The Hidden Welfare State

Conventional wisdom sees a major difference between Europe and America: European states are welfare states and spend mainly on “social” functions, whereas the American state devotes most of its expenditures to national defense, law and order, and other traditional functions of government. Theda Skocpol, a Harvard University political scientist, is representative of these beliefs when she claims that America is deprived of a European sort of welfare state: “The US,” she writes, “has never come close to having a ‘modern welfare state’ in the British, the Swedish, or any positive Western sense of the phrase.”1 If this is true, we may think that the European sovereign debt problem is due to their welfare state, and that such problem does not threaten America. But these beliefs are at best seriously misleading.