The Rise of the Dynamic Welfare State

Earlier this month, President Obama released his budget for the next fiscal year. The budget can be thought of as a large set of “asks” for Congress to consider, including funding levels for existing programs and proposed changes to tax policies. It’s incumbent upon the executive branch to justify each of its proposals and make the case for reform. But the release of the President’s budget is also an opportunity to think holistically about how all of the proposals and current policies fit together as well as how they have changed over time.

In this spirit, we are publishing a paper by David Stoesz which examines the recent evolution of the policies which collectively comprise the welfare state. His 2005 book, Quixote’s Ghost, offered a groundbreaking critique of how emerging philosophical battles fought between the left and right transformed the delivery of social policy, epitomized by the welfare reform efforts of the 1990s. In the subsequent years, he observes how the private sector has continued to increased its influence over welfare policy but has created new opportunities for policy reform in the process. Stoesz describes the emergence of what he calls the dynamic welfare state, which (in contrast to its more bureaucratic predecessor) is more open to policy innovations and places a greater emphasis on mobility and empowerment.

Many recent policy innovations have emanated from the nonprofit sector, which has increasingly incubated and directed demonstration projects and real world policy experiments designed to create an evidence base for policymaking. In the process, the responsibility for policy development has shifted so that it is no long an exclusive task of government. The paper explores the implications of these developments. It potentially creates a more dynamic space where multiple actors and institutions can explore alternative interventions which in turn can inform new policy efforts. The emergence of the asset-building field can be viewed in this context. Not only is this arrangement more reflective of the American experience, which historically has assigned a larger role for the private sector in the delivery of social policy than its European counterparts, but there may be a significant upside to these trends if government can be responsive to these learning and innovations. On the flip side, Stoesz introduces us to a host of new challenges, including the high-bar of an evidence-based policy standard and outsized corporate influence in the public sphere.

Beyond its excellent review of the evolution in social policy efforts, the paper argues sounds a cautious but hopeful note.

Undoubtedly, the dynamic welfare state will discomfit liberal social activists who have advocated benefits without attending to taxpayer concerns about the cost of open ended entitlements or the pernicious effects of social programs on recipients of services. But a dynamic welfare state will provide the justification for increasing investments in social capital to which conservatives have reflexively objected. Continual experimentation of social programs will prove of substantial public benefit in the long run as harmful programs are replaced by more effective interventions. Ultimately, the dynamic welfare state, which values consumer preference, optimizes program investments, and incorporates continual renewal will be more congruent with the requirements of 21^st century America.