Why Welfare States Persist

My review of “Why Welfare States Persist,” by Clem Brooks and Jeff Manza, for Political Science Quarterly:

Why do welfare states persist? Because they are popular, argue Clem Brooks and Jeff Manza in their new book, a statistical study of the connections between public opinion and policies in 16 rich countries in Europe and elsewhere.

Rich capitalist democracies around the world differ widely in their welfare states—their systems of government–provided social support–despite having comparable income levels. Brooks and Manza report that welfare state spending constituted 27% of GDP in “social democratic countries” such as Sweden and 26% of GDP in “Christian democratic countries” such as Germany, but only 17% in “liberal democracies” such as the United States and Japan. These differences are correlated with differences in income inequality and poverty rates between countries.

In their book, Brooks and Manza study how countries with different levels of the welfare state differ in their average policy preferences, as measured by a cross-national survey that asks whether respondents think the government should (a) provide a job to everyone who wants one, and (b) reduce income differences between rich and poor. Brooks and Manza find that countries where government jobs policies and redistribution are more popular are the places where the welfare state is larger, and this pattern remains after controlling for time trends, per-capita GDP of the country, immigration, women’s labor force participation, political institutions, and whether the ruling party is religious or on the left. The analysis is based on the following countries: listing in approximate order of increasing welfare state sizes, the United States, Japan, Ireland, Australia, Canada, New Zealand, Spain, Italy, the United Kingdom, Holland, Germany, Norway, Switzerland, Austria, France, and Sweden.

Brooks and Manza make a convincing case that attitudes are indeed correlated with policies, which implies that the voters in these countries are generally getting what they want, at least when considering comparative levels of social welfare spending. Chapter 2 of the book attempts to go further and make a claim of causality, to say that variation in countries’ attitudes are not just associated with policy variation but are actually a contributing cause of these policies. As a substantive matter, the causal claim undoubtedly has truth: in a democracy with all other things equal, we would expect a change in attitude to generally push toward the corresponding policy. (One can imagine exceptions, for example if an issue is “owned” by a faction or a minor party in a multiparty system, such that an increase in its vote actually harms the coalition that might advance the policy. But on average over 16 countries, we would expect a positive causal effect.) That said, I do not see that the statistical methods used by Brooks and Manza establish causality in the way that they claim. Using a statistical “test for endogeneity” cannot get around the fundamental issue that this is a cross-national comparison based on observational data: some countries have bigger welfare states than others, and these tend to have higher support for welfare states, even after (approximately) adjusting for some country-level factors.

As the authors note, the connections between attitudes and policies are complex. On one hand, governments are constrained by the general popularity of programs that give to the majority of voters; on the other, fiscal constraints make it difficult for governments to provide the sort of “Santa Claus” programs that citizens might want. Complexity arises because voters are aware of these constraints and typically don’t want to support political parties that don’t have a chance of winning or economic policies that are judged to be unsustainable.

Turning to surveys from individual countries–Sweden, Norway, Holland, and the United States–Brooks and Manza find that attitudes toward government-provided social services vary by country but have changed little from 1975 to 2000. Cross-national differences in attitudes, as well as in policies, seem stable and not tied to trends or to short-term factors such as the business cycle or changes in the party in power. Meanwhile, the size of the welfare state in rich countries has been stable since 1980, although with variation in individual countries (for example, a sharp decline in benefits in Switzerland and an increase in Italy).

These findings of stability in opinions and, in general, in spending, appear to contradict the conventional wisdom that welfare state policies have become repudiated in recent decades because of various factors, including: the fall of Communism and the corresponding discrediting of socialism as an economic policy; various economic crises since 1973 which have brought into question the ability of governments to pay for generous welfare benefits; and the growing presence of immigrants from poor countries, which has reduced the social consensus for income redistribution. One possible reconciliation of Brooks and Manza’s story and the general “decline of the welfare state” narrative is that, since 1980 or so, we have seen a conflation of welfare state expansion and reduction which happens to have averaged to a pattern of stability. In the wake of an aging population and lower employment rates, health-care spending has increased while job security programs have declined. Perhaps Brooks, Manza, and others who know more about this topic can let us know if this attempted synthesis makes sense.

Brooks and Manza have made a useful contribution by combining information from several sources to link public opinion and public policy on welfare provision. Various pieces of the story are well known, but I, for one, have not seen it all put together in this way. The book makes a compelling case for how policy differences between countries can persist, even in our modern, globalized, and post-socialist economy.

P.S. Lane Kenworthy points me to this discussion he wrote of Manza and Brooks’s argument, expressing concerns similar to mine about their causal reasoning. Kenworthy’s article has lots of pretty graphs and seems like a good start in the struggle to figure out a good general way to think about time-series cross-sectional data. The graphs on page 9-12 are particularly helpful. (I wouldn’t order them alphabetically, I’d make them smaller so more can be fit on one page and thus be visible at once, and I’m not a fan of the double-y-axis style, but these are all quibbles.)

12 thoughts on “Why Welfare States Persist

  1. I have one minor comment: Referring to Holland when you mean the Netherlands is like referring to England when you mean the United Kingdom (or California when you mean the United States)

  2. This post it's one of the most stupid things I have ever read about welfare state; please stop with this stuff and go to read "The Three World Of Welfare Capitalism" by the Danish sociologue Esping-Andersen.

    I never heard of a “decline of the welfare state”; well… in the '80 neo-liberals theorist have pushed a lot of states to reduce the size of their welfare, but in recent years every of those states have seen a growing class inequality; which in the long term will kill the market and than the nation.

    So, Why do welfare states persist? Because they work.

  3. Maarten,

    I'm sensitive to this distinction. The book under review used "Holland" so I used the same term, for consistency.


    If you'd prefer, you could rephrase the question as, "Why do welfare states persist at different stable levels in different countries?"

    Also, I register your request to stop, but you should perhaps direct this to the authors of the book; I merely reviewed it.

  4. A brief search on Google books leads to a review: "The world's richer democracies all provide such public benefits as pensions and health care, but why are some far more generous than others? And why, in the face of globalization and fiscal pressures, has the welfare state not been replaced by another model? "

    The differing rates is a valid question, but I do believe that the second question is a bit, um, Chicagoish, to coin a term. So far the only theoretical alternative is an unregulated market state, otherwise known as 'let them eat cake'. The only practical alternative offered on the right is the crony capitalist state, as exemplified by the current administration, which strives for the worst features of left and right.

  5. If the title was 'Why does civility persist?" then it would be clear it was meant somewhat tongue in check; but there no reason to presume that the title isn't more analagous to 'Why does wife beating persist?" Your review leaves accepts and there by implicitly supports the presumption that these state structures are fundamentally unstable.

    Welfare states are stable not just because they serve their populations but because they are create increase stability in the social and economic fabric. Because in many cases the best institutions we have found for solving particular problems (e.g. monetary systems, education, transportation, healthcare) are situated in a monopoly state solution, where you need a democratic governance to handle assorted abuse. If the book is, as you suggest, a study of alternatives in that design space then the title would be different, something like 'Welfare States: why the wide variation?"

    The aspiration of any democracy is to create programs that are both effective and popular. To pick one, popular – is to presume that the government is fundamentally incapable of effective . A presumption that is popular (sic) with allies of it's competing institutional forms. It rapidly decays in the presumption that these programs only exist as tools of populist fraudulent power brokers.

  6. I appreciate your review of this book.

    I want to add to the debate. The US and the Western European nations that these authors study run deficits and have done so for years. This allows them to be more generous than their people deserve – and more than they can afford. I don't begrudge retiree benefits, but cash payments and subsidies for the "poor" are galling. Especially disgusting is the generosity many European countries extend to immigrants.

    The authors note the popularity of welfare states. It upsets me that the UK and Western Europe tax their people so highly in part to pay for these generous benefits and yet the people continue to put up with it. In countries like Denmark, Sweden, and Finland about 50% of the population works just to support the other 50%.
    I look forward to the increasing influence and competitiveness from the emerging Asian economies. Eventually the UK, Europe, and US will have to reduce these ridiculous welfare giveaways just to be able to compete economically with the rest of the world.

  7. "The analysis is based on the following countries: listing in approximate order of increasing welfare state sizes, the United States, Japan…"

    I apologise for the strong language, but I do not know a single person living in the European Union that would not be laughing at this stage. I think you have to live in the relative isolation of a subcontinent or an island to consider that aggregate levels of spending are still correct proxies and not over-stylised variables of the level of welfare provided.

    That, and the reverse causal arrow problem in the authors' analysis. As often with Anglo-Saxon work, the theoretical framework seems to have been stripped down to such a minimal argument that it ends up assuming, simply put, rubbish. There is no attitudinal scale of "social services support" that constitutes a reasonable modelling of what is going on: people simply do not think of "social services" as a whole and instead work with ad-hoc clusters of services depending on their position in the lifecycle.

    I am honestly appalled to see that such arguments can still be made about the Welfare State. An equivalent argument would not even reach presentation status at an ECPR conference. (ECPR equates to APSA in the EU, with less boring annual meetings.)

    "Especially disgusting is the generosity many European countries extend to immigrants."

    Lyn, please do not emigrate to Europe.

  8. "In countries like Denmark, Sweden, and Finland about 50% of the population works just to support the other 50%."

    Would you care to provide us with references for that? Especially the part that says "just"?

  9. Actually, Lyn, you've chosen the three countries (Denmark, Sweden and Finland) that have the highest or near-highest employment rates in the world – all of them are considerably higher than the US. Perhaps it has something to do with them spending their money on universal health care to keep people able to work, educating all their children so that they can earn a decent wage, providing attractive insurance benefits and legislated employment conditions for those who work, and providing lots of cheap high-quality childcare for mums.

    In contrast, the US squanders its tremendous resources by spending more on "defense" than the rest of the world put together (around 15 times the amount it spends on welfare). Its citizens then refuse to pay for this through taxes (after all, if they had to they'd be a lot less enthusiastic about that spending). So it is easily the worlds biggest debtor – its economic future is now in the hands of bodies like the People's Bank of China that holds all those US Treasury IOUs.

    Lyn, for an American to complain about European deficit financing is just breathtaking. Especially as your chosen betes noir – the Nordics – aren't actually running deficits.

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