How the north can learn from the south in building a welfare state

Johannes Lenhard
March 31, 2014

Are the poor really dependent on welfare  and is that necessarily a bad thing, as the ‘post-welfare generation’ might want to argue?

The most recent video with Berkeley professor Ananya Roy under  the #GlobalPOV initiative is looking at the issue of the welfare state  and inequality. Actually, these ideas are reminiscent of claims heard  back in the 1970s in the US and UK. Nixon’s welfare queen jumps  to Roy’s mind. Roy goes on to argue that it is actually ‘us’ – the  relatively wealthy – who are just as dependent on state help. She  herself receives more in tax deduction on her mortgage than ‘any money  spent by the US government on what has come to be vilified as public  housing’.  And without doubt the biggest welfare queens are sitting in  corporate offices. The Walmart workforce is the greatest recipient of US  welfare help because Walmart – despite its $13 billion profit – does  not pay wages that are high enough for people to survive.

Discussing the TV series ‘Benefit Street’, Hasan recently wrote  about very similar issues in the UK: it is not the benefit receivers  who are getting the biggest chunk of money, but pensioners, middle-class  people and mainly corporations, such as G4S and Serco or the private rail companies, not to mention the bail out for the banks (an estimated £1.1trn  – enough to pay for 200 years of benefits). Similar calculations would  hold true in Germany and many other major European countries.

Roy’s conclusions also work in Britain as well as in the US: even though cash transfers based on conditions have serious problems,  it is the state and only the state which can (and is financially able  to) effectively change the situation of the poor. A Universal Basic  Income seems like a utopian vision for some, but we are getting closer  in some contexts, such as Switzerland as Haeusermann has recently documented.

The forerunners in all this are not liberal, Western market economies  but what we still disdainfully call ‘emerging economies’ in Asia and South America.  In these increasingly affluent countries, the workforce demands a share  of the wealth – and is often granted it by the state. Under Brasil’s ‘Bolsa Familia’ program,  for instance,  families who send their children to school and allow  them to be vaccinated earn $100 more per month. This has helped more  than 22 million people over the last 10 years. As Roy also claims, this  welfare state has to be fought for. The recent protests in China and Chile did exactly that; they fought for a greater share of the wealth (not yet necessarily with the desired effect).

It might be time to turn development on its head: the  overly-developed North (with its now completely underdeveloped unions)  might be able to learn very much from the emerging power-houses in Asia  and South America when it comes to building up a new model for welfare  states.


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Johannes Lenhard