Diversity v the welfare state? Taylor-Gooby's take

From Is the future American? Or, can left politics preserve European welfare states from erosion through growing "racial" diversity? (2005)

Reactions and impressions

• His feeling is that Alesina et al's analysis is very robust, but thinks that it is far more relevant for the US than for the rest of the world. His main argument is that in the US, racial/ethnic fractionalisation predated the formation of leftist, very pro-welfare state political blocs (in fact, the US has none, he feels, by European standards), whereas in Europe, leftist political blocs were in place before diversity became a significant political factor, and have thus enabled European countries to negotiate rising diversity with less impact on the welfare state. In short, the order of events matter.
• While Alesina's analysis may be spot-on for the US, there is no evidence, he argues, that it holds for the rest of the world.
• He does concede that rising diversity does appear to have some negative impact on support for Europe's welfare states, but says that this is quite small. My own feeling on this is that it would not be surprising for it to have some effect, but that Goodhart and other pessimists are too quick to think that American experience transfers easily to Europe.
• Interestingly, he notes that in Alesina's 2004 book, he and Glaeser say that one of the key impacts of high levels of diversity is that it gives anti-welfare state politicians a tool with which to argue against welfare state expansion: rightist politicians exploit diversity to advance their anti-state agendas. Certainly this is what we saw with Ronald Reagan's apocryphal welfare queen in 1980.
• His feeling seems to be that this is a challenge to be dealt with, but that European countries have the structures in place to do so.

Notes from the reading

• Alesina et al claim that "US-Europe differences have more to do with the racial divisions than with deep cultural differences. As Europe has become more diverse, Europeans have become increasingly susceptible to exactly the same form of racist, anti-welfare demagoguery that worked so well in the US. We shall see whether the generous European welfare state can really survive in a heterogeneous society."
• T-G acknowledges that immigration, which is at historically high levels, has provided an opp for right wing attacks on the welfare state. If Alesina is correct, he says, diversity "may be a more serious challenge to the European heritage than economic globalisation or the growth of the single market."
• Though most welfare state spending is horizontal (ie smoothing out the individual's life cycle), most people think that it is largely vertical - he has researched this. This makes it potentially easy to exploit diversity.
• The difference in diversity explains 43% of the gap in social spending btwn the US and Europe, say Alesina. That is, it accounts for 3.2 percentage points of social spending difference, whereas there is actually a 7.3 p point diff. T-G calls Alesina's argument for causality "convincing"
• Concludes that diversity has much less impact on social spending outside the US, and says that this is because it is more widely supported across society and the left is there to fight for it in a way they can or do not in the US
• Diversity does have a negative impact on social spending outside the US, he finds, but one that is much weaker than in the US. "When a left wing influence is established nad has influenced political instituations... different patterns of development and path dependency are set in train. The presence of the left appears to be able to insulate welfare systems against the impact of greater diversity among citizens."