Scholarly Comments on Academic Economics

The Welfare State Is the Wrong Target: A Reply to Bergh

by

Abstract

I AM DELIGHTED TO HAVE THIS CHANCE TO EXPAND ON THE links between social spending and economic growth. Andreas Bergh (2006) raises both small and large concerns that deserve further exploration. Let us go first to the largest issues of scope and methods, then to his specific criticisms of parts of my Growing Public book (hereafter GP) relating to Sweden’s policies toward the poor, toward women’s work, and toward retirement. The final section of this reply invites him and others to re-focus their search for flaws in large government, since the welfare state, as actually practiced, has not become a major flaw. On the contrary, the social transfers that have always defined the welfare state are indeed a “free lunch” in the sense that they have delivered more equality and longer life expectancy at an essentially zero cost in terms of GDP. Rather, it is other forms of legal and governmental interference with markets that are more likely to be anti-growth.