The Welfare State: Insurance or Redistribution?

The beginnings of the welfare state are usually traced to the social legislation initiated by Chancellor Bismarck of Imperial Germany in the late 1800s. Social reformist politicians in the United Kingdom around 1900, such as Winston Churchill and Lloyd George, were in part inspired by Bismarck. The growth of the welfare state is traced to the widening of the franchise, the growing power of the labor movement, shortage of labor after the two world wars and the increased administrative capabilities of the state following the war effort. The welfare state is not just social insurance, but involves redistribution of income, bound to be popular with voters. Gross social expenditures vary greatly among countries, while the difference is much less when measuring net social expenditures.