Federalism and the Welfare State

In this unique and provocative contribution to the literatures of political science and social policy, ten leading experts question the prevailing view that federalism always inhibits the growth of social solidarity. Their comparative study of the evolution of political institutions and welfare states in the six oldest federal states – Australia, Austria, Canada, Germany, Switzerland and the USA – reveals that federalism can facilitate as well as impede social policy development. Development is contingent on several time dependent factors, including the degree of democratization, the type of federalism, and the stage of welfare state development and early distribution of social policy responsibility. The reciprocal nature of the federalism–social policy relationship is also made evident: the authors identify a set of important bypass structures within federal systems that have resulted from welfare state growth. In an era of retrenchment and unravelling unitary states, this study suggests that federalism may actually protect the welfare state, and welfare states may enhance national integration.

HERBERT OBINGER is Assistant Professor at the Centre for Social Policy Research, University of Bremen, and principal investigator at its TranState Research Centre.

STEPHAN LEIBFRIED is Professor of Public and Social Policy in the Department of Political Science at the University of Bremen and co-initiator of the Bremen TranState Research Centre.

FRANCIS G. CASTLES is Professor of Social and Public Policy at the University of Edinburgh.

Federalism and the Welfare State

New World and European Experiences

Edited by

HERBERT OBINGER, STEPHAN LEIBFRIED
and FRANCIS G. CASTLES

CAMBRIDGE UNIVERSITY PRESS
Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo

Cambridge University Press
The Edinburgh Building, Cambridge CB2 2RU, UK

Published in the United States of America by Cambridge University Press, New York

www.cambridge.org
Information on this title: www.cambridge.org/9780521611848

© Cambridge University 2005

This book is in copyright. Subject to statutory exception
and to the provisions of relevant collective licensing agreements,
no reproduction of any part may take place without
the written permission of Cambridge University Press.

First published 2005

Printed in the United Kingdom at the University Press, Cambridge

A catalogue record for this book is available from the British Library

Library of Congress Cataloguing in Publication data
Federalism and the welfare state: new world and European experiences / Herbert Obinger, Stephan Leibfried, and Francis G. Castles, editors.
p. cm.
Includes bibliographical references and index.
ISBN 0 521 84738 9 (hbk) – ISBN 0 521 61184 9 (pbk)
1. Social policy – Case studies. 2. Federal government – Case studies. 3. Democracy – Case studies. I. Obinger, Herbert, 1970– II. Leibfried, Stephan, 1944– III. Castles, Francis Geoffrey.
HN17.5.F375 2005
320.6 – dc22 2004051187

ISBN-13 978-0-521-84738-4 hardback
ISBN-10 0-521-84738-9 hardback
ISBN-13 978-0-521-61184-8 paperback
ISBN-10 0-521-61184-9 paperback

Cambridge University Press has no responsibility for the persistence or accuracy of URLs for external or third-party internet websites referred to in this book, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate.

Contents

Figures

Tables

Contributors

KLAUS ARMINGEON, Professor of Political Science, Department of Political Science, University of Bern, Switzerland

KEITH BANTING, Queen’s Research Chair in Public Policy, School of Policy Studies and Department of Political Studies, Queen’s University, Kingston, Canada

FABIO BERTOZZI, Research Associate, Department of Social Work and Social Policy, University of Fribourg, Switzerland

GIULIANO BONOLI, Assistant Professor, Department of Social Work and Social Policy, University of Fribourg, Switzerland

FRANCIS G. CASTLES, Professor of Social and Public Policy, University of Edinburgh, United Kingdom

KENNETH FINEGOLD, Senior Research Associate, Urban Institute, Washington, DC, USA

STEPHAN LEIBFRIED, Professor of Public and Social Policy, Centre for Social Policy Research, University of Bremen, Germany

PHILIP MANOW, Senior Fellow, Max Planck Institute for the Studies of Societies, Cologne, Germany

HERBERT OBINGER, Assistant Professor, Centre for Social Policy Research, University of Bremen, Germany

JOHN UHR, Senior Fellow, Research School of Social Sciences, Australian National University, Australia

Preface

The idea for this volume stems from the observation that, somewhere between the literatures of political science and social policy, there is an unexplored territory where federalism and the welfare state meet, a no man’s land without even a conceptual map to guide us. Hic sunt leones! is the warning etched on the uncharted regions of ancient maps, but for us it serves as enticement, an invitation to explore the unknown.

   In some OECD federal nations almost one-third of the GDP is tied up in the welfare state, but scholars of the state and federalism typically ignore the welfare constituent of this spending and focus their attention almost entirely on non-welfare public agendas. For these political scientists, the state is always spelled with a capital S, and welfare, if mentioned at all, with lower-case w. As the majority shareholder of public expenditures at the federal level, the welfare state is not just a passive recipient of federalism’s multi-tiered policy-making, but a key player in shaping those policies and, indeed, in shaping the functioning of the federal structure itself. Its size, its indispensability, and the large segment of the voting population it affects make the welfare state a force to be reckoned with. In many instances, it also provides a mechanism for coping with problems the normal federal process has no means of dealing with, as was so clearly demonstrated in the process of German reunification. Scholars of the Welfare state – capital W, small s – have likewise ignored the differences between welfare state development in decentralized and centralized polities, although quantitative charts suggest that they have quite different terrains and profiles. The Welfare state and the federal State have thus been treated as separate hemispheres subject to different academic suzerainty. This may have to do with the implicit and morally grounded assumption that the welfare state is, by its nature, a single and indivisible entity, to be preserved from contamination by the discordant and fickle forces of politics.

   As we all know, successful expeditions into no man’s land require funding. The Hanse-Wissenschaftskolleg (HWK) in Delmenhorst, Germany and the Volkswagen Foundation have been crucial for this volume’s development and completion. A small workshop at the HWK in May 2002 brought the authors, welfare state scholars, together with experts on federalism from around the world, thereby creating the platform to launch a successful research project. Our thanks to those experts: to Martha Derthick and R. Kent Weaver, who played a vital role in framing the project and several of its chapters; to Jonathan Rodden, Arthur Benz and Fritz W. Scharpf for their on-going participation and support; and to Juan Linz, Alfred Stepan, Manfred G. Schmidt, Richard Simeon and Dietmar Braun for their input to the workshop. We appreciate their generosity with their time and their insights. The HWK also supported Francis Castles’ work in the final stages of academic production.

   Without on-going support from Bremen University, work on the volume would surely not have gone so smoothly. Thanks are due to the Centre for Social Policy Research, to Chancellor Gerd-Rüdiger Kück, and to Rectors Wilfried Müller and Jürgen Timm. A special contribution was made by the new Research Centre on Transformations of the State (TranState), funded by the Deutsche Forschungsgemeinschaft. TranState identifies four thematic threads in the unravelling of the ‘golden age’ State after the Second World War: internationalization, nationalization, socialization (Vergesellschaftung), and – the subject of this volume, and least studied of the four – sub-nationalization (see Stephan Leibfried and Michael Zürn, eds., Transformations of the State? (Cambridge: Cambridge University Press, 2005)). We are also grateful to Francis Castles’ colleagues at the University of Edinburgh for generously allowing him the not inconsiderable time required for his editorial tasks on this volume.

   There are others who should also be mentioned. Without John Haslam’s on-going editorial encouragement, tactful advice and gentle prodding we might long ago have abandoned our journey. We also wish to acknowledge a number of individuals who helped with everything from suggesting chapter authors and offering intellectual input into chapter revisions, to correcting some thousand foreign quotation marks and wayward commas, not to mention providing much needed moral support. They include Jacob S. Hacker, Hugh Heclo, Paul Pierson, Arthur Benz, Tanja Börzel, Paul E. Peterson, Monika Sniegs, Susan M. Gaines, Stefanie Henneke, Hanna Piotter, Frank Vandenbroucke, Ana Guilen, Gitta Klein, Gerhard Roth, Ingeborg Mehser, Dörthe Hauschild and two anonymous referees who evaluated the manuscript for Cambridge University Press.

   Mistakes and unruly lions are, as ever, the responsibility of the writers, but fresh insights and new discoveries will, we hope, be the reader’s reward for accompanying this team of political science and social policy scholars on their joint expedition into the unkown territory where federalism and the welfare state consort.

Note on illustrations

   The coins and seals depicted on the cover and in the chapter headings illustrate the rich tradition of federalist heraldry (for sources see below). Symbols for the welfare state, on the other hand, are rarely deemed worthy of the national currency, but its insatiable financial need is notorious.

   In the oldest federalist nations, the US and Switzerland, symbols for federalism are often used on the common currency, making them part of everyday life. On US coins some variation of the Great Seal of the United States shown in the heading of the concluding chapter has been used since 1782. The national bird, an eagle, is depicted clutching thirteen arrows representing the colonies in one talon, and holding a scroll that proclaims e pluribus unum – out of the many, one – in its beak. Above the eagle there may be a ‘glory’ with thirteen clouds or thirteen five-pointed stars, and around the edge of the coin there is often a ring of stars, with one for each state of the Union at the time of minting. The shield on the eagle’s breast shows a band of horizontal lines, unifying and supported by a series of vertical stripes, the former symbolizing Congress, the latter, the founding thirteen states. Similar motifs were used on the 1908 Barber half-dollar, shown at the beginning of the introduction and of chapter 4, and employed in the Seal of the President on the 1967 Kennedy half-dollar on the cover. Like many Swiss coins, the two-franc piece on the cover and in the chapter heading show Helvetia, the eighteenth-century symbol of Swiss nationhood, with one hand resting on a shield that bears the white Swiss Cross, which dates from the thirteenth century, and the other holding a lance. Switzerland’s twenty cantons and six half-cantons are represented by twenty-three five-pointed stars around the edge. The common five-franc piece shown at the beginning of the introductory chapter portrays the legendary founding figure of the Swiss federation, the  Confoederatio Helvetica, Wilhelm Tell (see Georg Kreis, Mythos Rütli (Zurich: orell füssli, 2004)).

   In Germany and Austria, as in the federations chartered by the Crown, i.e., Australia and Canada, federalism is represented only on coins minted for special occasions. The 1928 Austrian Gedenkausgabe series of two-schilling coins portrays famous historical figures on one side and the coat of arms of the nine Länder plus the Republik situated above the 2 on the other. The 1989 ten-DM silver coin, which celebrates the fortieth anniversary of Germany’s post-World War Two refounding, bears the coats of arms of the German Länder, eleven at the time. The design on Canada’s 2004 collector’s gold dollars displays the combined arms of the founding provinces, Ontario, Quebec, New Brunswick and Nova Scotia. It is derived from the Great Seal of 1868, which was never actually used as a seal, but was, rather, adopted as a national coat of arms. Attempts to add new provinces as they joined the Confederation, however, resulted in a design that was deemed too complex, and in 1921 the Canadian government requested a new arms. The British sovereign assigned a design with royal symbols from Great Britain and France and a sprig of maple leaves to replace their homespun federal theme. For its Centenary of Federation in 2001, Australia minted a special coin set. The fifty-cent piece on the cover shows the Australian coat of arms, which includes the coats of arms of the six founding states with a kangaroo and an emu on either side. The one-dollar piece in the chapter heading bears a symbolic representation of the federated continent.

   The multi-tiered nature of the European Union, explored in the conclusion, was reflected in the images on national mintings even before the introduction of the euro. In 1987 Germany celebrated the thirty-year anniversary of the Rome Treaty with the ten-DM coin shown in the conclusion; this depicts twelve horses pulling one cart, a typically federal motif. For the euro, national mints have produced various commemorative coins that emphasize deepening European integration and multi-tier themes, with the French being particularly prolific.

   We are grateful to the mint authorities of Australia (Royal Australian Mint), Austria (Austrian-Mint AG), Canada (Royal Canadian Mint), Germany (Deutsche Bundesbank), Switzerland (Swiss Mint) and the United States of America (US Mint) for permission to reproduce their coin images.

   Every effort has been made to trace the copyright holders and to obtain their permission for the use of copyright material. We apologize for any error or omissions in the above list and would be grateful if notified of any corrections that should be incorporated in future reprints or editions of this book.

   On US coins see Mort Reed, Cowles Complete Encyclopedia of US Coins (New York: Cowles Book Co., 1970), pp. 6–10, 29, 31f. et passim; Walter H. Breen, Walter Breen’s Complete Encyclopedia of US and Colonial Coins (Garden City, NY: Doubleday, 1988); Günther and Gerhard Schön, Weltmünzkatalog 2004. 20. Jahrhundert von 1900 bis heute, 32nd edn (Augsburg: Battenberg Verlag, 2003); Chester L. Krause and Clifford Mishler, The Standard Catalogue of World Coins, 1901–present, annual publication (Iowa, WI: Krause Publications, 2003).