Welfare state – do we even need one?

Welfare state, a concept of government in which the state … plays a key role in the protection and promotion of the economic and social well-being of citizens.

It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those unable to avail themselves of the minimal provisions for a good life. Read more here https://www.britannica.com/topic/welfare-state

An ancient idea

The welfare state as an idea has been around for thousands of years. The Romans, as an example, developed an ad hoc system for providing grain to the people when there were shortages. By the 2nd century CE it was formalised, to include bread and other essentials, as the population became too great to be fed from local sources. The state imported the food, through the use of hundreds of ships, mainly from North Africa. They then distributed it. The program was never an afterthought. With a large and feisty population, it was considered essential to the maintenance of civic peace, and it lasted until at least the fall of the Western Empire.

In modern times

The modern version of the welfare state is generally attributed to an unlikely leader – Otto von Bismarck. In the 1880s, as the political leader of the relatively new German Empire, he passed social welfare legislation, which he described as “practical Christianity”. His programs included old-age pensions, accident insurance and employee health insurance. Many were borrowed directly from the Prussian model. Bismarck himself was from Prussia, where they had proved popular, and had underpinned a strong and cohesive society.

He was not motivated by a soft heart however, but by political opportunism. He saw that by providing social programs he could achieve several aims. He would counteract the rising appeal of the Social Democrat Party, he could make staying in Germany more attractive to those considering leaving for America, and he would vie for the allegiance of German Catholics, who were torn by divided loyalties, between Germany and the Vatican.

Other European countries followed his lead. The times were changing; Victorian England’s rapidly developing middle classes were appalled by the social inequality around them. As wealth expanded throughout North America the Progressive Era was spawned. Many in the developing Western democracies realised that private philanthropy and religiously inspired charity was ill-equipped to deal with the scope of the problem, of a newly created industrial working class.

The 1880s have gained a reputation for a change in attitude, wherein poverty was re-discovered, and individualism was finished. Poverty was identified as more of a social evil than a failure of character. The poor had been blamed for their own misery, but some early social researchers discovered that poverty was not caused by a lack of moral fibre, or even degeneracy, but more by the stranglehold of the upper classes on opportunity. Old age and sickness were especially dreaded by the poor, because they were seen as being particularly merciless, inevitably miserable, and impossible to mitigate. They were by then either too sick, or too old, to work.

Self-help had been seen as an essential element of living a life of some dignity, but it was finally accepted that governments were the only mechanism for lifting the people out of their grinding poverty. These attitudes were again driven by the middle class, who were discovering the power of their vote, and politicians were aware that sooner or later the poor would themselves obtain that right (to vote).

Legislation for pensions and social insurance began to be passed, in most of the industrialising countries. America was shocked by the problems associated with industrialisation, urbanisation, immigration and political corruption, and responded with social activism and reforming zeal. https://en.wikipedia.org/wiki/Progressive_Era

World War I, The Great Depression, and World War II have been identified as important events, which expedited expansions of the welfare state(s). That was the defining nature of the rise of the Welfare State. It was managed differently, according to local circumstances, in many countries. There were also a multitude of reasons for its emergence and growth as a political and economic choice.

Labour aligned, or social democratic governments were more likely to institute versions of the Welfare State, due to a belief in progressive ideals. These included equality, the removal of poverty, and a general commitment to humanitarian values.

But it was also seen as a way to build national cohesion, and to promote social and civic harmony, where it might not otherwise exist. A surprising footnote from the Fascist era is the reliance of both Hitler and Mussolini, on generous social payments to their citizens. They were consciously buying industrial peace, and forging national cohesion.

Australia’s introduction to the Welfare State

While John Curtin is best remembered as a war-time Prime Minister, his work, alongside that of his Treasurer, Ben Chifley, was crucial in establishing a Welfare State on Australian lines, designed for Australian conditions. Curtin was influenced by the economic theories of Keynes, and had long wanted to transform life for Australians.

He had seen the damage caused by the Great Depression of the 1930s, and took the opportunity offered by wartime conditions to transform the nation. In 1942 he imposed uniform taxation on the states, which changed the financial relationship between the two levels of government forever. It also allowed him to increase revenue. The removal of the states’ right to levy their own income taxes was to be compensated by the Commonwealth ‘picking up’ their liability for social programs.

With a uniform income tax he was then in a position to expand his vision of a socially activist Commonwealth Government. The states, especially New South Wales and Victoria, had been adding elements of a social safety net since the beginning of the century. He and Chifley, between them, completed it. Early examples were the Widow’s Pension Act, and the Unemployment and Sickness Benefits Act.

By the end of that same year (1942) he had set up a Department of Postwar Reconstruction, which laid the groundwork for establishing a Commonwealth Housing Commission, the postwar Rural Reconstruction Commission, the Secondary Industries Commission and the Commonwealth Reconstruction Training Scheme. Many of these programs were designed to assist in re-building Australia, after the war ended.

In 1944 he set up the Department of Immigration which was to be responsible for organising postwar immigration to Australia. These changes were the basis for the enormous growth of the Australian economy in the postwar years.

John Curtin was a believer and a doer. He was lucky to be succeeded in the Prime Mininstership by another committed to the dynamic re-construction of Australia, post-war. Curtin and Chifley both maintained that the key principle of a successful re-construction was full employment.

Robert Menzies was of a similar mind. He defeated Chifley in the election of 1949, and won seven elections in a row, on a platform which included full employment. In 1961, he was lucky to be re-elected, because the unemployment rate had ‘blown out’ to 2.1%. He won that election by just one seat.

The Welfare State in Australia is under constant threat, by both sides of parliament. This is counter-intuitive, because it is clearly a retrograde step.

The Liberal Party, which has been infiltrated by many IPA-type neo-liberals, would like to dismantle the welfare safety net. The Labor Party, although not infested with IPA members, is slightly less cruel, but in its attempt to present a ‘small target, differs very slightly from their opponents. Many are neo-liberals themselves, mainly because they think it is an efficient economic system.

Where to from here?

In the Age of Coronavirus, with widespread economic devastation, we need action similar to that which re-constructed Australia in the period immediately after World War 11. We need to accept that we need massive stimulation, and we need to spend our way out of the coming Depression. We need Australians to be protected from hardship, because we can afford it.

Scott Morrison is a man shackled to his wayward monetarist beliefs. He needs to consider forming a National Government, including at least the Opposition Leader, and to govern for the country, and the people. You can see that he is torn between being a small-time political hack, and a real leader. He could really lead us out of this particular disaster. It just takes courage.

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Mark Buckley is a writer based in regional Victoria. He has a particular interest in politics, history and ethics in public life. He blogs at www.askbucko.com

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