Thursday, June 14, 2007

A Better Way Forward

The welfare state is the optimal economic system in terms of living standard, social justice, and economic performance. We owe it to ourselves to create one. Social Democracy is inherently superior in its performance because it:

1: Makes use of those human assets which would otherwise go unused.

2: Avoids the problems associated with huge wealth inequalities such as pollution, crime, and violence.

While there are naysayers who have been taught to believe that a decent and functioning welfare state is a source of unemployment, this does not need to be so. Active Labor Market Policies can curb and correct this. In fact, everything can be corrected, or at least mitigated.

What are these policies?.....They involve subsidizing hiring and work.

1 comment:

  1. I largely agree ;-)

    3 points:
    -Be more explicit in your distinction between normative considerations (justice) and positive considerations (how things work)

    -unemployment benefits to some extent provide disincentives to work, so your ALM policies and unemplopyment insurance must be carefully aligned. However, most people wanna work. Its not laziness why they are unemployed.

    -social democracy is not superior because it makes use of unused human assets but because it buys unproductive labor out of the production process. Doing this in a centralised way is more efficient than by private market. Compare the per capita social protection expenditures of US and continental Europe. They are very similar when adding together private and government expenditures. However, poverty and inquality is much higher in the US. This simple comparison is all that is needed to make that point.