Welfare State Models: Mediterranean, Arguments For and Against
Mediterranean Model: Greece, Italy, Portugal, and Spain
Pensions and Social Assistance Costs
This model applies to countries that developed a welfare state later (1970s and 1980s). This social model is the least expensive and is strongly based on very low pension and social assistance costs. These countries exhibit greater segmentation of the rights and status of people receiving benefits, reflected in very conditional access to benefits.
Strong Employment Protection
The main feature of the labor market is strong employment protection (not to be confused with worker protection or unemployment benefits) and the use of early retirement as a way of improving employment. Unions have an important presence, ensuring the extension of agreements reached in collective bargaining beyond the actual presence of unions. Again, this results in lower dispersion in wages than in the previous model.
Arguments in Favor of the Welfare State
- Humanitarian: No person should suffer unnecessarily.
- Democratic: Voters in most countries favor the gradual extension of social protection.
- Human Rights: States are bound by the Universal Declaration of Human Rights (1948) and the Covenants on Civil and Political Rights and on Economic, Social, and Cultural Rights (1966).
- Ethical: Reciprocity is an almost universal moral principle, and most welfare systems are based on patterns of generalized exchange. Altruism, or helping others, is a moral obligation in most cultures. For example, charity and aid for the poor (either through grants or jobs) are well-liked by many people.
- Religious: Most of the major world religions believe that altruism is moral and selfishness is immoral. Religious obligations include the duty of charity and the obligation for solidarity.
- Mutual Interest: Several systems have been created voluntarily through the growth of mutual insurance.
- Economic: Social programs perform a range of economic roles, including the regulation of demand from potential market failures and structuring the labor market.
- Social: Social programs are used to promote common goals regarding education, family, and work.
- Market Failure: Supporters of the welfare state argue that the private sector cannot solve social objectives or organize production efficiently.
Arguments Against the Welfare State
- Individualist: State intervention violates individual liberty; the individual should not be forced to subsidize others’ consumption.
- Neoliberal: The welfare state takes away freedom of choice because bureaucracies, over which the citizen has little control, decide what goods and services to “buy” with their taxes. In a free market, private consumers are sovereign (an argument developed by Milton Friedman in “Free to Choose”).
- Conservative: The welfare state is a moral hazard, as individuals are detached from the economic consequences of their actions. For example, one can practice extreme sports, knowing that healthcare is paid for collectively and that disability pensions exist if a serious accident occurs.
- Objectivist: The welfare state is based on a fallacy because if individual citizens cannot afford a certain level of “welfare,” there is no reason why others could do so collectively (argument by Leonard Peikoff).
- Syndicalist: The welfare state is an instrument to hide exploitation under the capitalist system.
- Hayek: Hayek argues that government institutions are unable to respond to specific circumstances as quickly as individuals would on their own.
- Religious: Some Protestant Christians are opposed to the welfare state because, while it enjoins people to be generous, they maintain that only voluntary donations through private charity are virtuous.