The Welfare State

Since the beginning of Christianity, and for many centuries that followed, what we call today social security, which essentially means assistance to the poor and the needy, was a task belonging to the Catholic Church. It was with the Reformation and only in the countries that rebelled against the Church, that a new problem arose, namely: how to take care of the poor and the needy at the massive, national scale of society, a task that only the Church had the experience and was equipped to perform?

The several Protestant churches that emerged from the Reformation were no answer to this question, as they were too small in size, too local in their reaching and too deeply divided. The only institution that could replace the Church in her national reaching and organization was the state. It is thus no surprise that the welfare state was a creation of Protestantism. Indeed, the first welfare state was created in mostly anti-Catholic Bismarck's Prussia, with other Northern European, mostly Protestant countries soon following suit.

This transfer of responsibilities from Church to State to assist the poor and the needy was a most serious task indeed. It was a work of God. Thus, from the beginning the welfare state was taken in Protestant countries as a most cherished, valuable, Christian institution, and an institution run by politicians and bureaucrats who would ultimately be answerable to God.

Different was the story of the welfare state in predominantly Catholic countries, such as Portugal and Spain. They imported it directly from Protestant countries as a symbol of modernity since, for the last two centuries or so, modernity in Catholic countries always meant imitating the institutions of Protestant countries.

The first thing politicians in these countries did when they set up their own welfare states was to take over all the Church's institutions and arrangements designed to take care of the poor and the needy, such as Misericórdias, hospitals, schools, parochial charities. All the assistance to the poor and the needy would from now on be carried through the state.

The difficulty with this solution was that politicians - as all lay people - in Catholic countries are not, and have never been, used to answer directly to God without the intermediation of the Church. Thus, when the authority of the Church was removed from society they were left answerable to themselves only. It should not come as a surprise that in Catholic countries the welfare state would soon turn predominantly into a system of welfare for the politicians themselves and for other groups who share in the powers of the state, such as bureaucrats and special lobby groups - not a system of welfare for the population at large.

The modern criticism that the welfare state leads to a bloated government sector and becomes an obstacle to growth and a source of damning inefficiencies in the economy is largely misdirected in my view. Northern European, mainly Protestant countries have the largest share of their GDP's spent through the government sector and this is so in part because of their welfare systems. Yet, they seem quite happy, if not proud of the them, as their economies display unrelenting signs of progress despite their welfare systems, if not because of them.

The situation is different in Catholic countries. The welfare state led to an exponential increase in government expenditures as a share of GDP over the last generation. But since it did not reach substantially - and will never reach substantially - the population at large, but will always remain captive of the comparatively small group of people who share in the powers of the state, in these countries the welfare state becomes truly an inefficient institution and a real obstacle to growth.