The Crisis of the Welfare State — the Dutch Experience

Abstract

Recently much has been written about the crisis of the welfare state (O’Connor, 1973; Veldkamp, 1976; Gough, 1979; Hirschman, 1980; OECD 1981; Preadviezen, 1981; Glennerster, 1983). The crisis as generally conceived has the following aspects. First, a fiscal aspect arising from increasing budgetary problems in financing welfare state expenditures. Second, a taxpayers’ revolt arising from reluctance by taxpayers to pay for the welfare state. This can take the form of open opposition, either political or industrial, or passive resistance. Politically the taxpayers may organise to elect tax-cutting governments (as in California, the USA and the UK). Industrially either firms or employees may seek to pass on tax increases in the form of price or pay increases. Passive resistance manifests itself when instead of obeying the law and observing the regulations of the welfare state, the citizens organise economic activity outside the confines of these regulations (the ‘black economy’). Third, a decline in support for the welfare state as traditional supporters die or lose confidence and new citizens enter the adult population without acquiring confidence. Fourth, a failure by many social programmes to achieve their objectives. Fifth, increasing awareness that the personnel employed on social programmes are often not the selfless servants of the clients.