Widespread aversion to "big government" could result in the scaling back of government-sponsored social assistance -- including welfare -- and insurance, such as health care, in Western Europe, says Pierre Pestieau. And while he concedes that these state programs are in need of reform, he maintains that their shrinkage and consequent replacement by private sector services would be socially and economically detrimental.
Armed with a series of charts and graphs detailing social spending and resource distribution, Pestieau defended government's role in providing social welfare in a lecture titled "Social Protection or Private Insurance in the European Union" Oct. 23 in the Guerlac Room of the A.D. White House. Pestieau is professor of economics at Belgium's University of Liege and holds the Luigi Einaudi Chair in Modern European and International Studies at Cornell for 1997-98.
Pestieau explained that few European leaders favor a "maximalist" approach to the social safety net; that is, ever increasing taxes in order to uphold the level of support. Instead, they view the "minimalist" method as an ultimate goal -- the reduction of social programs, on the grounds that the state can no longer afford them.
If welfare is eliminated and private companies are relied on to provide health insurance, however, the poverty rate will surely climb, Pestieau argued. The most generous amounts of social assistance and insurance are disbursed in countries such as the Netherlands, Sweden and Finland, where poverty is low.
"Charity begins and stops at home," Pestieau said. "It is limited and lacks the universality of the state."
Perhaps the greatest challenge to the preservation of social programs is winning over public opinion. Pestieau noted that people tend to prefer private insurance because they are able to choose a particular provider and plan, and they feel they are paying for a service. In general, people dislike paying the government taxes, however, even if the money is used to furnish them with benefits.