Public Management and Administration - Owen E.hughes

86 Public Management and Administration
he remarked that such pensions would teach ‘even the common man’ to look
upon ‘the Empire as a benevolent institution’ (Ritter, 1983, pp. 33–4).
There were undoubted electoral advantages in adopting such programmes,
with their adoption perhaps related to the extension of the franchise. The promise
and delivery of services to the public became a major part of party competition
and, from the 1930s, the economic theories of Keynes appeared to
allow a major role for government in stabilizing the economy and ameliorating
social ills.
Many European countries had substantial welfare programmes by the turn
of the twentieth century. But, due to the greater persistence of laissez-faire
thought, the first programmes in the United Kingdom were only adopted just
prior to World War I, and in the United States not until the Roosevelt years of
the 1930s. This period and the immediate post-war period were the high points
of what the Friedman and Friedman (1980) call ‘Fabian socialism and New
Deal liberalism’. In the United Kingdom and Europe, but not the United States,
there was also a related programme of industrial nationalization in order that
the commanding heights of the economy should be kept in public hands. In the
period after World War II, most European countries adopted ever more elaborate
welfare programmes to safeguard their citizens ‘from the cradle to the
grave’. They provided generous unemployment benefits, universal health
schemes, educational assistance and social aid programmes aimed at the
disadvantaged.
Ordinary members of society do gain benefits from welfare programmes.
In response to electoral pressure, Western governments have provided greater
opportunities in education at all levels, health care, and income support for
retirement or for the unemployed, all of which meant a steady increase in the
size and scope of governments at least until the 1970s or early 1980s. However,
the welfare state was never uncontroversial. It was an attempt to reassert
the political over the economic, and was therefore diametrically opposed to the
laissez-faire system. There were three problems. First, there was an aggregate
problem of financing as the welfare state ‘increasingly brought countries
face-to-face with the issue of affordability’ (Holmes and Shand, 1995, p. 559).
Someone had to find the money to pay for welfare programmes, which, in the
end, must derive from taxes on the wealth generated by the economic system.
Secondly, and related to the first point, a political programme of this kind relies
on broad-based political support, which in the later 1970s and 1980s was no
longer given as freely as it once was. The Reagan and Thatcher governments
have now gone, but they did tap some resentment in the community about the
size and scope of government and concomitant levels of taxation in the welfare
state period. Thirdly, the economic and political theories behind the welfare state
became less fashionable. Within the economics profession, the neoclassical
school came to enjoy a new ascendancy and provoked a reaction against the
welfare state. Neoclassicists advocated a return to a more dynamic economic
society based once again on the ideas of Adam Smith.