Growing Public: Volume 1, The Story: Social Spending and Economic Growth since the Eighteenth Century / Edition 1

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- Winner of the Allan Sharlin Award of the Social Science History Association
- Co-winner of the Gyorgy Ranki Prize of the Economic History Association

Growing Public explores the links between economic growth and social policies that redistribute income. Taxes and transfers have been debated for centuries, but only now can we get a clear view of the whole evolution of social spending. What kept prospering nations from using taxes for social programs until the end of the nineteenth century? Why did taxes and spending then grow so much, and what are the prospects for social spending in this century? Why did North America become a leader in public education in some ways and not others? Lindert finds answers in the economic history and logic of political voice, population aging, and income growth. Contrary to traditional beliefs, the net national costs of government social programs are virtually zero. This book not only shows that no Darwinian mechanism has punished the welfare states, but it uses history to explain why this surprising result makes sense. Contrary to the intuition of many economists and the ideology of many politicians, social spending has contributed to, rather than inhibited, economic growth.

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Editorial Reviews

From the Publisher
"[Lindert] provides a valuable history of social spending and proposes a theory about why some nations spend more than others that is closely related to how well democracy works. This is a piece of research that is rich in insight and grounded in empirical evidence." Jeff Madrick, The New York Times

"One great question of the early 21st century is whether...welfare states, facing massive commitments to aging populations, will themselves create new insecurities and injustices. Comes now economic historian Peter Lindert, who has thoroughly probed the welfare state, with a surprising message: important new book..." Robert J. Samuelson, Newsweek

"...the most comprehensive historical and econometric examination of the essential value of public expenditures I have seen anywhere. By the conclusion of this tour, the reader is left with a clear view of a world in which public expenditures on human welfare not only do no harm to national growth trajectories, but one in which investment in the infrastructure of human capital formation is itself growth-enhancing. This core finding of Lindert's exhaustive research will appear radical, perhaps even heretical, to a generation trained in neo-classical economics, but he arrives at it by employing the best of the theory and methodology of that discipline. As such it will be hard to refute." Anne E. C. McCants, Associate Professor of History, Massachusetts Institute of Technology

"What determines how much governments spend on health, welfare, education, and social security? What effect does this social spending have on economic growth? Peter Lindert gives new answers to these big questions, in a lucid and engagingly written book that ranges across the globe and from the eighteenth century up to the current day. His surprising finding is that social spending does not slow growth, at least in western democracies, and his gem of a book will be essential reading for historians, economists, political scientists, and modern-day policy makers." Philip T. Hoffman, Richard and Barbara Rosenberg Professor of History and Social Science, California Institute of Technology

"Peter Lindert has written a dazzling book. He takes on one of the grand topics of economics the rise of social spending and offers us a remarkable combination of new data, historical insight, political analysis, and economic assessment. Amazingly, Lindert comes up with fresh, convincing, and important insights on issues that have been debated for decades. Two of Lindert's major conclusions are that the spread of democracy has historically played a pivotal role in the rise of social expenditures; and that social spending has not gravely weakened economic incentives and long-term economic growth, despite the drumbeat of criticisms from free-market devotees. Indeed Lindert concludes that the net national costs of social transfers, and of the taxes that finance them, are essentially zero.a This powerful book will be widely read and debated for many years to come." Jeffrey D. Sachs, Director, The Earth Institute at Columbia University

"What determines social spending, also known as public education, also known as social security, also known as taking from the rich and giving to the poor? This question is the subject of much theoretical and empirical speculation and some moderately detailed previous work. Yet this magnificent summa by Peter Lindert blows away the field. He probes the historical and comparative rise of social spending in today's OECD countries and derives many new insights into the classic themes of social spending and elite behavior, democracy, inequality, religion, and ethnic divisions. He draws out the implications of his careful analysis for the future of the Third World and First alike. A must-read for anyone interested in big government, political economy, helping the poor, or simply the fate of human societies." William Easterly, New York University

"Peter Lindert has given us a treatise on the economic and political forces driving social spending and of the effects of the welfare state that sweeps over time, over nations, and over disciplines. It is simultaneously comparativepoliticaleconomic history, demography, applied econometrics, political theory, and political economy. While few will agree with all of the often-surprising answers he gives to the most fundamental questions regarding the existence and the effects of public social welfare policies, no one will suggest that they are not bold and provocative. Growing Public is a most readable and insightful and, yes, irreverent volume that will be discussed by all concerned with these front-page issues." Robert Haveman, John Bascom Emeritus Professor of Economics and Public Affairs, University of Wisconsin-Madison

"Growing Public greatly increases our understanding of the rise and the effects of social spending, and is a welcome empirically based response to the ever-growing economic literature arguing that the costs of the welfare state are unacceptably high." Industrial and Labor Relations Review, George R. Boyer

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Product Details

  • ISBN-13: 9780521529167
  • Publisher: Cambridge University Press
  • Publication date: 12/31/2003
  • Edition description: New Edition
  • Edition number: 1
  • Pages: 384
  • Sales rank: 1,259,550
  • Product dimensions: 5.98 (w) x 8.98 (h) x 0.87 (d)

Table of Contents

Preface to Volume I xv
Part 1 Overview
1. Patterns and Puzzles 3
Controversy 3
The Road from Here 4
Taxing, Spending, and Giving in the Late Eighteenth Century 7
Poor Relief, Public and Private 7
The Elderly 9
Public Education 9
The Long Rise of Social Spending 11
The Robin Hood Paradox 15
Is the Welfare State a Free Lunch? 16
An Educational Puzzle 19
2. Findings 20
Nine Conclusions 20
How Social Spending Emerged before World War II 22
Lessons from the Postwar Boom 26
Since 1980, Aging Has Brought New Budget Pressures 27
Unlocking the Free-Lunch Puzzle 29
How Welfare States Control the Disincentives 30
Early Retirement: A True, but Limited, Cost 32
The Pro-Growth Side of High Social Spending 32
Reconciling Europe's Unemployment with Its Satisfactory Growth 33
Two Cost-Cutting Principles in Democratic Welfare States 34
Part 2 The Rise of Social Spending
3. Poor Relief before 1880 39
How Much Did Europe Give the Poor before 1880? 40
Private Charity in Early Modern Europe: A Miscellany of Pittances 40
The Amounts of Public Poor Relief to 1880 45
How Europe Gave Relief and for What 48
The Eternal Search for the Worthy and Unworthy Poor 48
The Battle over Putting the Poor to Work 49
Indoor versus Outdoor Relief 51
Administrative Costs 54
What They Gave: Cash versus Aid in Kind 55
Who Received It 56
Town versus Country 56
American Private and Public Relief before the New Deal 58
How Much Public Relief Was Given 59
Private Charity in the United States and the Crowding Out Issue 60
Two Attacks on Outdoor Relief in New York 65
Summary 65
4. Interpreting the Puzzles of Early Poor Relief 67
The Rise and Fall of England's Old Poor Law, 1780-1834 67
Who Supported England's Old Poor Law? 67
The Reform Acts, Voice, and the Poor 71
The Rural-Urban Puzzle 73
If England Were Invisible: The Urban Bias in Poor Relief 73
England's Rural Southeastern Bias and the Boyer Model 75
An Extension to Scandinavia 77
The International Stagnation of Relief, 1820-1880 80
The Predicted Effects of Extending the Franchise 80
The General Pre-1930 Pattern of Votes and Social Spending 82
Local versus Central Government: What Happened to the "Race to the Bottom?" 84
Summary: Political Voice and Poor Relief 85
5. The Rise of Mass Public Schooling before 1914 87
Overview 87
To Be Explained: Patterns in the Inputs into Mass Schooling 88
Competing Theories 99
Updating the Elite-Pressure Theories 100
Landlords and Toryism 100
Capitalist Social Control 101
Domineering Government 102
Dominant Religions 102
Vested Interests within the Educational Sector 103
The Role of Decentralization 104
Popular Votes, Public Schools 105
But What Caused Democracy? 107
Reverse Causation from Schooling to Democracy? 107
Religious Diversity and the Rise of Democracy and Schooling 107
Reinterpreting National Histories of Mass Schooling 110
France, the Baseline Case 110
The English Delay 113
Rethinking German Education 115
Decentralized North America 122
Summary: Elites, Votes, and Schools 126
6. Public Schooling in the Twentieth Century: What Happened to U.S. Leadership? 128
Who Are the Leaders? 129
In Years of Education 129
In Learning 132
International Test Scores at the End of the Twentieth Century 132
When Did This Pattern Emerge? 138
In Inputs into Education 142
Taxpayer Effort on Behalf of Education 142
Expenditures per Student 142
Teaching Inputs per Student 143
Teachers' Pay and Quality 145
Summing Up the United States' Symptoms 150
The Underlying Incentive Issues 153
Quantity Incentives versus Quality Incentives 154
Student Accountability 155
Competition among Schools 157
The Long Sweep of U.S. School Choice 158
Analyses of Local Experience with School Choice 161
Deviant California 162
Choice in Higher Education 164
Subsidized School Choice in Other Countries 165
Rewarding Individual Teacher Performance 168
Conclusions: Which Explanations Fit the Symptoms? 168
7. Explaining the Rise of Social Transfers Since 1880 171
Who Were the Pioneers before 1930? 171
Shared Fears from World Wars and the Great Depression 176
The Role of Political Voice 179
Democracies, Elite Democracies, and Full Democracies 179
Votes for Women 182
The Rate of Turnover of the Chief Executive 183
The Role of Aging: Gray Power? 183
Globalization and Safety Nets 186
Social Affinity: "That Could Be Me" 186
Summary 188
Part 3 Prospects for Social Transfers
8. The Public Pension Crisis 193
In an Older World, Something Has to Give 194
Pressures in the OECD Countries 196
Who Is Most Threatened by Population Aging? 196
Who Is Least Prepared? 198
How Will Budgets Be Adjusted? 200
Immigrants and Pensioners 205
Returning to a Fully-Funded System Is Unlikely 207
Summary 208
9. Social Transfers in the Second and Third Worlds 210
The Aging Trend Is Nearly Global 211
Special Pressures in Transition Economies 212
Third World Social Transfers 218
Are they on a Different Path? 218
East Asia Is Not So Different 219
A Different Kind of Pension Crisis 221
Global Divergence, Convergence, and the Robin Hood Paradox 222
Part 4 What Effects on Economic Growth?
10. Keys to the Free-Lunch Puzzle 227
The Familiar Cautionary Tales Miss the Mark 228
Disincentives on the Blackboard 228
Harold and Phyllis 229
Micro-Studies of Labor Supply 230
Simulations 231
Global Growth Econometrics 233
What Better Tests Show 234
How Can That Be True? 234
The Welfare-State Style of Taxing: Pro-Growth and Not So Progressive 235
Recipients' Work Incentives 245
The Poor May Face Lower Work Disincentives in the Welfare State 245
Early Retirement: Good Riddance to Old Lemons? 249
Does the Dole Also Harvest Lemons? 252
Some Growth Benefits of High Social Transfers 253
Active Labor Market Policies: Not Much There 253
Child Care Support and Career Investment in Mothers 254
Public Health Care 257
Why These Keys? 263
11. On the Well-Known Demise of the Swedish Welfare State 264
Who Proclaimed It and How 264
Sweden's Growth and Social Spending Since 1950 267
What Went Wrong after the 1970s? 271
Macroeconomic Policy 272
The Demise of Swedish Corporatism 275
What Role for Sweden's High Tax Rates? 277
What Survived: Pro-Growth Social Spending 281
Investing in Women's Work and in Child Care 282
Education and Retraining 288
Late Retirement 289
Conclusions: Why No Demise 291
12. How the Keys Were Made: Democracy and Cost Control 296
Democracy, Budget Size, and Budget Blunders 297
Big Budget, High Stakes 297
Illustrative Tax-Transfer Blunders 299
Dutch Disability Policy 300
Labour's Selective Employment Tax of 1966-1970 300
The Thatcher Poll Tax of 1989-1992 301
Universalism May Cost Less 301
On the Tax Side 302
The Expenditure Side 305
Hence No Retreat 306
Notes 309
Bibliography 339
Acknowledgments 363
Index 365
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