Why we need an allocative (and resourceful) welfare state

KERSTENETZKY, CELIA LESSA

doi:10.1590/0101-31572021-3356

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Brazilian Journal of Political Economy

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Articles • Brazil. J. Polit. Econ. 41 (4) • Oct-Dec 2021 • https://doi.org/10.1590/0101-31572021-3356 copy

Why we need an allocative (and resourceful) welfare state¹ 1 I thank Jaques Kerstenetzky, Antonio Kerstenetzky, André Albuquerque Sant’Anna, Fábio Waltenberg, Leonardo Burlamaqui, Márcio Alvarenga Junior, and participants to the CEDE Workshop on the allocative welfare state for helpful comments on an earlier version of this article. Remaining errors or inaccuracies are of my sole responsibility. I also warmly thank Márcio Alvarenga Junior for generously computing and providing me with data on environmental backward linkage of social services in Brazil.

Por que precisamos de um estado de bem-estar social alocativo

Authorship SCIMAGO INSTITUTIONS RANKINGS

ABSTRACT

In this essay, I propose an agenda for the welfare state of the 21^st century that emphasizes its role as a mechanism of resource allocation. Since social and environmental problems are getting out of hand, the time for mere compensation is over: we need a mechanism for directly influencing systems of production and patterns of consumption in the direction of addressing those problems. This partially translates into a decisive sectoral shift towards public social services led by the welfare state. Among the advantages of this move, in addition to more socially balanced outcomes, are quality jobs and fulfillment of social needs in an environment-friendly way. The allocative task which gives the welfare state a constitutive role in shaping the socioeconomy complements its classic function as problem fixer. The allocative welfare state must be prepared to limit the domain of market allocation.

KEYWORDS:
welfare state; allocation; public social services; sustainability

Branches	2007	2013	Branches	2007	2013
Public Social Expenditure (%GDP)¹	23.00	26.03	ALMP (%GDP)	0.49	0.54
Public Social Expenditure (Per Head)^*	6,906.0	8,115.4	ALMP (Per Head)	170.9	196.3
Old Age (%GDP)	6.21	7.63	Unemployment (%GDP)	0.73	0.99
Old Age (Per Head)	2,265.2	2,796.6	Unemployment (Per Head)	264.4	375.0
Survivors (%GDP)	1.04	1.08	Housing (%GDP)	0.43	0.44
Survivors (Per Head)	337.8	335.5	Housing (Per Head)	115.2	137.4
Incapacity (%GDP)	2.08	2.21	Other social policy areas (%GDP)	0.47	0.53
Incapacity (Per Head)	805.0	869.0	Other social policy areas (Per Head)	175.0	215.9
Health (%GDP)	5.38	6.11	ECEC (%GDP)	0.57	0.72
Health (Per Head)	2,028.2	2,301.5	ECEC (Per Head)	200.9	273.1
Family (%GDP)	1.94	2.17	Education (%GDP)¹	4.22	4.33
Family (Per Head)	765.7	850.7	Education (Per student)²	20,036.6	22,947.0

Country	Productive	Distributive	Social	Personal
The Anglo-Saxons
Australia	19.3%	31.9%	35.7%	13.0%
Ireland	19.9%	31.5%	35.4%	13.2%
New Zealand	21.2%	33.5%	34.3%	10.9%
United Kingdom	21.7%	28.7%	39.0%	10.6%
United States	23.2%	28.3%	36.8%	11.8%
Mean	22.7%	28.6%	37.0%	11.7%
The Nordic
Denmark	16.6%	30.2%	44.7%	8.5%
Finland	19.7%	30.9%	40.2%	9.3%
Norway	17.1%	30.1%	46.0%	6.8%
Sweden	21.4%	27.7%	43.2%	7.7%
Mean	19.1%	29.3%	43.6%	8.0%
Continental Europe
Austria	19.7%	33.7%	35.2%	11.4%
France	19.5%	28.8%	42.8%	8.8%
Germany	20.5%	32.3%	38.8%	8.4%
Netherlands	22.0%	30.6%	39.2%	8.1%
Switzerland	25.4%	28.7%	37.1%	8.8%
Mean	20.6%	30.8%	39.9%	8.7%
The LAC
Argentina	13.8%	36.2%	31.9%	18.1%
Costa Rica	17.9%	38.7%	23.8%	19.5%
Cuba	5.1%	24.9%	55.6%	14.4%
Mexico	11.1%	45.3%	22.5%	21.1%
Peru	10.1%	49.1%	21.8%	18.9%
Uruguay	13.5%	36.7%	28.6%	21.3%
Mean	11.2%	43.0%	25.9%	19.8%
Emerging Economies
China	15.5%	22.5%	55.5%	6.5%
South Africa	5.9%	37.0%	33.6%	23.5%
Brazil	13.8%	37.3%	25.4%	23.5%
Mean	14.2%	29.9%	40.8%	15.1%

Centro de Economia Política Rua Araripina, 106, CEP 05603-030 São Paulo - SP, Tel. (55 11) 3816-6053 - São Paulo - SP - Brazil
E-mail: cecilia.heise@bjpe.org.br

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[TFN1] Source: Kerstenetzky and Guedes (2020Kerstenetzky, Celia Lessa, and Graciele Pereira Guedes, “Great Recession, great regression? The welfare state in the twenty-first century”, Cambridge Journal of Economics, Volume 45, Issue 1, January 2021, Pages 151-194).

[TFN2] Note:¹ The data for the year 2007 concern the year 2008 because for 2007 information on education is not available.

[TFN3] Note:² Education (per student) takes into account public and private spending.

[TFN4] Note: * It does not consider spending on education.

[TFN5] Note: ** At constant prices (2010) and constant PPPs (2010) in US dollars.