The Public Interest

The Tenacious Welfare State

Michael S. Lund

Fall 1982

IN 1881, Otto yon Bismark proposed to the Reichstag that all German industrial workers should be covered by compulsory sickness insurance. The social security laws subsequently enacted from 1883 to 1889 are generally regarded as the inauguration of the modern welfare state. The Iron Chancellors bold initiative overcame the fears of other conservative regimes of the day that social insurance meant socialism, and over the next eighty years new national schemes covering work accidents, sickness, old age, and unemployment spread in successive waves throughout Europe and across the Atlantic. Once established, these programs tended to make additional groups eligible, cover more social risks, raise benefits, and steadily increase expenditures. Following the Depression and World War II, growth in social security and other welfare functions of Western governments was especially dramatic. By the mid-1970’s, public social expenditures dominated national budgets and accounted for 20 to 25 percent of national income.

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