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Welfare Essay

The Classic Welfare State was initiated by the Labour’s Beveridge Report which aimed to eliminate the ‘five giant’ towards post-war reconstruction[1].

This essay will argue to a small extent the classic Welfare State promote a more egalitarian society. It is because cost and benefit were not often equally shared under the system, within difference socio-economic groups (SEGs), throughout the classic era (1945-1975). A welfare state is based on government’s expenditure; citizens thus can enjoy an equal outcome from it[2]. For example, citizens pay the tax for the NHS and the rich and the poor could receive same level of treatment[3]. In this essay, egalitarian is considered as each individual contributes the same weight of cost and they should acquire the same level of benefit[4]. However, in the classic era costs were not shared but carried mainly by the poor; meanwhile the benefits were distributed unevenly between different SEGs. Despite the society as a whole were benefit from a higher standard of housing, people who are more affluent had benefited from a regressive tax level, further education and better quality of healthcare treatment.

Taxation is the way in which government can influence individual welfare and it did not balance cost to a significant extent throughout the Classic era[5] The income tax, as a direct taxation, had become more regressive. Between 1955 and 1974, the percentage of tax raised from firms was dropped for about 75%[6]. A bachelor could have retained £3587 in his £10,000 earning in 1949; by 1974, £6088 can be retained[7]. Thus, the redistribution from the rich to the poor was not substantial comparing the beginning and the end of the classic era[8]. In contrast, the government revenue became more relying on the poor, partly because of the inflation. Even a married worker with two children was liable to tax in mid 1970s[9] and they suffered from the highest marginal rate of taxation[10]. In here we might see that direct taxation had been eroded by more regressive base.

Together with indirect taxation which pays for the welfare, we should discover the nature of wealth distribution and how much did it share peoples’ cost[11]. The rich, for example the managers could enjoy various subsidies. They were increasingly benefiting from, for instance free medical insurance, use of company car, and top hat pension[12]. Moreover, during 1950s the national pension might no longer supported by a flat-rate contributions. Thus the Labour party developed a new pension scheme featured the earnings-related benefits[13]. However, according to Halsey, the wealth inequality was actually decreased between 1961 and 1976 by taxes when taking Gini coefficient into accounts.[14]. We might argue that the regressive taxation led to an uneven share of cost in short term; in the other hand the gap was actually closing in a very gradual manner.

There used to be an egalitarian vision of a shared housing benefit from Bevan, the Minister for Health, ‘where the doctor…and the farm labourer all lived in the same street…(as a) mixed community.’[15]. To evaluate how egalitarian society was achieved, we might consider the quantity and quality of housing available to different SEGs. For the poor who need to rent out, the Conservative government had set and achieved the goal of building 300,000 council housing per year in 1953 and 1954[16]. Between 1945 and 1964, there were averagely 158,000 public houses being built every year[17]. In the other hand, housing had switched to high-rise tower rather than council housing. This might be seen as a tradeoff of quality for quantity. Those towers were criticized for its lack of consideration in community sense and create barriers to residents’ interaction[18] as well as for its low quality[19]. Surprisingly, the overall standards of amenities such as WC in-house did undergo an increase, despite property owner could enjoy consistently higher than household which rent from a private person[20]. Interpretation behind could be both working and middle class were taking advantages from the state intervention; while perhaps those live in the tower suffer more.

The state did relieved people from squalor to some extent. However, there was a fluctuation to the extent of a shared benefit. Pressures were put by the Conservatives on local authorities to raise rents, which affected the low-income most[21]. Also, the government actively encouraged people to be a property-owner[22] thus the tax relief granted in this respect had reached £2341 million which was about £900 million more than on subsidizing the social housing[23]. Tax relief to property owners such as the Schedule A tax, had benefited the richest landlord to a substantial proportion[24]. In late 1970s, income group who earned £6240 or more had taken 70% more public expenditure than those who earned less than £2080[25]. Although the poor had taken up more of the subsidies for council tenant than the rich, the higher income group had substantially owning more properties thus acquired considerable granting on this respect as well[26]. Thus this essay argues that under the welfare state, every class could enjoy benefits to some extent so everyone was the winner. This did promote a more egalitarian society.

The NHS was initiated by the Labour government after WWII, promising people that they ‘may get the best that modern science can offer’ including hospitals, doctors and nurses[27]. However both health and healthcare were unable to be distributed equally from the NHS but largely benefiting the rich. It was found that the higher the patients’ SEGs belong to, the longer consultation time doctor would spend on them[28]. Whereas the patients from lower SEGs tend to receive a lower level and less frequent consultation or treatment despite their demand was higher in certain aspect, for instance hip replacement[29]. Furthermore, infant mortality and stillbirth rate of lowest SEG was the highest[30]. According to Hill’s statistics, the welfare state had failed to tackle this class inequality in distribution of health, but had worsened the situation instead[31].

The HNS expenditure per unit of need is rather unequal. Le Grand argued that the upper two SEGs had consumed at least 40% more expenditure than the lowers by using data in 1972[32]. However, the study of O’Donnell and Propper claimed that in fact the poor people acquired more healthcare than the rich by measuring the frequency of visiting GP[33]. They were aware of the methodology used by others such as Le Grand’s work; and the use of 1980s, in the age of Thatcherism, data might further reinforce the argument that poor was benefiting more from the NHS. However this essay had argued that the rich were taking advantages from a longer consultation time as well as the standard of treatment. In general Hill had presented that the higher the patients’ socio-economic group belongs to, the more the health care system would spend[34]. To sum up, the better-off had obtained more benefits, including health and healthcare from the system.

In 1944 education had essentially meant ‘equality of opportunity’ and ‘parity of esteem’ implied the equal distribution of resources[35]. However the opportunity of pupils from higher social class was greater than their fellow students. The streaming of children was depended on the 11-plus exam which measured the IQ of pupils; and this was found in favouring the middle-class and the professionals group[36][37]. Apart from examination, parental factor also played a part. As working class family might not recognize the benefit behind further education, while perhaps the father did not receive much, so the money forgone from being hired might perceived as more costly than continuing education[38]. Moreover, the resource available for children was significantly unequal. According to Hart et al, there was a positive relationship between the amount of books at home and income[39]. As a result, working class found it hard to move upward in the social ladder, and the situation had actually worsened in the classic era[40]. It was not hard to argue that the benefit for education was mainly occupied and consolidated only by the better-off.

Considering expenditure used, the higher SEGs had acquired more resources in higher education. Le Grand had demonstrated that in late 1970s, the richest fifth of household received about 150% more public expenditure than the poorest counterpart[41]. If we measured by occupation, the expenditure enjoyed by a professional was in fact lower than a unskilled labour in primary school age; but the situation reversed in and after secondary school and the former could enjoy 50% more than the latter[42][43]. It might because of the higher possibility for a high social class pupil to enjoy university life than a working class[44]. Although the imbalance in the input of expenditure did not create a more egalitarian society, it was notable that there is no controversy here to put more resources on those might be the future professional and help sustain the states prosperous. The poor pupils did benefit from the state in early school age, and the data from 1970s suggested an unchanged inequality among social class.

To conclude, to a large extent the British welfare state in 1945-75 did not create a more egalitarian society. This was because the cost and benefits of the welfare state were not equally shared among different socio-economic-groups. The wealthier and higher SEGs could have enjoyed a lower responsibility in contributing to the state by an increasingly regressive tax base; as well as taking advantages on higher level of healthcare and health, and further education. In general everyone perhaps were benefited from the state in housing, as public housing and private market had both received certain grant and help. This essay had argued that an egalitarian society could not be achieved by a base built on over-dependence and exploitation on the poor. However, the essay had only discussed the issue on very few topics, a further research on pension or transportation could be done. Also, the previous argument is mainly focused on wealth and its relationship to equality, the argument on gender or race could help broadening the discussing into different respect.

 

Bibliography

Archive of Labour Party Manifestos, 2001, 1945 Labour Party Election Manifesto, Retrieved January 26th, 2015 from: http://www.labour-party.org.uk/manifestos/1945/1945-labour-manifesto.shtml

Fraser, D., 2009, The Evolution of the British Welfare State, Fourth edition, Basingstoke: Palgrave Macmillan, p298

Greener, I., Simmons, R., Powell, M., 2009, The Consumer in Public Services: Choice, Values and Difference, Bristol: Policy Press

Halsey A.H., Heath A.F., Ridge, J.M., 1980, Origins and destinations: family, class and education in modern Britain, Oxford: Clarendon Press, p188

Halsey, A.H., 1988, British social trends since 1900: a guide to the changing social structure of Britain, Basingstoke: Palgrave Macmillan

Harrison, R., 2009, Towards an archaeology of the welfare state in Britain, 1945–2009. Archaeologies, Vol.5(2), pp238–262

Hart, R., Moro, M. and Roberts, J. 2012, Date of birth, family background, and the 11 plus exam: short– and long–term consequences of the 1944 secondary education reforms in England and Wales, Stirling Economics Discussion Paper, no.2012(10),p3, 4

Hill, M., 1993, The Welfare State in Britain: A Political History Since 1945, Aldershot: Edward Elgar, p37

Jenkin, P., 1980, Black Report 4 The Evidence for Inequality in Health Service Availability and Use, Retrieved January 26th, 2015 from:  http://www.sochealth.co.uk/resources/public-health-and-wellbeing/poverty-and-inequality/the-black-report-1980/the-black-report-4-the-evidence-for-inequality-in-health-service-availability-and-use/

Le Grand, J., 1978, The distribution of public expenditure: The case of health care, Economica, Vol.45, p132

Le Grand, J., 1982, The Strategy of Equality, London: George Allen & Unwin

Le Grand, J., 2012, Inequality, choice and public service, in A. Giddens and P. Diamond, (eds), The New Egalitarianism, London: Policy Network

Lowe, R., 2005, The Welfare State in Britain since 1945, Third edition, New York: Palgrave Macmillan

Malpass, P., 1990, Reshaping Housing Policy: Subsidies, Rents and Residualisation. London: Routledge.

O’Donnell, O. and Propper, C., 1991, Equity and the distribution of UK National Health Service resources, Journal of Health Economics, Vol. 10(1), p9

Peter Scott, ‘The Household Economy since 1870’ in R. Floud, J. Humphries and P. Johnson, (eds.), The Cambridge Economic History of Modern Britain, Volume II 1870 to the Present, Cambridge: Cambridge University Press, 2014

Rubinstein, W.D., 1986, Wealth and Inequality in Britain, London: Faber and Faber

Sinfield, A., 1966, ‘Poverty, privilege and welfare’, in P. Bean and D. Whynes (eds), Barbara Wootton: social science and public policy: essays in her honour, London: Tavistock, p112

Stanford Encyclopedia of Philosophy, 2013, Egalitarianism, Retrieved January 25th, 2015 from: http://plato.stanford.edu/entries/egalitarianism/

Titmuss, R.M., 1962, Income Distribution and Social Change, London: George Allen & Unwin Ltd., p129

 

FOOTNOTES

[1] Harrison, R., 2009, Towards an archaeology of the welfare state in Britain, 1945–2009. Archaeologies, Vol.5(2), pp239

[2] Le Grand, J., 1982, The Strategy of Equality, London: George Allen & Unwin, p14, 15

[3] Le Grand, J., The Strategy, p15

[4] Stanford Encyclopedia of Philosophy, 2013, Egalitarianism, Retrieved January 25th, 2015 from: http://plato.stanford.edu/entries/egalitarianism/

[5] Peter Scott, ‘The Household Economy since 1870’ in R. Floud, J. Humphries and P. Johnson, (eds.), The Cambridge Economic History of Modern Britain, Volume II 1870 to the Present, Cambridge: Cambridge University Press, 2014, p366

[6] Lowe, R., 2005, The Welfare State in Britain since 1945, Third edition, Palgrave Macmillan: New York, p297, 298

[7] Rubinstein, W.D., 1986, Wealth and Inequality in Britain, London: Faber and Faber, p82

[8] Halsey, A.H., 1988, British social trends since 1900: a guide to the changing social structure of Britain, Basingstoke: Palgrave Macmillan

p147, 152

[9] Scott, The Household Economy, p367

[10] Lowe, The Welfare State, P297, 298

[11] Sinfield, A., 1966, Poverty, privilege and welfare, in P. Bean and D. Whynes (eds), Barbara Wootton: social science and public policy: essays in her honour, London: Tavistock, p112

[12] Sinfield, Poverty, privilege and welfare, p113

[13] Fraser, D., 2009, The Evolution of the British Welfare State, Fourth edition, Basingstoke: Palgrave Macmillan p298

[14] Halsey, British social trends, p154

[15] Hill, M., 1993, The Welfare State in Britain: A Political History Since 1945, Aldershot: Edward Elgar, p37

[16] Fraser, The Evolution, p295

[17] Hill, The Welfare State, p51

[18] Harrison, Towards an archaeology, p4

[19] Hill, The Welfare State, p51

[20] Halsey, British social trends, p380

[21] Malpass, P., 1990, Reshaping Housing Policy: Subsidies, Rents and Residualisation. London: Routledge

[22] Greener, I., Simmons, R., Powell, M., 2009, The Consumer in Public Services: Choice, Values and Difference, Bristol: Policy Press, p138

[23] Halsey, British social trends, p376

[24] Titmuss, R.M., 1962, Income Distribution and Social Change, London: George Allen & Unwin, p129

[25] Le Grand, J., The Strategy, p88

[26] Le Grand, J., The Strategy, p88

[27] Archive of Labour Party Manifestos, 2001, 1945 Labour Party Election Manifesto, Retrieved January 26th, 2015 from:http://www.labour-party.org.uk/manifestos/1945/1945-labour-manifesto.shtml

[28] Jenkin, P., 1980, Black Report 4 The Evidence for Inequality in Health Service Availability and Use, Retrieved January 26th, 2015 from:  http://www.sochealth.co.uk/resources/public-health-and-wellbeing/poverty-and-inequality/the-black-report-1980/the-black-report-4-the-evidence-for-inequality-in-health-service-availability-and-use/

[29] Le Grand, J., 2012, Inequality, choice and public service, in A. Giddens and P. Diamond, (eds), The New Egalitarianism, London: Policy Network

[30] Jenkin, Black Report 4

[31] Hill, The Welfare State, P419, 421

[32] Le Grand, J., 1978, The distribution of public expenditure: The case of health care, Economica, Vol.45, p132

[33] O’Donnell, O. and Propper, C., 1991, Equity and the distribution of UK National Health Service resources, Journal of Health Economics, Vol. 10(1), p9

[34] Le Grand, The Strategy, p26

[35] Lowe, The Welfare State,P215

[36] Hart, R., Moro, M. and Roberts, J., 2012, Date of birth, family background, and the 11 plus exam: short– and long–term consequences of the 1944 secondary education reforms in England and Wales, Stirling Economics Discussion Paper, no.2012(10), p3,4

[37] Lowe, The Welfare State,P228

[38] Le Grand, The Strategy, p63

[39] Hart, Moro and Roberts, Date of birth, p37

[40] Le Grand, The Strategy, p76

[41] Le Grand, The Strategy, p57

[42] Halsey, British social trends, p293

[43] Le Grand, The Strategy, p58

[44] Halsey A.H., Heath A.F., Ridge, J.M., 1980, Origins and destinations: family, class and education in modern Britain, Oxford: Clarendon Press, p188

Welfare is a public policy concept in which government programs are introduced to help a society’s poor or disabled population reenter the workforce and care for themselves. This paper will take an in-depth look at the institution of welfare in the United States. Proceeding from a brief history of modern welfare programs, this essay will then review many of the issues that have arisen concerning this form of public policy as well as the ongoing attempts in Congress to correct these issues.

Keywords Aid for Families with Dependent Children (AFDC); Cash Transfer; Personal Responsibility & Work Opportunity Reconciliation Act (PRWORA); Welfare Dependency; Welfare State

Stratification

Welfare

Overview

In 1977, the budget director for the state of New York, Peter Goldmark, offered his thoughts regarding social welfare programs. "Welfare," he said, "is hated by those who administer it, mistrusted by those who pay for it and held in contempt by those who receive it." Goldmark was certainly not alone in his assessment of social welfare programs. Indeed, while the notion of using public funds to help the destitute get back on their feet is a noble concept for left-leaning idealists, in practical application, it has generated more controversy from both sides of the American political aisle than it has addressed poverty in the United States. In the latter twentieth century, this controversy became even more heated in light of two recessions, unpredictable economic development and subsequent budget austerity.

This paper will take an in-depth look at the institution of welfare in the United States. Proceeding from a brief history of modern welfare programs, this essay will then review many of the issues that have arisen concerning this form of public policy as well as the ongoing attempts in Congress to correct these issues.

A Brief History of Welfare in the United States

Welfare, a public policy concept in which government programs are introduced to help a society’s poor or disabled population reenter the workforce and care for themselves, is by no means a new idea. However, government was not always the primary donor to the poor — in the Middle Ages, the impoverished looked to churches and other charities for help rather than to political leaders.

While most societies viewed the poor in a negative light, in the sixteenth century, public attitudes concerning the poor began to change. In Great Britain, the introduction of the "English Poor Law" cast a light on the plight of the poor, calling for the reform of the impoverished population as well as eliminating poverty itself. The English Poor Law remained in effect for more than two and a half centuries. Its significance cannot be understated, as it represented a major shift in government policy toward the poor, creating institutions and programs designed to reduce the number of impoverished people and restore economic balance among the people (Slack, 1995).

While the English Poor Law cast a light on the need seen by many to help rather than isolate the impoverished, the stigma of poverty has persisted throughout history. An interesting change of attitude, however, occurred during the early twentieth century, when the stock market crashed in 1929.

The Depression

When Wall Street collapsed on what was coined "Black Tuesday," individual shareholders saw their holdings dwindle into negligible sums. However, the tumble was not limited to investors — assets of countless businesses also shrank, sending 11,000 banking institutions into insolvency. Within three years of Black Tuesday, stock market prices were 20 percent of what they were worth prior to 1929. Consumer confidence collapsed concurrently with the stock market, which meant production also fell off. By 1932, manufacturing output was halved, and up to 30 percent of the American workforce lost their jobs (Nelson, 2008).

The stigma of poverty was suddenly lifted during the Great Depression — there were simply too many members of the U.S. population who could be classified as below the poverty line to be considered social pariahs. The economic tumult of the Depression, the impotence of policymakers to rebuild economic institutions and systems and, above all, the increasing number of American poor vaulted Franklin Delano Roosevelt into the presidency in 1933. With his election came a mandate to help people get back to work.

Roosevelt introduced the "New Deal" while accepting the Democratic nomination for the presidency, and he made good on his vow upon entering office. In addition to filing legislation to stimulate industrial recovery and prevent future collapses from taking place, Roosevelt also pushed for unprecedented billions in federal spending to help create jobs and provide relief for the poor. While industrial and infrastructure recovery was an important part of this New Deal, the driving force behind the initiative was poverty relief and recovery. Political concerns were certainly expressed about the focus and effectiveness of this set of proposals, but in the face of public demands for relief, such concerns were marginalized (Bonatti & Thomsson, 2007).

In 1944, FDR also introduced the notion of a "Second Bill of Rights," which lent a philosophical ideal to his proposed policies. Stemming from his concept of the "four freedoms," freedom of speech, religion, fear and want, the Second Bill of Rights was designed to emphasize the latter of these freedoms by working to ensure that every individual had a right to make as comfortable a living as possible (Sunstein, 2006).

One of the longest-lasting aspects of Roosevelt's "welfare state" (a system in which the government assumes responsibility over the health, education, employment and social security of the people) was that of Social Security, which is used to help the handicapped and elderly remain free from want. Thirty years after the Roosevelt administration, the leadership team of President Lyndon Johnson took charge to build upon the legacy of FDR. Johnson managed to invest $6 billion in Medicare and another $1.3 billion in education reform appropriation. Johnson, addressing both U.S. Capitol chambers, declared a "war on poverty," prompting more people to get involved and the federal government to get more active in servicing the people's needs

In addition to his Medicare and education measures, Johnson's "war on poverty" included the introduction of the Head Start program, work study initiatives, food stamps, and the health care insurance program for the poor, Medicaid. In the years that immediately followed, Johnson's war seemed to be fomenting a return, as poverty levels dropped and living standards improved. Less than a decade later, however, poverty levels remained steady. In fact, Sheldon Danzinger of the University of Michigan said in 2004 that Americans have allowed poverty to again fall off the public's national agenda (Siegel, 2004).

Indeed, while the nobility of Roosevelt and Johnson reinvigorated the debate on the need to help the poor return to the rolls, there remains controversy about whether the government's role of managing the distribution of public funds to offset poverty is necessary. This paper will next look at the controversy over the modern welfare state.

Further Insights

Civic Responsibility or Budget Drain?

There are many different aspects of the American welfare state. As the definition provided earlier in this essay demonstrates, it is manifest in a broad range of areas. Most of these arenas are, however, somewhat benign in terms of their political sensitivity — after all, public education, Social Security and health care are universally applied programs. Alternatively, "welfare" more often than not evokes more attention from both advocates and critics alike, in large part because of the stigma that remains attached to the nation's poor. However, another critical factor is a simple matter of dollars and cents.

When one of the cornerstones of FDR's New Deal, the Aid for Dependent Children (as it was known then), was initiated, its payments to eligible children were only about $32 per month (equal to $360 today), and only one of three children actually received the benefit. By the 1960s, however, the program was renamed "Aid to Families with Dependent Children" (AFDC), and benefits were expanded to include grants for mothers. The benefit itself grew as well, a 60-percent increase in only twenty years. Furthermore, the number of people receiving the benefit more than doubled during the 1940–1960 timeframe. What was even more troubling to budget monitors was what...