Creating a Capital Investment Welfare State: The New American Exceptionalism: 1998 Presidential Address

In the past few decades forces such as globalization and international competition, rising public budgets, and aging populations have caused many nations to reexamine the social programs they established at least a half century ago. Some nations have cut spending; others have reorganized priorities to provide support for dual-earner families, single mothers, or elderly people who need long-term care. The United States appears instead to be in transition from a social insurance welfare state to a "capital investment welfare state" in which the objective is to increase savings and investment. This shift in U.S. public policy is most explicit in the ascendance of a neoconservative ideology, which depicts the welfare state as an impediment to a free market. This ideology has lent credence to proposals for privatizing Social Security and is implicit in seemingly minor technocratic changes in Medicare, which nonetheless have inserted market principles into a social insurance program. Whether current trends represent the most recent manifestation of American exceptionalism or a concurrent restructuring across nations can be determined only by comparative research examining (1) how different nations are responding to contemporary fiscal pressures, and (2) if nations are redistributing the social welfare burden from the public to the private sector.