Have the policies of the welfare state been detrimental to the economic performance of society by encouraging individual irresponsibility?
...ponsibility. (Dolgoff, 1999) In the post welfare state, it is becoming increasingly clear that the world has entered an age of intense international economic competition. This competition relates to issues of motivation, potential for growth in the markets, employment, productivity, financial stability, taxation and ideologies deemed to be supportive of successful economic competition. (Jamrozik, 1990) It is important to note that there is little correlation between social conditions and economic policies in Western society. There are however similarities between social conditions and social policies in Industrialized Western liberal-democratic free market economies. (Jamrozik, 1990) There are two predominant theoretical views that support social welfare policies as detrimental to economic performance. These were borne as economic growth slowed down, inflation rose and higher taxations were imposed. Both views have been substantiated by two reasons; a negative effect of welfare expenditure on the economy by reducing the amount of capital available for investment; and a negative effect of the population - a growing attitude and behaviour of dependency and reduced responsibility (Humphreys, 2001). The first predominant theoretical view was detailed by political and economic realists, who engaged in policy analysis that included economic perspectives. One of the critics from this perspective, Wilfred Prewo (1982), denotes one of the main problems of the welfare state being; “many social security provisions are inefficient, as they give rise to moral hazard….leading to unnecessary high costs”. Moral hazard is a term that questions whether social welfare, by lessening or eliminating personal risks encourages irresponsible behaviour. (Jamrozik, 1990) The second theoretical view is the Neoclassical / New Right critique theory. The New Right was used as the basis for criticism of the welfare state on economic, social, political and moral grounds. A supporter of this theory, Pierson (1991), argues that the welfare state is uneconomical by displacing and undermining the incentives of the market, of capital to invest, and of labour to work. Furthermore, he believes that the welfare state has failed to eliminate poverty and inequality, subsequently creating a ‘cycle of dependence’. (Jam...