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Sozialstaat und struktureller Wandel: Eine verhängnisvolle Beziehung?

Norbert Berthold

Swiss Journal of Economics and Statistics (SJES), 1999, vol. 135, issue III, 407-437

Abstract: More open goods and factor markets are the leading causes of the massive structural changes that can be observed nowadays. They accelerate the process of creative destruction which is the basis of our material wealth. However, currently the dominant outcome still appears to be the destruction of old economic structures and not yet the creation of new ones. It should therefore come as no surprise that people demand more of the goods "security" and "justice", and that they mainly in Europe call for more government help. Yet, the traditional welfare state finds itself in a dilemma type of situation: Increased market competition reveals clearly that the ability of the government to efficiently satisfy the rising demand for "security" and "justice" diminishes, and that government activities are a growing obstacle to an efficient process of structural change. Reforming the welfare state must therefore be high up on the agenda for economic policy. Welfare state activities must be restricted to those areas where it still has a comparative advantage in comparison with private markets in satisfying the demand of people for "security" and "justice".

Date: 1999
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