Chapter 5: How productivity can remain unchanged despite major investments – social security
Modern social security systems are the largest distributive counterpart of the government’s capacity to raise taxes. Any welfare state is at root a system in which resources are requisitioned from those in work or on higher incomes, as well as from companies and from the well off, and then redistributed to the elderly, sick and disabled people, those unlucky in seeking work, and families or children in low- income households. Much of this redistribution is achieved through public services, supplied to all citizens by government agencies or by private organizations in ways that are funded, regulated and shaped by government. However, most social security transfer payments across the world are mediated in much less complex ways. Especially in simpler and more ‘statist’ welfare systems (such as that in the UK), monies are moved from the taxation department to a social security department, whose officials then allocate state benefits directly to eligible individuals or households. In more complex European welfare states such direct government transfer payments are often smaller because the state essentially supplements the social insurance that individuals have themselves taken out with other voluntary or quasi- private organizations, such as insurance funds, trade unions or social housing providers. But even here, the non- governmental providers are almost always organized in government- regulated schemes that are also underpinned in financial and risk- assurance terms by taxpayers.
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