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The College of Liberal and Fine Arts

Rebuilding the Welfare State

UTSA professors examine European solutions

Given the entrenched partisanship of U.S. politics, the concept of the “welfare state” has emerged as a divisive issue, pitting conservative thinkers intent on cutting back on social programs against progressives committed to maintaining and even expanding such services.

But two UTSA associate professors argue that the idea of a welfare state—with its implied promise of ensuring the welfare, or well-being, of all citizens, not just of those at the lower economic rungs, as many believe—need not be divisive. What’s more, their analysis indicates that the United States need only look to some European models in reconciling a thriving welfare state with a strong economy.

Stephen Amberg and Daniel Engster, both associate professors in the Department of Political Science and Geography, are exploring the idea that a healthy welfare state need not compromise the strength of the economy. Amberg benefited from a $70,000 Fulbright Distinguished Professorship to teach at the Center for the Study of the Americas at the Copenhagen Business School for the 2009-10 academic year. This past spring, he was on a UTSA Faculty Development Leave for a study comparing U.S. and Danish labor market practices. In 2008, Engster also received a Fulbright Research Award to study welfare state policies for a semester at Gothenburg University in Sweden. He recently secured a $50,400 grant from the National Endowment for the Humanities to help finance his work for the 2011-12 academic year toward research for his book Justice and the Welfare State.

In citing the Swedish and Danish models, Amberg and Engster make a compelling case for achieving equilibrium. “Somehow, the Danes and the Swedes have figured out how to grow their economies even with a huge welfare state,” Amberg said. “Denmark is an advanced, capitalistic society but has a huge welfare state—perhaps the largest in the world—yet they have lower unemployment than we do and have a trade surplus while the U.S. has a deficit.”

“My focus of study has always been on social justice issues, what the state can do through policy. We need to fill the gap of what the market can do and what people and charities can do in addressing the changing nature of the welfare state.”

Concentrating more on the Swedish model, Engster adds that the Europeans view the existence of a welfare state not just as a moral imperative, but as guided by self-interest as well. In providing generous social programs, the Swedes have yielded a healthy workforce that keeps their economy humming.

“The U.S. child mortality rate is almost three times more than in Sweden,” Engster noted. “They have very generous health care and benefits for families with children. As a result, they have low child mortality, low child poverty rates and better outcomes in graduation rates than we do.”

Amberg suggested that vociferous opposition to a robust welfare state in America in some camps is rooted in a misunderstanding of the concept. Some critics forget that the U.S. already provides socialistic programs in the form of pensions for the elderly, unemployment compensation, public schools, home mortgage tax subsidies and financial assistance for the poor.

“One of the causes of divisiveness … is that the idea of a welfare state is not very well understood in the U.S., but comparative analysis is one of the ways that social scientists clarify concepts and practice for policy-makers and the public,” Amberg said. “From an American point of view, it is unexpected but true that many countries with welfare states much bigger than ours also have thriving economies.”

Both agreed that while heated political partisanship has contributed to the steady decline of the welfare state in America—particularly as it relates to programs aimed at the very poor and working class—myriad other economic forces have aligned to contribute to its dilution since the heyday of social programs in the 1930s.

“There’s been a lot of talk about the decline of the welfare state or whether it’s a decline or transition,” said Engster, who lived in Sweden for a semester to study that country’s practices. “Political rhetoric is a big part of it, but there are also structural reasons behind it: interconnectedness with a global society, a transition from an industrial-heavy economy to a service economy and changes in the family structure.”

Despite such market and societal forces, Engster challenged the notion that social programs must be slashed in order to achieve a thriving economy: “What I disagree with is that the only viable solution is to cut services and policies and make the economy a totally unregulated market system, reducing taxes and cutting services to achieve a less bureaucratic state.”

The slash-based approach is rooted more in anecdotal accounts of the perceived ills of a welfare state or in ideological bias rather than on proven, empirical data, Engster said. Amberg agreed, pointing to the origins of the approach in the 1980s under the Reagan administration—an idea that has gained renewed political traction of late among Republican presidential candidates.

“The Republicans since Reagan have promoted a neo-liberal image of the economy, in which global market competition demands lowering the cost of doing business,” Amberg said. “[They] argue this can be done by slashing the welfare state and taxes on investors, deregulating, and preventing unionization.”

But in Denmark, the concepts of capitalism and socialistic-style programs are not mutually exclusive, Amberg argues: “One of the ways that comparative research helps us understand the ideological nature of this argument is to look at other countries with good records but different institutions. Denmark’s economic well-being exceeds ours in many, though not all, ways. But they have very high taxes, a strong regulatory state and an 80 percent unionization rate.”

The model has caught the attention of other observers—from both the left and the right—including USA Today, which examined the Denmark dichotomy in a 2007 study. Yes, the Danes—as most Europeans—have high taxes, taking an average of 50 percent of their income. But on the other hand, the study revealed, wages are high and the country’s big welfare state provides workers with universal public health care, education, child care, job training and generous unemployment benefits.

Danes reap the benefits of their country’s capitalist-socialist hybrid approach, Amberg argues. For one thing, students are paid a stipend to attend college full-time. Moreover, vocational education coordinated with employers allows for 30 percent of Danes to receive technical training, compared to 3 percent of Americans. Additionally, universal child care has yielded one of the world’s most gender-equal labor markets, and unemployment benefits pay 90 percent of lost wages for two years.

… consensus on social revamping should be based on how such reform would achieve the greater good, not on fixed ideological positions.

The upshot: Western government officials continually descend upon the country to study its approach. USA Today reported that of particular interest is the Danish concept of the European Union-coined term “flexicurity,” described as “a hybrid of free labor markets, unfettered business and adjusting welfare to give incentives for people to work so they can pay taxes to finance the benefits they get.”

Similarly, the Swedish model has been touted by pundits. In its own treatise on the subject, the conservative Brussels Journal all but endorsed the idea that the U.S. should adopt a Swedish-like model, contingent on some tailoring specific to the U.S. economy.

But achieving such goals of reform may prove an uphill battle in this country. Amberg points to the very two-party system—praised for its innate promise of a healthy exchange of ideas—as actually having the opposite effect, given deep divisions between the left and the right.

“The Danes are exemplary because they work together, not because they all agree but because a wide range of viewpoints is respected in the policy-making process” said Amberg. “They have multiple parties on the left and the right and, still, the Danes are able to work out compromises for the public good. There are two socialist parties, three right-wing parties and several very small ‘centrist’ parties. Everybody has their say, and nobody’s views are ruled out of the discussion.”

In squaring a healthy economy with a strong welfare state, Engster argues for a paradigm shift—a change from basing policy on political ideology to basing decisions on empirical evidence yielded from European successes: “My focus of study has always been on social justice issues, what the state can do through policy. We need to fill the gap of what the market can do and what people and charities can do in addressing the changing nature of the welfare state.”

In the din of political discourse in this country, attempts at reform—including ongoing health care reform some detractors have pejoratively dubbed “Obamacare”—are often marked by partisan divisiveness. Some camps of the electorate—members of the increasingly influential Tea Party arguably the most vocal among them—have attempted to portray the reform as a “socialist” government takeover of health care, despite the fact that under the Affordable Care Act, the government neither employs the doctors nor creates a single-payer system. This exemplifies the kind of ideological simplification that hinders productive discussion of the pros and cons of policy decisions.

Still, both professors expressed optimism that social reforms may ultimately take place in this country, perhaps after the noise of the presidential campaign has quieted. They agreed that consensus on social revamping should be based on how such reform would achieve the greater good, not on fixed ideological positions.

“We have had for too long a ‘We’re Number One’ philosophy, and I think we do a lot of things very well and are a great country in a lot of respects,” Engster said. “But we can benefit by looking at other countries’ experiences, and we need to collaborate with these countries to improve some aspects of our social systems.”

In expressing his own optimism, Amberg struck a similar note: “We have to remember that during the post-World War II era we achieved broad agreement on public policy and a lot of agreement on civil rights. Republicans voted for Medicare in 1965. Historically, we are a nation of problem solvers.”

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