The future of the welfare state as collective insurance against uninsurable risk

Colin Hay in Renewal:

We are entering, if we have not have already entered, a new phase in the life-course of the welfare state. Set in any kind of comparative historical context it is likely to look very distinctive. For it will see the strange and potentially alarming co-presence of three conditions:

    • Welfare state spending rising to previously unprecedented levels (whether expressed as a percentage of GDP or, as perhaps it should be, on a per capita basis)
    • Expenditure rising, but still failing ever more systematically to protect and insure citizens against the risks (both individual and collective) they face
    • An ever-greater proportion of such spending being debt-fi nanced in an age of
      ostensible austerity.

The likely consequence of the third condition is a new fiscal crisis of the welfare state and pervasive debt default. This, on the face of it, seems paradoxical. How is it that welfare spending might swell to previously unprecedented levels yet fail to meet the needs of citizens? And how is it possible to imagine an ever-greater mountain of public debt capable of precipitating a fiscal crisis of the state and public debt default in an age of institutionalised and normalised austerity? In what follows I will seek to unpick and resolve the paradoxical nexus, to explain how it is that we now find ourselves in such a situation and to explore at least some of the implications.

More here.  And a response from Mark Blyth here.