Are We at the End of the Welfare State?

By Mike Konczal |

I have a piece at the American Prospect, The Great Society’s Next Frontier, about potential futures for the welfare state. It attempts to answer the question over whether or not the passage of Obamacare means that the welfare state is now complete. If we take the project of American liberalism to be Keynesian economics, plus the mixed economy, plus social insurance, plus political liberalism, can we check the social insurance part as complete? I decided to ask several scholars of the welfare state what they see as potential steps in the decades ahead, and lay out their answers.

The “completed welfare state” usually means a few different things. One is that the major committments of social insurance are now determined, and it is just a matter how broadly or narrowly to construe those committments. That’s many people’s answer for the issue. Dylan Matthews gave a similar answer on bloggingheads recently, noting that things like universal pre-K will fall out of our obligations to provide universal K-12 schooling. Many of the changes experts in the piece proposed were extensions of already functioning programs, like the EITC or unemployment insurance or expanding K-12 schooling to a younger age.

Another is that the level of expenditure and revenue is set for the near future, so if social insurance is expanded it’ll require a more fundamental change in what we are willing to pay for our government. And indeed many of the debates going forward will be about spending less than projected on health care through controlling costs, or changing how we fund things, such as taking the tax expenditures for 401(k)s and making them more progressive. There are many things that don’t require changing the level of expenditure and revenue, such as raising the minimum wage (which compliments the EITC quite well). This is one reason we may see more of a focus on “predistribution” policy in the years ahead.

I wanted to add this point from Envisioning Real Utopias about a basic income, but also pertains to both the minimum wage and things like Demos’ call for raising retail wages. In addition to reducing coercion as workers aren’t separated from the means of subsistence, eliminating poverty without creating the major pathologies of means-tested anti-poverty transfers, recognizing the value of decommodified care-giving activities and subsidizing the social and cooperative market economies, a basic income also does the following:

Second, universal basic income is likely to generate greater egalitarianism within labor markets. If workers are more able to refuse employment, wages for unpleasant work are likely to increase relative to wages for highly enjoyable work. The wage structure in labor markets, therefore, will begin to reflect more systematically the relative disutility of different kinds of labor rather than simply the relative scarcity of different kinds of labor power. This, in turn, will generate an incentive structure for employers to seek technical and organizational innovations that eliminate unpleasant work. Technical change would therefore have not just a labor-saving bias, but a labor-humanizing bias.
This connection between cheap labor and technology change is a constant theme of Peter Frase, who mentioned the Prospect piece in a recent post.
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Mike Konczal is a Fellow with the Roosevelt Institute, where he works on financial reform, unemployment, inequality, and a progressive vision of the economy. His blog, Rortybomb, was named one of the 25 Best Financial Blogs by Time magazine. Follow him on Twitter @rortybomb.