The Implications for Democracy
Edited by David G. Mayes and Anna Michalski
The traditional welfare system involves the reallocation of resources from those in society who are doing relatively well to those who are in difficulty, usually so that the standard and quality of their life can be brought up to some level which society feels is the minimum acceptable. Determining such transfers and the taxation required to achieve them lies at the heart of the democratic system. However, as time passed the concept of the welfare system became more sophisticated, more pervasive and much more linked to the development of society as a whole rather than just to alleviating the worst individual circumstances. There is thus a close interaction between social policy and the process of achieving faster economic growth. The idea that welfare and growth were somehow antithetical has now largely disappeared with the shift from an emphasis on the stateís role of correcting market failures to a human development perspective which instead recognizes social policy as an investment factor. In that perspective, improved health, education, housing and employment all contribute to factors that underlie sustainable economic growth. However the process of taxing one group in society for the greater good and the benefit of others still remains deeply politically contentious, particularly in view of the argument over incentives.