“Many people would prefer to live in a society that is not only affluent but also reasonably egalitarian” (Kenworthy, 2004, p. 1). This could possibly be considered for the title of the least-contested statements in political economics, the notion of equal opportunity for all is one of the key aspects of the American dream. This is the idea behind the welfare state. The general concept of the welfare state is rather simplistic; create more economic equality within the citizens of the state. Of course the effectiveness of this is heavily reliant on the prosperity of the state and its citizens as a whole. This redistribution of wealth is a noble idea that should, in theory, improve the overall quality of life in the state. As with many other well-intentioned programs, the devil is in the details. Aging populations, economic shifts, immigration increases and other unforeseen changes in the social layout of welfare states has placed a strain on the extent, nature and existence of welfare and social-economic redistribution. Welfare states are being challenged and in some ways downsized. However, due to popularity, current condition, and overwhelming necessity, there is not a likely, foreseeable end to the existence of the welfare state. This paper will explore and expand upon some specific challenges to the welfare state. These challenges include the complications of public pensions and health care an aging population in the age of social security, as well as the persistence of economic inequality in welfare states, particularly the United States of America and Canada. Despite these issues and the relative scaling back of welfare states, the welfare state will not disappear but is instead simply changing and evolving.
In 1964, President Lyndon Johnson famously declared a ‘War on Poverty’. The actions taken by President Johnson’s administration are “considered the largest expansion of social safety net programs in history” (Caldwell, 2014). It is also likely the most famous example of welfare expansion. Despite initially decreasing the poverty rate in the United States the hundreds of pieces of legislation he passed, as well as the efforts of the presidents who followed him, have had mixed results with the poverty rate, which has fluctuated between 11 and 15 per cent in the years since Johnson’s famous declaration of war (Caldwell, 2014). There is new strain on the program in many welfare states now and into the future; the problem arises in the aging population. There are multiple negative implications due to this demographic shift. Lane Kenworthy (2004) discusses the first problem, concerning public pensions, stating,
With low fertility rate, limited immigration, and lengthening life spans, the cost of public pensions becomes ever larger relative to the tax base from which they are funded. Since pensions typically are the largest category of social expenditure aside from health care, this puts severe strain on the welfare state (p. 3).