How the Role of Western Governments Evolved

Most of us never learnt Western history from a social perspective – how, for example, did the Western welfare state emerge? Prof. Karthik Muralidharan looks into that in his book, Accelerating India’s Development.

 

Long, long ago, Western governments monarchies were about one thing only – security. After all, it was a time when your neighbor could attack, defeat, loot and occupy you, and enslave or kill your inhabitants. Those were savage times.

 

The role of the Western state changed only with the Industrial Revolution. As production increased phenomenally, better systems were needed. Roads, ports, railways initially.  As urbanization followed industrialization (people migrated for better paying jobs from the villages), the populations of towns exploded. Sanitation and sewage systems had to be improved. These improvements in turn boosted productivity and the state’s tax revenue, which could further improve infrastructure (and yes, continue to fund the military expansionism too).

 

The Western “welfare state” has emerged only in the last 100 years. The biggest trigger was the catastrophic Great Depression of the 1930’s – the unemployment count exploded, companies went bankrupt in huge numbers, and so communism became more and more appealing. Governments began to spend more of the tax revenue on social welfare to address the situation. Then World War II happened. All major and long wars trigger higher taxation. But when the war ended, Western governments didn’t reduce the tax rate (much). Instead, they started using the revenue coming from the (still) high tax rate to fund more social welfare schemes – and yes, the fear of communism was a major factor.

 

The pattern, as Muralidharan says, is that Western spending on welfare increased as they got richer. In India, by having given the right to vote to all right from the beginning, the electorate expects and demands higher welfare spending when the state is much poorer, and thus incapable of meeting such expectations.

 

Overall, our expectations are unrealistic. On the other hand, a lot of people are only asking for the most basic of amenities…

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