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The Welfare State, RIP

PARIS – It is usually easier to see the beginning of something than the end of it. Born in 1945 in post-war Britain, the welfare state met its end in Britain this week, when British Chancellor of the Exchequer George Osborne repudiated the concept of the “universal benefit,” the idea that everyone, not just the poor, should benefit from social protection.

The welfare state was described by its intellectual architect, Lord Beveridge, as a structure built to protect the individual “from the cradle to the grave.” This model came to dominate every West European country, with local traditions and local politics dictating the diversity of its application. By the 1960’s, all of democratic Europe was social democratic, a combination of free markets and mass social protection.

This European model succeeded beyond anyone’s wildest dreams, and for decades was the envy of the world in a way that neither “Wild West” American capitalism, nor Soviet and Maoist state socialism, ever could be. Social democracy seemed to deliver the best of both worlds, economic efficiency and social justice.

True, there were always some nagging doubts about the European welfare state, mostly starting in the 1980’s, when globalization arrived at Europe’s door. Hampered by the financial cost built into the welfare state – and perhaps by the psychological and financial disincentives built into it as well – European economies began to slow, with per capita income becoming stagnant and high unemployment a permanent fixture.