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9 - The Creation of Welfare States

from Part II - From Laissez Faire to Welfare States: 1930 to 1970

Published online by Cambridge University Press:  07 December 2023

Vito Tanzi
Affiliation:
International Institute of Public Finance (IIPF), Germany
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Summary

The Great Depression introduced doubts in the minds of many about the virtue of a free market economy. The absence of safety nets, at a time when unemployment had reached 25–30 percent, created major difficulties. The need for redistribution and stabilization was felt by many. The changes in the structure of the economies had facilitated tax collection. The new environment led to welfare states with high and growing progressive taxes, high levels of social spending and growing power by labor unions. For a while harmony between the roles of government and state seemed to grow. Then difficulties would begin to appear and to grow over time and this would set the stage for a counterrevolution in later years. Slow growth and growing inflation starting in the late 1960s and continuing in the 1970s would increase the reaction to the welfare policies and to the great power that labor unions had acquired. There would be increasing calls for a return to a growing role by the free market.

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Chapter
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Monitoring the State or the Market
From Laissez Faire to Market Fundamentalism
, pp. 61 - 68
Publisher: Cambridge University Press
Print publication year: 2023

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  • The Creation of Welfare States
  • Vito Tanzi, International Institute of Public Finance (IIPF), Germany
  • Book: Monitoring the State or the Market
  • Online publication: 07 December 2023
  • Chapter DOI: https://doi.org/10.1017/9781009434430.012
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  • The Creation of Welfare States
  • Vito Tanzi, International Institute of Public Finance (IIPF), Germany
  • Book: Monitoring the State or the Market
  • Online publication: 07 December 2023
  • Chapter DOI: https://doi.org/10.1017/9781009434430.012
Available formats
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  • The Creation of Welfare States
  • Vito Tanzi, International Institute of Public Finance (IIPF), Germany
  • Book: Monitoring the State or the Market
  • Online publication: 07 December 2023
  • Chapter DOI: https://doi.org/10.1017/9781009434430.012
Available formats
×