The "New Welfare State" under Fiscal Strain: Austerity Gridlocks and the 
Privatization of Risk

Mertens, Daniel

doi:10.1093/oso/9780198790488.003.0006

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The "New Welfare State" under Fiscal Strain: Austerity Gridlocks and the Privatization of Risk

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Mertens, Daniel
Institutioneller Wandel im gegenwärtigen Kapitalismus, MPI for the Study of Societies, Max Planck Society;
Political Science Department, Goethe-University, Frankfurt am Main, Germany;

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http://dx.doi.org/10.1093/oso/9780198790488.003.0006
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Citation

Mertens, D. (2017). The "New Welfare State" under Fiscal Strain: Austerity Gridlocks and the Privatization of Risk. In A. Hemerijck (Ed.), The Uses of Social Investment (pp. 77-87). Oxford: Oxford University Press.

Cite as: https://hdl.handle.net/11858/00-001M-0000-002E-11B4-C

Abstract

This chapter raises concerns regarding the possibility of increasing social investment due to the persistence of austerity regimes in Europe and beyond. On the one hand, austerity policies have put severe constraints on the expansion of social investment, mainly because of the budgetary institutions and politics that have evolved around these spending areas. On the other hand, demand of and supply for credit in order to pursue private alternatives to traditional social policies have increased significantly in the face of persistent fiscal restraint. Against this background, the rise of microfinance in Western countries aiming at job creation, and the growth of student loan schemes fostering human capital investment, have been conducive to the realization of social investment goals, but at the same time have shifted risks to households—a move that is likely to have dramatic consequences on economic and social progress.