Showing papers by "Peter H. Lindert published in 2004"

Growing Public: Social Spending and Economic Growth Since the Eighteenth Century

Abstract: Part V. The Underlying Framework: 13. A minimal theory of social transfers 14. A guide to the tests Part VI. Accounting for Social Spending, Jobs and Growth: 15. Explaining the rise of mass public schooling 16. Explaining the rise of social transfers 17. What drove postwar social spending? 18. Social transfers hardly affected growth 19. Reconciling unemployment and growth in the OECD Appendices.

Social Spending and Economic Growth

Abstract: Prevailing opinion holds that big government and high taxes reduce growth. Social programs are claimed to be a matter of social justice, even if they impede economic growth. But Peter Lindert in a new book argues that these claims are fiction. States that spend a lot on social programs grow no more slowly than those that spend little. He discusses his views and the evidence below.

Growing Public: Explaining the Rise of Social Transfers Since 1880

Abstract: Starting around 1880, the scope of social transfers widened. No longer were social transfers just classic poor relief. Wholly new kinds of social transfer programs emerged – redistributive pension programs, unemployment compensation, accident and disability compensation, public health for the poor, and housing subsidies. More and more countries initiated each kind of transfer. Why did the rise of social transfers happen so late in the long sweep of history, gathering momentum only late in the nineteenth century? Why did it then continue for one hundred years? What kinds of countries raised social transfers and the taxes needed to pay for it, becoming full-fledged welfare states? What forces made their political systems do this, when other countries held back? Why, after 1980, did the share of social transfers in GDP stagnate but not decline, despite the highly publicized conservative revolution led by Reagan and Thatcher? The history of social transfers since 1880 is explained largely by the same democratization that shaped the pre-1880 history of poor relief in Chapters 3 and 4 and the rise of public education in Chapter 5 and 6. Four other starring roles were played by population aging, globalization, income growth, and shifts in the social affinities felt by middle-income voters. A supporting role was played by a shift in Catholic attitudes toward government social programs. This chapter sketches how these starring and supporting roles help us interpret the delayed and partial emergence of the welfare state.

Growing Public: The Rise of Mass Public Schooling before 1914

Abstract: OVERVIEW The second kind of social spending emerged in the nineteenth century. Country after country turned toward tax revenues as a basis for launching or expanding schools, especially primary schools. Yet some countries took far longer than others to develop universal primary schooling – and most countries have deficient primary education even today. These differences in basic schooling have long been recognized as one of the keys to global income inequalities. Of all the kinds of public spending considered in this book, expenditures on public schooling are the most positively productive in the sense of raising national product per capita. Here we concentrate on primary public education, the kind of education that involves the greatest shift of resources from upper income groups to the poor. What holds back primary and secondary education in so many societies, and what forces promoted it in the history of today's high-income countries? How some nations came to promote mass schooling through taxation, capturing its external benefits for growth and democracy, while most others lagged behind before 1914, is the central issue in this chapter. As with poor relief, so too with early schooling, the roles of elite self-interest, democracy, and decentralization will help us interpret the rich variety of national experiences. The main arguments are as follows: Global leadership: German states led the way in elementary education from 1815 until about 1860. In terms of enrollment rates, it was then overtaken not only by the United States, but also by several other countries. By 1882 France had become an enrollments leader in Europe. In the share of national product spent on education, Germany retained leadership throughout the nineteenth century, though other countries were not far behind. […]

Patterns and Puzzles

Abstract: CONTROVERSY Over the next one hundred years, there will be waves of intense debate over using taxes for social programs. Defenders will package such programs as high-return investments that benefit most of society and tax only those people whose share of income and wealth could stand to come down. Opponents will decry the two-sided stifling of initiatives that invites both the taxed and the subsidized to be less productive. Both sides will invest in studies showing that they are right. This future debate seems to follow naturally from the flow of history, the logic of self-interest, and the inevitable help-versus-incentives quandary. The two opposing sets of arguments have been rediscovered and repeated for centuries, mainly in debates over social transfers to the poor. Any reading of the social history of early modern Europe turns up all the arguments we hear today. Long before the Fabians, there was a Left argument that the poor, elderly, and uneducated were people who needed help through no fault of their own. Many of these unfortunates could never be self-supporting, so that harsh work incentives would be cruel and unproductive. Others were the “able–bodied” whose productive potential could handsomely repay any society that wisely invested in them. And long before Malthus there was a conservative argument that any combination of taxes and transfers is doubly costly. It erodes incentives to work, to take risks, and to accumulate, both for those being taxed and for those receiving benefits based on their low incomes.

Growing Public: Keys to the Free-Lunch Puzzle

Abstract: It is well known that higher taxes and transfers reduce productivity. Well known – but unsupported by statistics and history. This chapter dramatizes a conflict between intuition and evidence. On the one hand, many people see strong intuitive reasons for believing that the rise of national tax-based social transfers should have reduced at least GDP, if not true well-being. On the other, the fairest statistical tests of this argument find no cost at all. Multivariate analysis leaves us with the same warnings sounded by the raw historical numbers (back in Chapter 1). A bigger tax bite to finance social spending does not correlate negatively with either the level or the growth of GDP per capita. How can that be? Why haven't countries that tax and transfer a third of national product grown any more slowly than countries that devote only a seventh of GDP to social transfers? The conflict between intuition and evidence can be explained with better tests and a closer look at institutions. Those well-known demonstrations of the large deadweight losses from social programs have overused imagination and assumption. There are good reasons why statistical tests keep coming up with near-zero estimates of the net damage from social programs on economic growth. It's not just that the tales of deadweight losses describe peculiarly bad policies. It's also that the real-world welfare states benefit from a style of taxing and spending that is in many ways more pro-growth than the policies of most free-market countries.

Growing Public: What Drove Postwar Social Spending?

Abstract: The postwar growth of welfare-state social transfer programs has dwarfed the earlier pioneering attempts to build comprehensive insurance programs. Social transfers have risen even faster than public education. How did that happen? A lesser part of the answer is a story of the generations that lived through the Great Depression and the Second World War. The greater part of the answer rests on the same broad social forces that were already acting in the half-century after 1880. This chapter re-introduces the three main forces of democracy, demography, income, and other social differences to give a fuller explanation of both the growth and the diversity of the movement toward welfare states. To highlight how policy behavior has and has not changed since 1880, this chapter follows the same historical forces and same format we just followed in Chapter 16. The fuller postwar data coverage allows us to expand the inquiry, however. We can compare time periods of only three or four years, yielding more dynamic information from a 35-year span than the ten-year stretches could give for the fifty years between 1880 and 1930. Public education expenditures are also conveniently available for the 1962–1981 period, allowing more direct comparison of social budget priorities than for the pre-1930 era, for which we had to be content with counting enrolled student and teachers. It will turn out that the same three leading actors are at center stage for the postwar era, but with altered behavior and with a fourth now sharing the stage.