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cracks in the welfare state? « Previous | |Next »
April 27, 2009

Lindy Edwards, a Research Fellow in the Research School of the Social Science at AN, argues in Reinventing social democracy vital for progress in The Age that three factors lining up to suggest that social democracy will soon face a crisis of its own. It is crunchtime for social democracy.

In spelling these out she refers to Professor Bob Gregory recent presentation at the Australian National University a few weeks ago in which he argued that this recession is likely to be the one that breaks the welfare state. Gregory's argument is this:

The problem is that in each recession since the 1970s, a cohort of people has been thrown into unemployment in the first year of the recession. Most of those people have never got back to full-time work again. They have moved off the dole and on to other forms of welfare, but they have continued to rely on government benefits for their primary source of income. The result is that the primary source of income for about 20 per cent of working-age Australians is a government benefit. The number of working-aged men in full-time jobs has dropped from about 88 per cent in the early 1970s to about 66 per cent in the mid-2000s.

Gregory's argument is that if this recession is only on par with the 1990 recession in the number of people it throws out of work, it will be enough to make the welfare system unsustainable. A workforce of only 10 million people will be supporting between 3.5 million and 4.5 million people on benefits.

The reason? Each recession wipes out a string of unskilled jobs and they never come back. The commonly cited reason for the unemployment problem is the shift from a manufacturing industrial economy to a high-tech service economy. So though neo-liberalism might have exploded the traditional model of social democracy is also heading for a crisis of its own.

| Posted by Gary Sauer-Thompson at 8:32 AM | | Comments (17)


The Australian continues to demonize those who are critical of neo-liberalism. Thus David Burchell in his latest op-ed---Facts undermine the case for the market as villain says:

.. in the last months of 2008 our hermits emerged again from their desert caves, their bony loins girded for another furious assault on the dark forces of the mundus. They had foretold all along that the market was a false god. And in the inscrutable course of Biblical time, which knows no human laws, they had finally come to be proven correct.

These are the market-haters who talk in terms of the dark satanic forces of the market.

Another attempt to reve up the culture wars to further the Conservative movement.

There is also Giles Auty in The Australian having a go at social democracy. He says:

Outside proponents of big and interfering government and whatever else social democracy could be held to stand for, it is widely accepted that the real cause of the present world economic crisis was due to an excess of American government interference with the normal workings of the marketplace rather than the reverse.

For Auty it was, in fact, misplaced and financially irresponsible attempts at egalitarianism that hurled the world into its present crisis.

Therefore, the solution is less government interference in the economy and f greater inequality.

I just love it when people assert that something is 'widely accepted' (and is therefore unquestionably correct). What they often mean, as I suspect Auty means here, is 'widely accepted by people who I have subjectively decided are the only ones who know what they are talking about'.

It's widely accepted that 'The Australian' is a discredited propaganda rag.

yeah conservatives now equate liberalism with socialism( big government intervention). They seem to miss that liberalism stands for personal autonomy or freedom whilst the latter stands for equality. Social democracy is equated with socialism.

They also seem to over look that most of the measures by the Rudd Government are designed to save, not destroy, the instruments of capitalism-- businesses and the markets in which they compete. The are acting to rescue capitalism from its worst excesses.

What's an alternative to social democracy and welfare right now that doesn't involve the risk of some kind of mass revolt or mass misery? Could government instead spend its resources building containment facilities for the unproductive? And maybe reintroduce that votes only for the propertied thingy, whatever it's called.

It will be interesting to see if the pension is raised and it seems most likely it will be whether unemployment benefits are too.
The equation 10 million supporting 3.5-4.5 million is a shocker for business and government. I wonder how it compares to other countries outlook?

A succesful economy is one which supports many in idleness. Long term welfare dependance is one form. It just means that many people are not needed by the economy _and_ no one can be bothered to find a frippery job for them. Welfare dependance is an index of economic success and productivity gains.

Conservatives don't like this success, it means their values are completely useless and the sky is falling, so they desire to forget it all by putting them in the army instead of welfare, mostly to hurt people in meanignless ways. It's just another option of what to do with productivity gains.

Some progressives want to help people by getting everyone a job, but as humans are becoming more and more unnecessary to the economy this will just look more and more stupid.

In the future the best we can hope for is a system where jobs are randomly rationed among those who can't make art, the ultimate in consuming frippery, which the economic machien should relly be consciously designed to service instead of denied.

I think that the Welfare state is going to get slowly squeezed rather than rolled back.

The equation 10 million supporting 3.5-4.5 million is a shocker for business and government.I guess the emphasis will be on getting jobs for the young to avoid a wasted generation.

maybe some of the unskilled whose jobs are wiped out and never come back can be retrained in digital skills and literacy and work as volunteers for ngo's? Or as online artists representing their own history?

maybe thelevels of unemployment will fall shy of the sad peaks of past recessions?

If you listen to talkback radio, you realize that it is alive with the view that the migration intake needs to be cut fast as Australia heads into a sharp rise in unemployment, to ensure available jobs go to ‘Aussies’ rather than ‘foreigners’.

The xenophobia is re-surfacing.

Its safe to assume that Jobs will be one of the key election issues.
Health and Education off the agenda perhaps. Immigration back at number 2 maybe as it tends to become embroiled in the Jobs issue. Housing could well be up there too.
I doubt whether we will be on the up cycle economically by the next federal election.

Can somebody please explain to me what this "social democracy" is. Every person I come across who advocates this (such as Luvvie Quiggin) appears to me to be a common garden variety socialist.

basically, it is the welfare state that historically was situated between free market capitalism and socialism after the Great Depression.

When you say "historically", when did it ever exist in Australia?

I mean has this mythical "social democracy" ever existed in Australia?