Historical Analysis of Welfare



Historical Analysis on welfare

Introduction

Welfare State or more precisely, welfare is usually a measure taken on the macroeconomic level by the government of a country to promote the well being of its public. Welfare generally encompasses all the citizens of a state, and so is also called social welfare. A state is transformed into a welfare state when its governments and institutions join hand and devise policies for overall social welfare of its citizens such as through pension plans, unemployment insurance, social security plans or measures to improve health, education, housing and social protection. Throughout history, economists are especially interested in evaluating government's expenditures on its social welfare system and based on that, the current as well as future well being and health of the public can be observed. Obtaining welfare or social benefits is considered a “right” of every citizen living in a welfare state. The government takes measures of not only implementing such programs but also makes these benefits accessible to the common man. In a welfare state, a direct transfer of funds take place from the government (public sector) to the receivers of welfare, and often include contributions from the private sector as well in the form of redistribution taxation. Such a system of distributing welfare occurs in a mixed economy (Ozawa, 2005).

Early Origins

The historical background of the modern welfare state is constituted by the various “poor relief” measures introduced in European states since the 17th century and codified in some of them (e.g., England) in organic sets of provisions (the Poor Laws). The institutional watershed was, however, the establishment of compulsory insurance, resting on the new principle of a rights-based protection backed by state authority. The pioneer country was Wilhelmina Germany (1890-1914), which introduced sickness insurance in 1883, work accident insurance in 1884, and pension insurance in 1889. By the end of the Great War, virtually all West European countries had legislated at least one compulsory insurance scheme. The United States and Canada followed suit with federal insurance schemes between the 1920s and 1930s.

The relatively close temporal proximity of the introduction of compulsory social insurance reflects the similar problematic pressure that all countries were suffering in the wake of capitalist industrialization and, more generally, modernization. The specific timing reflects, in contrast, specific national political constellations. Authoritarian regimes (e.g., Germany and Austria) moved as front-runners, in the hope of taming an increasingly active workers' movement that threatened to jeopardize conservative hegemony. Despite their more advanced level of socioeconomic development, the early democratizes, such as Britain, lagged somewhat behind: In these countries, political elites were less worried about legitimating and consensus and the introduction of social insurance had to wait for the strengthening of socialist representation within national parliaments (Chappell, 2011).

The early phase of “instauration” witnessed the emergence of two distinct basic approaches to social insurance. The occupational approach (prevailing in continental Europe) was based on labor market status and proceeded through the establishment of several occupational schemes (the first typically covering blue-collar industrial workers), often ...