The welfare state was created over time because people felt that protection and promotion of the citizenry can only happen under such an arrangement. In this model, the state plays the key role in providing services. State functions through the transfer of funds from citizens and industry through taxation. State then tries to re-distribute part of the proceeds of the taxation to its people. Historically through the 20th century have had lower poverty rates when compared to other types of arrangements. From a 20th Century point of view, welfare state functioned well. As the world changed in late 20th century through to early 21st century there are increasing signs that welfare state may need to evolve further to meet the current challenges.
Welfare State Model
Some welfare state models have created new issues, such as benefit dependency and disincentives for full-time work. In some cases, the welfare state model faces existential problems due to social, technological and other changes. Experts argue that aging, especially in advanced western societies, create significant problems. On the one hand, more services have to be provided by the governments, on the other hand, they have to deal with a reduced tax base. There are also problems associated due to the chronic nature of illnesses that elderly people face.
Experts argue that Welfare state system needs reform and readjustment to reflect the changes of the 21st Century. Some of the countries are opting for creating incentives for older people to work longer. Some countries are trying to raise the pension age to reduce the cost of welfare payments. Other countries are trying to increase the tax base through increased levels of migration and other measures. Most countries are also trying to reduce the disincentives for work. It remains to be seen whether any of these reforms can help in sustaining the welfare state model into the future.