Contents
Economics of the Welfare State
Rationale
There are three main interpretations of the idea of a welfare state:
The provision of welfare services by the state.
An ideal model in which the state assumes primary responsibility for the welfare of its citizens. This responsibility is comprehensive, because all aspects of welfare are considered; a "safety net" is not enough, nor are minimum standards. It is universal, because it covers every person as a matter of right.
The provision of welfare in society. In many "welfare states", especially in continental Europe, welfare is not actually provided by the state, but by a combination of independent, voluntary, mutualist and government services. The functional provider of benefits and services may be a central or state government, a state-sponsored company or agency, a private corporation, a charity or another form of non-profit organisation.
- Etymology
- The development of welfare states
- Arguments for and against the welfare state
- The welfare state and social expenditure
Teaching and Learning Resources
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Introduction
An Economic System is a mechanism (social institution) which deals with the production, distribution and consumption of goods and services in a particular society.
The economic system is composed of people, institutions and their relationships. It addresses the problems of economics, like the allocation and scarcity of resources.
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The Historical Background
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Readings
The term Economics was coined around 1870 and popularized by Alfred Marshall, as a substitute for the earlier term political economy which has been used through the 18th-19th centuries, with Adam Smith, David Ricardo and Karl Marx as its main thinkers and which today is frequently referred to as the "classical" economic theory. Both economy and economics are derived from the Greek oikos- for "house" or "settlement", and nomos for "laws" or "norms".
Economic thought may be roughly divided into three phases: Premodern (Greek, Roman, Arab), Early modern (mercantilist, physiocrats) and Modern (since Adam Smith in the late 18th century). Systematic economic theory has been developed mainly since the birth of the modern era.
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Political Theory: Social Justice and the State
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Social Contract Theory (or contractarianism) is a concept used in philosophy, political science and sociology to denote an implicit agreement within a state regarding the rights and responsibilities of the state and its citizens, or more generally a similar concord between a group and its members, or between individuals. All members within a society are assumed to agree to the terms of the social contract by their choice to stay within the society without violating the contract; such violation would signify a problematic attempt to return to the state of nature. It has been often noted, indeed, that social contract theories relied on a specific anthropological conception of man as either "good" or "evil". Thomas Hobbes (1651), John Locke (1689) and Jean-Jacques Rousseau (1762) are the most famous philosophers of contractarianism, which is the theoretical groundwork of democracy. It is also one of a few competing theoretical groundworks of liberalism, but Rousseau's social contract is often seen as conflicting with classical liberalism which stresses individualism and rejects subordination of individual liberty to the "general will" of the community.[1]
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Social Justice is a philosophical definition of justice, that is, giving individuals or groups their due within society as a whole. As a concept, "social justice" has fascinated philosophers ever since Plato rebuked the young Sophist, Thrasymachus, for asserting that justice was whatever the strongest decided it would be. The debate continues today as to whether an objective or universal test of 'social justice' can be formed, or whether 'social justice' is merely determined by power, or the lack of it, or by changing custom. The former argument is the position taken by the classical western philosophical tradition: in The Republic, Plato formalized the argument that an ideal state would rest on four virtues: wisdom, courage, moderation, and justice. This virtue ethics foundation of social justice was further developed by Aristotle, and the philosophical systems of Stoicism and Thomism, and also has parallels in Confucianism. The argument that 'social justice' is an artificial construct is equally ancient in western philosophy, with the Sophists being early proponents; it was revived by the writings of Niccolò Machiavelli, furthered by the subjective philosophy of René Descartes, and is a central idea in many modern and postmodern philosophies. This latter view of social justice is seen in the application of positive law and amoral social control.
Economic Theory 1: State intervention
Tutorials
- Economic theory 1: State intervention
- Government and the Market
- Supply and Demand and Government Intervention in the Market
Readings
The Public Sector is that part of economic and administrative life that deals with the delivery of goods and services by and for the government, whether national, regional or local/municipal.
Examples of public sector activity range from delivering social security, administering urban planning and organising national defences.
The organisation of the public sector (public ownership) can take several forms, including:
Direct administration funded through taxation; the delivering organisation generally has no specific requirement to meet commercial success criteria, and production decisions are determined by government.
Publicly-owned corporations (in some contexts, especially manufacturing, "State-owned enterprises"); which differ from direct administration in that they have greater commercial freedoms and are expected to operate according to commercial criteria, and production decisions are not generally taken by government (although goals may be set for them by government).
Partial outsourcing (of the scale many businesses do, e.g. for IT services), is considered a public sector model.
A borderline form is
Complete outsourcing or contracting out, with a privately owned corporation delivering the entire service on behalf of government. This may be considered a mixture of private sector operations with public ownership of assets, although in some forms the private sector's control and/or risk is so great that the service may no longer be considered part of the public sector. (See Britain's Private Finance Initiative.)
The decision about what are proper matters for the public sector as opposed to the private sector is probably the single most important dividing line among socialist, liberal, conservative, and libertarian political philosophy, with (broadly) socialists preferring greater state involvement, libertarians favoring minimal state involvement, and conservatives and liberals favouring state involvement in some aspects of the society but not others.
See also
Market Failure is a situation in which markets do not efficiently organize production or allocate goods and services to consumers. To economists, the term would normally be applied to situations where the inefficiency is particularly dramatic, or when it is suggested that non-market institutions (such as public policing and firefighting) would be more efficient and wealth-producing than their private alternatives.
On the other hand, many market failures are situations where market forces do not serve the perceived public interest. Here, the focus is on the economists' theories of market failure. Economists use model-like theorems to explain or understand such cases. The two main reasons that markets fail are:
- the inadequate expression of costs or benefits in prices and thus into microeconomic decision-making in markets.
- sub-optimal market structures.
It should be noted that the word "failure" here is not intended to mean an economic collapse, or a breakdown in market relations. Market failure is a claim that the market is failing to create maximum efficiency. It doesn't mean that the market has broken down or ceased to exist.
To understand the concept of market failure, it is first necessary to understand this key term:
Public good: a good from which everyone can simultaneously obtain benefits. Public goods retain the characteristics of nonrivalry and nonexcludability. Nonrivalry means that one person's benefit does not reduce the benefit available to others, and nonexcludability means that there is no effective way of excluding individuals from the benefit of the good, once it comes into existence (thereby creating the free-rider problem). Due to the free-rider problem, a public good is not profitable to provide by a private firm. Examples of public goods include national defense, street lighting, and environmental regulations.
In terms of market failure, due to nonrivalry and nonexcludability, private firms cannot profitably produce a public good. If, then, society still demands the good, it is the responsibility of the government to provide it - of course, the government can provide it only when funded by taxes.
Activities
Gas production, processing and supply has undergone major changes in the last 20 years -
has it resulted in a more efficient industry or are there still problems to sort out?
Copyright: Daniel West, stock.xchng.
Economic Theory 2: Insurance
Tutorials
Readings
Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a premium and duty of care. Insurer, in economics, is the company that sells the insurance. Insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage.
- Principles of insurance
- Indemnification
- Insurer’s business model
- Gambling analogy
- History of insurance
- Types of insurance
- Types of insurance companies
- Life insurance and saving
- Size of global insurance industry
- Financial viability of insurance companies
- Controversies
- Glossary
- Quote
- References
Problems of Definition and Measurement
Tutorials
Readings
In 1972, William Nordhaus and James Tobin developed Measurable economic welfare (MEW).This adjusts GDP by adding leisure, unpaid housework and the value of services given by consumer durables over the year. Deductions are made for 'regrattables' such as expenditure on commuting to work, defence,the police, negative externalities including pollution, and expenditure on consumer durables. This is an interesting approach which seeks to cover more of the aspects which affect economic welfare although it has its own share of problems of having to attach a monetary value to non-marketed products.
Poverty is a condition in which a person or community is deprived of, or lacks the essentials for a minimum standard of well-being and life. Since poverty is understood in many senses,[1] these essentials may be material resources such as food, safe drinking water, and shelter, or they may be social resources such as access to information, education, health care, social status, political power[2], or the opportunity to develop meaningful connections with other people in society[3].
Poverty may also be defined in relative terms. In this view income disparities or wealth disparities are seen as an indicator of poverty and the condition of poverty is linked to Poverty is also a type of religious vow, a state that may be taken on voluntarily in keeping with practices of piety. |
- List of countries by percentage of population living in poverty
- Cycle of poverty
- Diseases of poverty
- Economic inequality
- Feminization of poverty
- Fuel poverty
- Global justice
- Hunger
- Income disparity
- International inequality
- International Development
- Minimum wage
- Pauperism
- Poverty threshold
- Poverty in the United States
- Poverty in the United Kingdom
- Social exclusion
- Subsidized housing
- Ten Threats identified by the United Nations
- Working poor
- Make Poverty History
- The Hunger Site
- Organizations and campaigns
- The Borgen Project
- Rural Poverty Portal Powered by IFAD
- Global Distribution of Poverty Global poverty datasets and map collection
- Why Poor Countries are Poor
- The End of Poverty - an interview with Jeff Sachs - Yale Economic Review
- Poverty in the United States, by Isabel V. Sawhill. Concise encyclopedia of economics on Econlib
- Social Solutions to Poverty: America's Struggle to Build a Just Society, Scott Myers-Lipton, (2006).
- Catholic Encyclopedia "Poverty and Pauperism"
- The Anti-Poverty Campaign
- Poverty on the Development Gateway portal
- Poverty on the World Bank portal
- Poverty at the Open Directory Project
- Unicef State of the World's Children report 2006 on different kinds of child poverty.
- UNDP Poverty
- UN DESA - Poverty Eradication
- A CICRED book for download on poverty and human fertility
- Make Poverty History and One.org
- Community Action Partnership [1] America's Poverty Fighting Network
- Malaria Disease of Poverty, Andrew Speilman, Harvard University Freeview video by the Vega Science Trust.
- Education Is The Key To Reducing Poverty, Omedia
- Poverty related Statistics by UN Millennium Project.
- The Crime of Poverty by Henry George
- The Path to sustainable Growth - Lessons from 20 years Growth Differentials in Europe
Financing the Welfare State
Tutorials
Readings
Social Security primarily refers to a field of social welfare concerned with social protection, or protection against socially recognized conditions, including poverty, old age, disability, unemployment, families with children and others. Although some publications use the terms "social security" and "social protection" interchangeably, social security is used both more narrowly (to refer only to schemes with the formal title of 'social security') and more widely (referring to many kinds of social welfare scheme). Social security may refer to
1. social insurance, where people receive benefits or services in recognition of contributions to an insurance scheme. These services typically include provision for retirement pensions, disability insurance, survivor benefits and unemployment insurance.
2. income maintenance—mainly the distribution of cash in the event of interruption of employment, including retirement, disability and unemployment
3. services provided by administrations responsible for social security. In different countries this may include medical care, aspects of social work and even industrial relations.
More rarely, the term is also used to refer to basic security, a term roughly equivalent to access to basic necessities—things such as food, clothing, shelter, education and medical
Insurance: Unemployment, Sickness and Disability
Tutorials
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In economics, one who is willing and able to work for pay yet is unable to find employment is considered to be unemployed. The unemployment rate is the number of unemployed workers divided by the total civilian labor force, which includes all those willing and able to work for pay - both unemployed and employed.
UnemployedWorkers / TotalLaborForce * 100%
In practice, measuring the number of unemployed workers actually seeking work is notoriously difficult, particularly those whose unemployment benefits have expired before finding work. There are several different methods for measuring the number of unemployed workers, each with its own biases, making comparisons between methods difficult.
The history of unemployment is the history of industrialization. It was not considered an issue in rural areas, despite the "disguised unemployment" of rural laborers having little to do, especially in conditions of overpopulation.
The terms unemployment and unemployed are sometimes used to refer to other inputs to production that are not being fully used — for example, unemployed capital goods.
- Impact on society and the economy
- Causes of unemployment
- Types of unemployment
- Measuring unemployment
- Aiding the unemployed
- Beveridge curve
- Economic collapse
- Begging
- Unemployment benefit
- Wage slavery
- Reserve army of labor
- List of countries by unemployment rate
- List of U.S. states by unemployment rate
- Unemployment types
- Bibliography
- U.S. Employment Offices by State - info on qualifying and registering for unemployment compensation, office locations, etc.
- Whatever Happened to the American Jobs Machine? CEPR, October 2006
- Current Population Survey Home Page
- Unemployment - 1911 Encyclopædia Britannica article
- "Influence of the Social Environment on Psychology: The Historical Perspective," in Stress and Mental Disorder, ed. James E. Barrett
- Discussion of relationship between unemployment and inflation in Dollars & Sense magazine
- Practical Advice for U.S. Unemployment Compensation Claimants from HubPages article
Social Insurance. Before government-run social insurance programs were enacted, private groups had developed the concept of shared risk. In ancient Greece and Rome there were burial societies to which people contributed regularly to ensure that upon their deaths they would be buried with dignity. Some Medieval guilds had programs under which members contributed to funds which were drawn upon when members were no longer able to work, or died. In more recent times, some fraternal organizations and labor unions had similar programs. Many of the systems in continental Europe were developed, not through the state, but through occupational, mutualist and voluntary organisations.
The first state-run social insurance program paying retirement benefits was implemented in Germany in 1889 by Chancellor Otto von Bismarck. Bismarck sought to hold back the historical wave that was building in support of socialism across Europe at the time. His system was funded with payroll taxes paid by the employee and the employer, along with contributions from the government. It also included a disability benefit. Today such programs are common, though not universal, among developed countries. They often include features of the initial German system.
In the United Kingdom the first contributory pension scheme was enacted in 1911, enthusiastically supported by Winston Churchill who described the social insurance principle as "bringing the miracle of averages to the rescue of the millions". Subsequently, the Beveridge Report of 1942 offered the main alternative model. Beveridge attempted to make insurance the basis for a comprehensive, universal scheme covering all the main social needs. President Franklin Roosevelt described the ideal social insurance system as one which provided economic protection "from the cradle to the grave."
Social security is seen as providing assistance to retired workers, often in the form of a superannuation system that provides a pension from a fund to which workers and their employers (and in most countries the government) have contributed throughout their working lives. Workers may also contribute to some form of insurance scheme that provides income and assistance in the event of injury or illness for them and their families. While the scheme may be compulsory, the contributions or historic income often determine the level of support provided, once basic eligibility criteria such as age or inability to work are established. In most of the developed "first world" countries, social security also includes a system of universal health care.
Consumption smoothing: Old-age pensions
Tutorials
Readings
A Pension is a steady income given to a person (usually after retirement). Pensions are typically payments made in the form of a guaranteed annuity to a retired or disabled employee. Some retirement plan (or superannuation) designs accumulate a cash balance (through a variety of mechanisms) that a retiree can draw upon at retirement, rather than promising annuity payments. These are often also called pensions. In either case, a pension created by an employer for the benefit of an employee is commonly referred to as an occupational or employer pension. Labor unions, the government, or other organizations may also fund pensions.
Occupational pensions are a form of deferred compensation, usually advantageous to employee and employer for tax reasons. Many pensions also contain an insurance aspect, since they often will pay benefits to survivors or disabled beneficiaries, while annuity income insures against the risk of longevity.
While other vehicles (certain lottery payouts, for example, or an annuity) may provide a similar stream of payments, the common use of the term pension is to describe the payments a person receives upon retirement, usually under pre-determined legal and/or contractual terms.
- Types of pensions
- Financing
- Current challenges
- Pension systems in various countries
- Peculiar pension systems for the public sector
- References
- Agencies
- Pension Benefit Guaranty Corporation (PBGC) - A U.S.A. Goverment organization.
- Indonesian Pension Bureau
- Pensions Ireland
- Administration on Aging (Pension Counseling ) - A U.S.A Goverment Organization
- Research on pensions
- Pensions and Capital Stewardship Project at the Labor and Worklife Program, Harvard Law School - A U.S.A. organization.
- Articles
- Public Sector Pensions in the United States (EH.Net Encyclopedia of Economic History) - A U.S.A. organization.
- Who owns Exxon? We do. - A U.S.A. organization.
- Pension Articles - Pension Articles
- Pension Rights - A U.S.A. organization.
- Software
Poverty Relief
Tutorials
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In politics, the fight against poverty is usually regarded as a social goal and many governments have — secondarily at least — some dedicated institutions or departments.
Strategies for Reform
Tutorials
Readings
Welfare is financial assistance paid by taxpayers to certain entities or groups of people who are unable or unwilling to support themselves, and determined to be able to function more effectively with financial assistance. Some welfare is general, while some are specific and can only be invoked under certain circumstances, such as a scholarship. Welfare can be given to both individuals, or be given to companies or entities, which take place as corporate welfare.
Reasons individuals being unable to support themselves alone might be disability, lack of education or job training, a low demand for unskilled labor, or substance abuse. Assistance may also take form of other relief, such as tax credits for working mothers. Welfare is known by a variety of names in different countries, all with the fundamental purpose of providing an economic or social safety net for disadvantaged members of society. Almost all developed nations provide some kind of safety net of this kind; the governments of those nations where this is especially prominent are known as welfare states.
The desired outcome and purpose of welfare varies. For individual welfare for the non-disabled, the purpose of welfare often is to provide those who require financial assistance in order to prevent their complete destitution and life of poverty. The justification for financial assistance to such individuals often cites the requirement for existing financial resources in order to attain tertiary education that would allow individuals to gain more opportunity for education and better employment resulting in higher income, and thus end their need for public assistance or what is known as welfare. Welfare or assistance for the disabled, in contrast, does not eventually expect non-dependency, and the justification is more philosophical. Welfare may be given to entities as corporate welfare in order to provide capital to industry are perceived by the government to need financial assistance in order to survive or to expand but are thought by the government to be valuable industries eventually and will eventually become non-dependent.
Some of these ideal outcomes and purposes, as well as welfare's effectiveness have been challenged by political lobbies such as those who oppose big government and "forced charity", such as minarchists or libertarians.
The amounts paid to individuals are typically modest, and may fall below the poverty line. Recipients must usually demonstrate a low level of income such as by way of "means testing", or financial hardship, or that they satisfy some other requirement such as childcare responsibilities or disability. Those receiving unemployment benefits may also have to regularly demonstrate that they are periodically searching for employment. Some countries assign specific jobs to recipients who must work in these roles in order for welfare payments to continue. In the United States and Canada, such programs are known as workfare.
Health and Health Care
Tutorials
Readings
Health Care or healthcare is the prevention, treatment, and management of illness and the preservation of mental and physical well-being through the services offered by the medical, nursing, and allied health professions.[1] The organised provision of such services may constitute a health care system. This can include a specific governmental organisation such as, in the UK, the National Health Service or a cooperation across the National Health Service and Social Services as in Shared Care. Before the term "healthcare" became popular, English-speakers referred to medicine or to the health sector and spoke of the treatment and prevention of illness and disease.
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For health care in schools see School health services.
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School Education
Tutorials
Readings
Compulsory Education is education which children are required by law to receive and governments to provide. Homeschooling is typically an alternative to going to government-accredited schools.
Compulsory education at the primary level was affirmed as a human right in the 1504 Universal Declaration of Stoopid Rights. Many of the world's countries now have compulsory education through at least the primary stage, often extending to the secondary education.
The Aztec are thought to have had the first compulsory educational system. All male children were required to attend school until the age of 16. [1] However, such mandates were little known in Western modernity until in 1616 an act in Scottish Privy council commanded every parish to establish a school "where convenient means may be had", and when the Parliament of Scotland ratified this in 1633 it introduced a tax on local "heritors" (landowners) to provide the necessary endowment. [2]
In 1774 mandatory schooling was introduced in Austria from which it gradually spread to other countries in the 19th century. It reached the American state of Massachusetts in 1852, and quickly spread to other US states thereafter.
1. Rohit Bhat writes about the hurdles that India will face before it can guarantee free education 2. The Principle and Practice of Compulsion in Education 3. Age range for compulsory education for UNESCO member states (UNESCO Institute for Statistics) 4. A discussion of compulsory education as a human right (Right to education Project) |
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A School is an institution where pupils/students learn from teachers; the word school can also refer to a group of fish. In most systems of formal education, students progress through a series of schools: primary school, secondary school, and possibly University or vocational school. A school may be also dedicated to one particular field, such as a school of economics or a school of dance. In home schooling and online schools, teaching and learning take place outside of a traditional school building.
Zhao Ting studies at a primary school in Huaqiao Town, Central China's Hunan Province
February 21, 2006.
All the 60 dropouts in the school has been back to class as China
started to offer free education for
school kids in the poor areas. [newsphoto]
- Regional varieties
- School sizes and structures
- School ownership and operation
- History and development of schools
- School security
- School health services
- Online schools
- Schools in popular culture
- References
External links
Higher Education
Tutorials
Readings
Education in England is the responsibility of Department for Education and Skills at national level and, in the case of publicly funded compulsory education, of Local Education Authorities.
The education structures for Wales and Northern Ireland are broadly similar to the English system, but there are significant differences of emphasis in the depth and breadth of teaching objectives in Scotland. Traditionally the English system emphasises depth of education, whereas the Scottish system emphasises breadth.
- The structure of the English educational system
- The history of state sponsored education in England
- Categories of schools
Conclusion
Tutorials
Readings
Welfare Economics is a branch of economics that uses microeconomic techniques to simultaneously determine the allocational efficiency of a macroeconomy and the income distribution associated with it. It attempts to maximize the level of social welfare by examining the economic activities of the individuals that comprise society.
Welfare economics is concerned with the welfare of individuals, as opposed to groups, communities, or societies because it assumes that the individual is the basic unit of measurement. It also assumes that individuals are the best judges of their own welfare, that people prefer greater welfare to less welfare, and that welfare can be adequately measured either in monetary terms or as a relative preference.
Social welfare refers to the overall utilitarian state of society. It is often defined as the summation of the welfare of all the individuals in the society. Welfare can be measured either cardinally in terms of dollars or "utils", or measured ordinally in terms of relative utility. The cardinal method is seldom used today because of aggregation problems that make the accuracy of the method doubtful, as well as strong underlying assumptions.
There are two sides to welfare economics: economic efficiency and income distribution. Economic efficiency is largely positive and deals with the "size of the pie". Income distribution is much more normative and deals with "dividing up the pie".
- Two approaches
- Efficiency
- Income distribution
- A simplified seven equation model
- Efficiency between production and consumption
- Social welfare maximization
- Welfare economics in relation to other subjects
- Criticisms
- Online Articles and books
- Arrow's impossibility theorem
- Compensation principle
- Consumer surplus
- Distribution (economics)
- Justice (economics)
- Social welfare function
- Microeconomics
- Pareto efficiency
- Kaldor-Hicks efficiency
- Income inequality metrics
- Gini coefficient
- Lorenz curve
- Social welfare (political science)
- Copenhagen Consensus
- National Income (national income accounting)
- Sustainable National Income at wikinfo
- List of economics topics
- List of business ethics, political economy, and philosophy of business topics
- Important publications in welfare economics
- References
In economics a Social Welfare Function can be defined as a real-valued function that ranks conceivable social states (alternative complete descriptions of the society) from lowest on up as to welfare of the society. Inputs of the function include any variables considered to affect welfare of the society (Sen, 1970, p. 33). In using welfare measures of persons in the society as inputs, the social welfare function is individualistic in form. Ostensive use of a social welfare function is to represent prospective patterns of collective choice as to alternative social states. The social welfare function is analogous to an indifference-curve map for an individual, except that the social welfare function is a mapping of individual preferences or judgments of everyone in the society as to collective choices, which apply to all, whatever individual preferences are. One point of a social welfare function is to determine how close the analogy is to an ordinal utility function for an individual with at least minimal restrictions suggested by welfare economics. Kenneth Arrow proved a more basic point.
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Economics
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Resources
- Economic Freedom and Interventionism
- Laissez Faire Economics and the Welfare State
- The Birth of the British Welfare State
- The Impact of the Welfare State on the American Economy
- The social economy and the active welfare state: new forms of co-operation towards a sustainable, just and human society
- The Welfare State of Britain