| Title | Welfare state |
|---|---|
| Contributor | Nicholas Barr (author) |
| DOI | https://doi.org/10.31389/lsepress.tlc.k |
| Landing page | https://doi.org/10.31389/lsepress.tlc.k |
| License | https://creativecommons.org/licenses/by-nc/4.0/ |
| Publisher | LSE Press |
| Published on | 2025-10-16 |
| Short abstract | Debates about the roles of markets and government are often framed as a binary choice between two polar cases, and often in ideological terms. This chapter recognises a spectrum, ranging from markets with light regulation (weights and measures) to heavy regulation (pharmaceutical drugs). I argue that it is useful to analyse the types and extent of government interventions as a mosaic comprising multiple objectives, multiple ways in which governments can intervene, multiple reasons why markets, including insurance markets may fail, and why governments may fail. Sections I and II outline the approach. Section III discusses social insurance, including unemployment insurance, medical insurance, and long-term care. Section IV considers pensions and section V outlines a view to the future. The final section offers the main conclusions. Drawing on findings for which multiple Nobel prizes in economics have been awarded since 1995, the chapter contrasts with the Washington Consensus by suggesting analysis based on a fuller model than the simple competitive market equilibrium. The idea is not to offer a blueprint, but to show how the elements in Boxes 11.1–11.4 offer building blocks for thinking about appropriate interventions. The elements of the mosaic are neither a mechanistic template nor an invitation to random artistry. Instead, they establish a strategic logic for discussing options for intervention. Answers will depend on the good or service in question, on a country’s economic and institutional capacity, its demography, and its politics and social attitudes. This chapter includes responses to Nicholas Barr by Santiago Levy and Paul Johnson. |
| Long abstract | Debates about the roles of markets and government are often framed as a binary choice between two polar cases, and often in ideological terms. This chapter recognises a spectrum, ranging from markets with light regulation (weights and measures) to heavy regulation (pharmaceutical drugs). I argue that it is useful to analyse the types and extent of government interventions as a mosaic comprising multiple objectives, multiple ways in which governments can intervene, multiple reasons why markets, including insurance markets may fail, and why governments may fail. Sections I and II outline the approach. Section III discusses social insurance, including unemployment insurance, medical insurance, and long-term care. Section IV considers pensions and section V outlines a view to the future. The final section offers the main conclusions. Drawing on findings for which multiple Nobel prizes in economics have been awarded since 1995, the chapter contrasts with the Washington Consensus by suggesting analysis based on a fuller model than the simple competitive market equilibrium. The idea is not to offer a blueprint, but to show how the elements in Boxes 11.1–11.4 offer building blocks for thinking about appropriate interventions. The elements of the mosaic are neither a mechanistic template nor an invitation to random artistry. Instead, they establish a strategic logic for discussing options for intervention. Answers will depend on the good or service in question, on a country’s economic and institutional capacity, its demography, and its politics and social attitudes. This chapter includes responses to Nicholas Barr by Santiago Levy and Paul Johnson. |
| Language | English (Original) |
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Nicholas Barr is Professor of Public Economics at LSE, the author of numerous articles, and the author or editor of over 20 books, including The Economics of the Welfare State (6th edition, 2020), Financing Higher Education: Answers from the UK (with Iain Crawford, 2005), and Pension Reform: A Short Guide (with Peter Diamond, 2010, also in Spanish). The heart of his work is an exploration of how market failures both explain and justify the existence of welfare states. He is a member of the Editorial Board of the International Social Security Review and associate editor of CESifo Economic Studies, the Australian Economic Review and the Journal of the Economics of Ageing. Alongside academic writing is wide-ranging policy work, including spells at the World Bank and IMF, and as a member of the World Economic Forum’s Global Agenda Councils on Demographic Shifts and on Ageing Society. He has advised governments in post-communist countries, and in the UK, Australia, Chile, China, Hungary, New Zealand and South Africa. He was a member of a small group advising the government of China on pension reform, presenting their findings to the premier in 2004. In Chile he was a member of the Bravo Commission. He has also been active in the debate on higher education finance, and he and his colleague Iain Crawford have been described as the architects of the 2006 reforms in England.
Santiago Levy is currently a Senior Fellow at The Brookings Institution and member of the board of various development organisations. Before that, he was Vice-President at the Inter-American Development Bank, General Director of Mexico’s Social Security Institute, Deputy Minister at Mexico’s Ministry of Finance, and President of Mexico’s Federal Competition Commission. In academia, he was President of the Latin American and Caribbean Economic Association (LACEA), Associate Professor of Economics and Director of the Institute for Economic Development at Boston University, Visiting Researcher at Cambridge University and Professor of Economics at the Instituto Tecnológico Autónomo de México. At the Ministry of Finance, he was the main architect of Progresa-Oportunidades. At the Social Security Institute, he promoted legal changes to reform pensions and extend coverage to rural workers. He has published on social policy, informality, education, tax policy, trade and competition policy, and policies for poverty alleviation. He has received First Place, National Research Prize in Economics (Banco Nacional de México); First Place, Latin American Economics Prize (El Trimestre Económico); and Distinguished Alumni Award, Boston University. His current work focuses on the challenges of socially inclusive growth in Latin America.
Paul Johnson has been Director of the IFS since 2011. He is a columnist for The Times, and is a regular contributor to other broadcast and print media. He is a Visiting Professor in the UCL Policy Lab and at the UCL Department of Economics. He was for 10 years a member of the UK Climate Change Committee, and has served on the council of the Economic and Social Research Council and of the RES. Paul led reviews of pension auto-enrolment and of inflation measurement for the UK Government, and of fiscal devolution for the Northern Ireland Executive. Previous roles have included time as chief economist at the Department for Education and as director of public spending at HM Treasury, where he also served as deputy head of the Government Economic Service. Paul published the Sunday Times bestseller Follow the Money in 2023. He was appointed CBE in the 2018 birthday honours.