#1031 Peter Lindert: How Government Social Spending Works

Dec 12, 2024

Peter Lindert, Distinguished Professor Emeritus at UC Davis, dives into the mechanics of government social spending. He discusses the historical rise of social programs, particularly in Northwest Europe, and emphasizes the role of universal education in promoting equality. Lindert critiques the shift in funding towards the elderly and wealthy since 1910, while exploring the implications of welfare dynamics in various political systems. He brings insights on the economic impacts of immigration and the challenges facing retirement and social security amidst an aging population.

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INSIGHT

Conditions for Social Spending Growth

The expansion of political voice to the masses is a key condition for social spending to increase.
The rise of commerce and the increasing value of literacy and numeracy also contributed.

INSIGHT

Importance of Universal Education

Universal education offers high returns for society, not just individuals, contributing significantly to productivity.
No country relies solely on private education; public funding for primary education is universal.

INSIGHT

The Free Lunch Puzzle

Increased social spending doesn't necessarily lead to GDP or skill loss, creating a "free lunch puzzle."
This is partly because governments avoid implementing economically damaging policies.

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Dr. Peter Lindert is Distinguished Professor Emeritus in the Department of Economics at the University of California, Davis. Dr. Lindert studies the causes and effects of modern fiscal redistribution; and the history of inequality, political voice and economic growth. He is the author of several books, including Making Social Spending Work.

In this episode, we focus on Making Social Spending Work. We first ask what social spending is, and address the main arguments for and against government social spending. We talk about the conditions that allow for government social spending to take off, why Northwest Europe led the way, the importance of universal education, and a shift in spending toward the powerful and the elderly since 1910. We discuss the “free lunch puzzle”, the benefits of universal healthcare and welfare programs, social spending in developing countries, social spending in autocracies and democracies, and trends since 1980. We talk about the impact of immigration on the economy, and the pension system and the sustainability of social security. Finally, go through examples of wrong social spending, and the biggest threats to social programs until 2050.

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