Teaching Comparative Government and Politics

Friday, July 20, 2012

Death of the welfare state?

The austerity advocates claim that public spending is the cause of all things awful in European economies. Evidence?

http://www.theatlantic.com/business/archive/2012/07/the-myth-that-entitlements-destroy-a-nations-growth-busted-in-1-chart/259645/

The euro crisis is supposed to be the death knell of cradle-to-the-grave government. But the reality is the only thing the euro crisis might be the death knell of is the euro. None of Europe's biggest welfare states are in trouble.

Let's look at some data. The chart below compares average social spending with adjusted per capita GDP growth since 2000 on the vertical axis. (Note: The y-axis shows social spending as a percentage of GDP; the x-axis shows percentage growth. Data is from the OECD and IMF). See if you can make out any kind of discernible relationship here.

(click on chart for larger view)

I know this picture is worth 1,000 words, but here are four more. There is no pattern…

You don't need to sacrifice economic security for economic growth. Other countries manage both just fine. Actually, the U.S. is in better shape than most other rich countries because our demographic crunch is much less ... crunchy? Our society is still growing, if aging…