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Can the Welfare State Compete?: A Comparative Study of Five by Ian Gough, Alfred Pfaller, Goran Therborn

By Ian Gough, Alfred Pfaller, Goran Therborn

The authors study how the united states, nice Britain, France, Sweden and Germany have replied to the expanding problem of overseas pageant because the mid-1970s. except in Sweden, the pursuit of competitiveness has undermined financial and social citizenship rights, and this has, in Britain and the us, engendered an attack upon the belief of the welfare country. unity and social self-discipline can be critically established if the welfare kingdom is to stay economically and politically possible in a hugely aggressive sleek world.

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Reducing the international price of domestic production factors may also be a means of getting more of these factors productively employed and remunerated accordingly. This is the essence of export-led growth. When factors get scarce, however, selling more sooner or later means producing more per factor employed. In the long run it is more and more the ability to produce more than others which allows a country to sell more than others. Market shares reveal this ability. But they are also instrumental in bringing it about as selling prospects stimulate investments in productive capacity.

Ow taxes and high defence expenditure was far more pervasive and let the budget deficit soar to record heights. So, contrary to its philosophy, the government of President Reagan increased de facto its claim on economic resources. Yet it refused to extract them out of the private sphere via higher taxes and it also took care not to expropriate private income earners indirectly via inflation. It made sure that it could borrow sufficient private funds. By offering high interest rates it outcompeted other borrowers not only in the USA, but also abroad.

We can use different indicators of competitiveness which are less sensitive to exchange rate disturbances and adjustments. Instead of looking at market shares as the measure of apparent competitiveness we can look at the determinants of a country's ability to earn high factor incomes in international trade. As already noted, the development of export shares in the manufacturing sector can, over a seven year-period, understate and overstate this ability. Behind it is the ability to offer goods which achieve a relatively high price in the international market place and to produce a relatively large quantity of such goods per person and unit of capital employed.

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