The following is an excerpt from our short course entitled “What Could Governments Do for Us?”
In our previous posts, we discussed the difficulties faced by Congress and the president when deciding the best mix of taxation, spending, and borrowing. We also reviewed specific budgetary choices concerning liberty and justice, national security, the advancement of national interests abroad, natural resource management, national productivity and the quality of life. Today’s post briefly covers the topics of how some governments budget for social protections.
Some governments favor social protections for their citizens. Examples include:
- maternity leave,
- paternity leave,
- unemployment compensation,
- disability payments,
- medical care,
- veterans’ benefits, and
- social security retirement benefits.
These are often referred to as entitlements. Most low-income countries do not have such programs or have them only on paper.
Aging populations put pressure on governments that offer medical and retirement benefits. The importance of retirement benefits varies, of course, with older adults’ share of the population. According to the U.S. Census Bureau, the population aged 65 and older was almost 5% of the total U.S. population in 1920. By 2024, it was almost 18%.
This growth puts pressure on age-related entitlements and, together with interest obligations, crowds out some other kinds of spending. For example, spending on the Department of Health and Human Services plus the Social Security Administration increased from 24% of total spending in 1970 to almost half (47%) by 2024.
- Click here to explore the elderly share of populations around the world.
Some governments seek to reduce the number of people living in poverty and the degree of inequality within their populations. They typically do this by:
- trying to accelerate growth (China, India, South Korea),
- enacting regulations to protect workers from predation (Norway, Denmark, and Iceland stand out),[i]
- requiring universal health care (62 countries in 2018),[ii]
- by providing universal secondary education (most governments succeed on this one: laggards include Afghanistan, Bangladesh, Laos, Pakistan, and much of Africa),[iii]
- providing fiscal transfers to households (most of Europe), and
- using progressive taxation (Australia, Denmark, and Belgium).[iv]
Click here to see poverty rates by country as reported by Wikipedia.
To see the full short course, click on the blue link “What Could Governments Do for Us?“
We offer several other short courses on the U.S. system of government. You can find them here: https://cffad.org/topics/
[i] Oxfam (2018). The commitment to reducing inequality index. https://www.oxfamamerica.org/static/media/files/The_Commitment_to_Reducing_Inequality_Index_2018.pdf
[ii] See https://en.wikipedia.org/wiki/List_of_countries_with_universal_health_care
[iii] UNICEF data.
[iv] Oxfam (2018).
