Why doesn’t the US have a European-style welfare state? By Alesina et al
· Relative stability of the US means that it is still governed by an 18th c constitutition emphasising property rights. Less influence for the 20th c’s emphasis on social rights
· Reciprocal altruism: voters will only be happy giving money to the poor if they feel that the poor don’t deserve their fate. In the US, much more likely to think that the poor are poor because they’re lazy. In Europe, much more likely to think it’s because they’re unlucky.
· Minorities are highly over-represented amongst the poorest Americans, accounting for 30% of the population but 46% of those in poverty. America’s trouble race relations are “clearly a major reason for the absence of an American welfare state”.
· According to Banting, Alesina et al (2004) find that more than half of the difference in social spending between the US and Europe is attributable to the level of racial diversity
· Goodhart says that these authors conclude that Americans think of the poor as a different group, whereas Europeans think of the poor as the same group.
· Argue that across countries, racial fragmentation is a powerful predictor of redistribution. This will be a great point for presenting the argument.
· In US, high school dropouts are stronger supporters of welfare state than high school graduates – but those with graduate degrees are even more supportive than high school dropouts.
· Social public expenditure as a % of GDP, 1995: US 15.8%, UK 22.5%, EU 25.4%, Sw 33%. The UK is much more like the EU in terms of welfare state, though somewhat closer to the US than to Sweden. This is important in terms of retrenchment and in terms of Banting’s argument regarding the growth of welfare states. While retrenchment is unlikely, it might be possible that high levels of ethnic diversity could slow growth of welfare state.
· Govt expenditure on subsidies and transfers, 1998: US 11%, UK 16.6%, EU 21%, Sw 23.4%. Here the UK is dead in the middle between US and EU, and Sw is much closer to EU average than on above metric. This implies that a lot of Sw’s spending is not on redistribution but is instead on universal programmes, no?
· V int figures on growth of spending over time. Blog this later.
Race and identification
· Alesina et al show that trust is higher in racially homogenous communities. Other American research shows that people of different races are more likely to cheat each other, and that participation in social activities is lower in racially fragmented communities
· Individuals prefer to form racially homogenous political jurisdictions, research shows
· Humans may be programmed to form in-group-out-group associations, and race is an easy marker for this type of association. One famous experiment divided boys into different teams and showed how hostile they become to their rivals, strictly on an “us” v “them” basis. Race is an easy marker for this type of association, particularly in the US. In the UK, does class form a similar marker, thus perhaps mediating the effect of race (though not getting rid of it)?
· In the US, altruism is lower between races than within them.
· Racial animosity is a long-standing part of American life, in contrast to UK and Europe.
· Race has been used as a way to keep welfare state small (29).
· In US, support for welfare is higher among people who live near to many welfare [income support] recipients who are of the same race, but lower among those who live near to many recipients of the same race. Seems to mean that people have a sympathetic reaction when they see IS going to people of their own race, but a negative reaction when they see IS going to those of other races. (This would lead to argument that inequality is bad for welfare state support in a racially diverse society, but perhaps good for it in a homogenous one.)
· In no European country is there a minority who is as relatively poor (and thus dependent on the welfare state) as blacks in the US. Among non-hispanic whites in US, poverty rate is under 8%, while for blacks it is three times that. For whites, poverty is a condition of the other.
· In US, states with more blacks have less generous welfare policies (even taking into account the fact that states with more blacks also tend to be poorer and thus have less to spend)
· Argue that cross-country and US evidence indicate that hostility between races limits support for welfare, they say, but don’t present any evidence for outside the US.
· While race is the major factor, they say, they also say that historical factors, such as the frontier mentality, also matter. Americans did not have to learn how to get along with their poor: they could move away from them, or encourage them to move away. They also credit the American belief that the US is an open and fair society, and do not present evidence indicating that this is shaped by race.
· Their conclusion is that race is critically important to understanding US-Europe differences. Americans are more likely to think that income comes from effort, and that welfare recipients are not pulling their weight. As they say, this opinion may itself be the outcome of racial factors. But does this necessarily imply that it is the result of racial diversity? The US has a particularly contested racial history.
European support for the welfare state and feelings about poverty etc
· 48% of European respondents to the World Values Survey say that government should own more of the economy. Only 26% of Americans agree. “This probably reflects a greater distrust of the state within the US.” White Americans tend to distrust other races, but Americans in general tend to distrust the state. But they argue that this does not explain American distaste for redistribution.
· Americans are much more likely to believe in social mobility. 71% believe that the poor have a chance to escape poverty, compared to only 40% of Europeans – even though there is no more mobility in the US. 54% of Europeans believe that the poor are unlucky, compared to 30% of Americans. 60% of Americans say the poor are lazy, compared to 26% of Europeans.
· American beliefs about the poor deserving their fate are clearly intertwined with their beliefs about race (particularly blacks being lazy), but there is no evidence that Europeans have these beliefs about the poor – instead, they are much more likely to believe that they are unlucky, or that structural factors are causing their poverty. Perhaps this is because the poor in Europe have traditionally been the same colour as the rest of the population, and with that changing, there will be problems. This would indicate that if you support a strong welfare state, you need to have robust policies to decrease poverty amongst non-whites.
· The more that a country’s population believes that luck affects SES status, the higher that country’s social spending.
· Americans are more comfortable with widespread inequality.
· The more I read of this, the more it seems to me that the US is the outlier rather than the model. It had immigration at a different time, it has a radically different history, it has much more contentious racial issues, and it has much different belief systems (perhaps due to race and immigration)
· With broader, more universal welfare programmes, more people benefit, and thus support is broader. The US is at the extreme in its level of targeting and means-testing? “The ability to push a welfare state increases as the welfare state itself grows.” An “increasing returns” phenomenon.
Not related to essay on multiculturalism and the welfare state, but interesting nonetheless
· Tax rates for those on low incomes in the US are higher than for those on low incomes (up to 50% median wage) in US
· The more you work in the US, the more you are likely to earn. More exactly, those in the top quintile make more money and work more hours. That same relationship does not hold as true in Europe (Alesina et al 35).
· Research shows that Americans are more punitive than Europeans – ie happier to see supposed miscreants suffer.