The racism of the welfare state

Alberto Alesina Professor of Economics Harvard University Project Syndicate

Two demographic acids are corroding Continental Europe's welfare states. One is Europe's aging population. The other is the flow of immigrants from soon-to-be new member countries in the European Union and from outside the union.

In our recent book Fighting Poverty in the U.S. and Europe: A World of Difference, Edward Glaeser and I discuss why the welfare state is so much more generous in Europe than in the U.S. One important explanation is the much larger racial heterogeneity to be found in the U.S. relative to the more homogeneous Continental Western Europe.

Consider this: According to the World Value Survey, whereas 60 percent of Americans believe that the poor are "lazy," only 26 percent of Europeans hold this belief. Not surprisingly, those who adhere to such beliefs are more averse to redistribution and welfare, and evidence shows that in the U.S., those who express more "anti-minority" points of view are also more averse to redistribution and more likely to have less sympathy for the poor.

It seems easier for white middle class Americans to consider the poor less worthy of government support if they think of them as different. To put it crudely, but candidly, indifference comes easy if the poor are assumed to be mostly "black." This is more difficult in Norway, where rich and poor are white, often blond and tall.

Much experimental and statistical evidence shows that individuals trust and associate more with others of the same race. Precisely for this reason, political opportunists in the U.S. have long used the race card to discredit welfare and redistribution, from the Jim Crow system that segregated blacks in the South before 1964 to the infamous Reagan-era charge about black "welfare queens" who drive Cadillacs. Right wing white politicians, predisposed against taxes and redistribution, use the race issue to secure the votes of poor whites, who otherwise might vote differently on purely economic grounds.

Even more fundamentally, racial considerations also influence the nature of America's political institutions. Proportional representation, widely adopted in Europe in the first decades of the 20th century, was never embraced by the U.S. because it is a system that would allow black representatives to be elected regularly.

In Europe, however, socialist and communist parties imposed electoral systems based on proportional representation precisely because they open the door to representatives of minorities (the communists and socialists themselves). The few American cities that introduced this system in the Progressive era, between 1910 and 1930, soon abandoned it -- or were forced to -- in order to stop the election of black representatives. Today the only U.S. city that uses proportional representation is the leftist bastion of Cambridge Massachusetts.

Proportional representation is widely viewed as one factor that promotes the implementation of redistributive policies by providing a political voice to minorities. Cross-country evidence shows that the size of public redistributive spending increases with the degree of proportionality in the electoral system.

There is more. Many redistributive programs in the U.S. are run by the 50 states. States that are more racially heterogeneous have smaller redistributive programs, even controlling for their level of income. Welfare is relatively plentiful in the overwhelmingly white states of the North and Northwest (Oregon and Minnesota, to cite two examples) and in some states in New England (such as Vermont). It is lacking in the racially mixed Southeast and Southwest.

Continental Europe is becoming, and will become, more ethnically mixed as more newcomers from Eastern Europe and the developing world arrive. Xenophobic parties are on the rise across Europe; in some cases, they are in office. Think of Jvrg Haider and the late Pym Fortuyn, or, to a lesser extent, Italy's Northern League. It will not be long before even Europe's more respectable conservative parties reach for rhetoric about "foreigners coming here to feast off of our taxes."

Simply put, when middle-class Europeans begin to think that a good portion of the poor are recent immigrants, their ingrained belief in the virtue of the welfare state will begin to waver. Even Europe's leftist intelligentsia now associates crime and urban squalor with immigration. The step from here to lamenting the high taxes spent on welfare for immigrants is a but a short one.

When this happens -- and I say "when," not "if" -- there are three possible political responses. One is to close borders to poor immigrants, eliminating any correlation between poverty and immigration. The second is to somehow restrict welfare benefits to "natives." The third is to reduce the size of welfare for all because political support for it is declining.

The first strategy is short sighted and the second odious. I hope that the third one will win out, because it would mean relatively open borders, no discrimination, and less government intervention.

Not to worry: The European welfare state will remain more generous than the stingy American one, but it may become more manageable and less intrusive. The fact that this will come about because of ethnic "animosity" is sad and depressing. The silver lining is that the European welfare state does indeed need trimming!

The writer is the co-author of Fighting Poverty in the U.S. and Europe: A World of Difference (Oxford University Press).