"...countries with the world’s biggest welfare states are flourishing in the global economy. According to the World Economic Forum’s Global Competitiveness Report, the most competitive economies in the world are, in order, Finland, the US, Sweden, Taiwan, Denmark and Norway. Government consumes around half of gross domestic product in all of these countries, apart from the US and Taiwan, where the combined federal–state share of GDP is slightly more than 30 per cent. (The US government share of GDP is much higher when tax deductions and exemptions for public purposes are counted.) What is more, on a per capita basis from 1990 to 2002, Sweden and Finland had the same 2 per cent growth rate as the US.
The truth is that the scale and scope of national welfare states is far less constrained by the global economy than many believe. Whether a country has a generous or stingy welfare state depends chiefly on its internal politics and traditions.
It is time, then, to replace the conventional wisdom. In the 21st century, most workers in advanced industrial nations will work in the non-traded domestic service sector. Most will not compete with workers in other countries. And a generous welfare state need not be a hindrance to competitiveness. These statements are not as familiar as the platitudes that make up the conventional wisdom. But they happen to be true.
The writer is Whitehead senior fellow at the New America Foundation
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