Looking for a substitute for the welfare state?
Baleren Bakaikoa Azurmendi
2010ko urriaren 05
Forty years ago the welfare state began to weaken. First, neoliberal economists like Milton Friedman theorized against state intervention in the economy. In fact, it is said that state intervention damages the economic activity and leads to stagnation.The economic theories of
Keynes and Keynesians were challenged by Friedman and others, and it remained to be put into practice. Thatcher arrived in the UK and Reagan in the USA. Subsequently, the economic policies of the neoliberals have also reached the European continent, especially the European Union (EU). The European Commission is the forerunner of the neoliberals, not forgetting the governments of the countries that make up the EU, including the Social Democrats; among them R. Zapatero: remember what he said and what he is doing.
Neoliberalism has led to the mining of the welfare state, but this mining has been avoided quite well by the Scandinavians. In fact, in these countries the state still manages more than half of the Gross Domestic Product (GDP). This means that they have tax periods and therefore continue with significant levels of public spending. Among these expenditures, which are aimed at society, precisely social expenditures, are the highest in the world. This situation has been supported by genuine social democrats, although the conservative parties have also maintained the symbol of the welfare state.
On the other hand, the Scandinavian countries have been able to combine abundant rent, a strong welfare state and competitiveness. In addition, they are coming out of this crisis quite well. In what way? Well, through the continuous improvement of the educational system, giving priority, above all, to Research and Development, where they have the highest expenses in the world, three times higher than those of the Spanish state!
Spending on R & D in the Stockholm region accounts for about 4.5 per cent of GDP and has made it so easy to emerge from the crisis. The closest region in the Basque Country is Alto Deba, but in a different mood.
In all, for example, Sweden allocates about 32 percent of GDP to social spending, 15 points more than the Southern Basque Country! However, it remains competitive in global markets.
But not everything will be as it has been until now. In fact, the Social Democratic Party, which has been a leader for decades, is weakening. The proof of this is the last elections, which have been won by the conservative parties and if they comply with their program, the taxes of the middle classes will be lightened. And of course, if the welfare state is based on progressive taxes, the effect of such a fiscal measure will be the relief of the welfare state.
All this has already given rise to a response, both in Sweden and in other Scandinavian countries, where the so-called third sector, the social economy, is developing. Much of the welfare state’s activity is taking over the third sector, focusing on social enterprises created by civil society. The welfare state has opened its doors to social welfare. When the market and the state do not meet their needs, the third sector will respond to them.
In the Basque Country we are accustomed to respond to both public and private needs from civil society. Now we are also being presented with new needs and civil society will have to be prepared to meet all of them if we want to maintain the standard of living we have. There are beautiful models if we have the will to look.
Keynes and Keynesians were challenged by Friedman and others, and it remained to be put into practice. Thatcher arrived in the UK and Reagan in the USA. Subsequently, the economic policies of the neoliberals have also reached the European continent, especially the European Union (EU). The European Commission is the forerunner of the neoliberals, not forgetting the governments of the countries that make up the EU, including the Social Democrats; among them R. Zapatero: remember what he said and what he is doing.
Neoliberalism has led to the mining of the welfare state, but this mining has been avoided quite well by the Scandinavians. In fact, in these countries the state still manages more than half of the Gross Domestic Product (GDP). This means that they have tax periods and therefore continue with significant levels of public spending. Among these expenditures, which are aimed at society, precisely social expenditures, are the highest in the world. This situation has been supported by genuine social democrats, although the conservative parties have also maintained the symbol of the welfare state.
On the other hand, the Scandinavian countries have been able to combine abundant rent, a strong welfare state and competitiveness. In addition, they are coming out of this crisis quite well. In what way? Well, through the continuous improvement of the educational system, giving priority, above all, to Research and Development, where they have the highest expenses in the world, three times higher than those of the Spanish state!
Spending on R & D in the Stockholm region accounts for about 4.5 per cent of GDP and has made it so easy to emerge from the crisis. The closest region in the Basque Country is Alto Deba, but in a different mood.
In all, for example, Sweden allocates about 32 percent of GDP to social spending, 15 points more than the Southern Basque Country! However, it remains competitive in global markets.
But not everything will be as it has been until now. In fact, the Social Democratic Party, which has been a leader for decades, is weakening. The proof of this is the last elections, which have been won by the conservative parties and if they comply with their program, the taxes of the middle classes will be lightened. And of course, if the welfare state is based on progressive taxes, the effect of such a fiscal measure will be the relief of the welfare state.
All this has already given rise to a response, both in Sweden and in other Scandinavian countries, where the so-called third sector, the social economy, is developing. Much of the welfare state’s activity is taking over the third sector, focusing on social enterprises created by civil society. The welfare state has opened its doors to social welfare. When the market and the state do not meet their needs, the third sector will respond to them.
In the Basque Country we are accustomed to respond to both public and private needs from civil society. Now we are also being presented with new needs and civil society will have to be prepared to meet all of them if we want to maintain the standard of living we have. There are beautiful models if we have the will to look.