state — especially in the United States — “now looks something like a Maginot Line.”

Rather than directly assaulting the welfare state, those seeking to remake the American political economy have mostly outflanked it, relying heavily on tactics of gridlock-inducing policy drift to produce major changes in taxes, industrial relations, corporate governance, and financial regulation that have been highly beneficial to the most affluent.

We now know that the welfare state can survive without strong labor movements. What is less clear is whether the broadly shared prosperity and security that was a byproduct of the post-war political economy can be restored.