Amanda Stanhaus

Tag: social policy

Ideological Nuances Created Distinct North American Welfare States

Originally submitted for an independent research project comparing North America’s welfare states with Professor Antonia Maioni at McGill University.

For the former colonies of British North America, the American Revolution was a watershed for current Canadian and American identity. The United States celebrates the people’s revolution, the heroic founding fathers overthrowing an oppressive state, and the creation of an original government structure; Canada lacks similar national heroes and myths, instead commemorating defeat and a long struggle to preserve the British Monarchy.[1] Canada’s loyalty to the Crown and Britain’s Tory tradition has made Canada a more law-abiding, statist, and collectively-oriented society than the U.S..[2] Meanwhile, the U.S.’s foundation in Whig tradition emphasizes individualism and meritocracy, which were central to the Declaration of Independence and continually reinforced throughout American history.[3] While a comparison of North America’s welfare states to other OECD nations will show them to be similar liberal welfare states, Banting notes the ability of Canadian social policy to distinguish itself from the U.S. has immense political significance.[4] Stemming from revolutionary and counterrevolutionary ideologies, unique values and forms of federalism shape the policies of North America’s welfare states.

The revolutionaries were Whigs, while the counterrevolutionaries were Tories; this divergence has distinguished the American value system from the Canadian one. Despite divergent ideologies, their strong resemblance is a product of their joint origins as a liberal settler society.[5] However, America’s checks & balances system reflects its anti-statist tradition, meanwhile Canada’s parliamentary system allows for unchecked power comparable to an absolute monarch.[6] The Dominion of Canada was created by Tories protecting themselves from American territorial expansion, and Lipset notes that the conservative Tory value of collective rights has motivated Canada’s contemporary support for social democratic redistributive and welfare policies.[7] The U.S.’s laissez-faire Lockean tradition is incompatible with such programs, as this stresses individual responsibility.[8] While North America’s countries seem similar, it is their nuanced revolutionary and counterrevolutionary ideologies that contribute to drastic differences in social policy.

The divergent ideologies shaped their values, which determine support for social policies. Adams notes that Americans are more extreme in their views of patriarchy, gender, family organization, religion, and openness to violence, while Canadians tend toward moderation.[9] Accordingly, Adams describes that “[Canadians] have moved away from traditional religion, questioned traditional family models and generally have become a less hierarchical, more flexible people.”[10] Adams concludes that “this ‘heterarchical’ flexibility… is manifested in many ways, from increased acceptance of flexible gender identities …to the changes in workplace dynamics and the management of human resources.”[11] Moderation has influenced the Canadian view of the liberal tenet of individual responsibility, compared to their southern neighbors; “[Americans] are more likely than Canadians to feel that people should be given a chance to make something of themselves but that if they fail, it is their own responsibility, not that of society or of the government. By contrast, the somewhat greater strength in Canada of the belief that a person’s life is not necessarily subject to his or her control.”[12] Canadians value collective rights and believe it is appropriate to use state power to intervene in the market to benefit the common good.[13] The contrast of America’s individual responsibility to Canada’s collective responsibility is clearly seen in health policy. Evans succinctly notes “in Canada the primary source of funding depends upon the type of benefit; in the United States it depends upon the characteristics of the beneficiary.”[14] Individual responsibility motivates America’s welfare provisions that incentivize changing the recipients’ behavior; there is no equivalent in Canada.[15] Absolutist Americans and moderate Canadians have created distinct welfare states.

Canada’s Westminster-inspired parliamentary federation is a stark contrast to the congressional federation of the U.S.. At the national level in the U.S., power is shared between the President and Congress, where weak party discipline further disperses power.[16] Banting describes the U.S.’s legislative process as painful, as it’s fragile and temporary coalitions make it probable “that any proposal will be delayed, diluted, or defeated.”[17] Banting describes Canada’s policy-making process as “more concentrated than in the United States, a difference that facilitated the development of social programs.”[18] Simeon explains Canada’s “fusion of executives and legislatures, combined with strong party discipline, renders both national and provincial governments much more centralized.”[19] Yet, while power is centralized at both the provincial and national level, it is decentralized across these levels of government.[20] Distinct regional politics, specifically Francophone Canadians concentrated in Quebec, have caused decentralized social policy, yet equalization transfers do not allow geographic variation in benefits; variation in benefits is characteristic of the American system.[21] The minority population of African-Americans are distributed throughout the U.S., without a strong majority in any region or state.[22] With African-Americans lacking adequate representation, Banting describes the racist policies of the Social Security Act of 1935, “resistance from southern congressmen and other conservatives led to the exclusion of agricultural and domestic labour, denying coverage to three-fifths of black workers. In addition, southern congressmen led a successful campaign in the name of ‘states’ rights’ against national standards in public assistance, leaving southern blacks at the mercy of the local authorities.”[23] Racism and regional politics, magnified by the unique federal systems of Canada and the U.S. have resulted in distinct social policy.

Stemming from the system’s separation of powers, American policymakers can buck party discipline and are inclined to please interest groups, which is infeasible in the Canadian system. Canadian policy makers can take bold action because its parliamentary federation lacks the checks & balances of a congressional federation.[24] Immergut describes how “veto points” are points all along a congressional federation’s chain of decisions to create legislation; interest groups can influence the legislation’s outcome by accessing the political representative at the “veto point” along the chain. [25] Harles describes America’s system teeming with veto points, “Americans are suspicious of political authority…accordingly, the American government is hedged with an impressive array of institutional devices meant sharply to curtail its authority. This fragmentation of power means that there are numerous access points in the American policy-making process…federal and state officials are freed from the strictest norms of  party discipline and thus highly susceptible to the solicitation of private citizens and groups.”[26] The fractured power of the American federal system creates numerous “veto points” for interest groups to impact social policy for their specific benefit.

Traditionally Tory, Canada has created a collectively responsible political culture and intervened in the market for society’s benefit. Traditionally Whig, the U.S. has stressed laissez-faire policy and created a welfare system to incentivize individual responsibility. Banting notes these ideological differences also shaped the two countries’ unique retrenchment policies, “cuts in the United States fell disproportionately on benefits for the poor, whereas Canadian cuts accelerated an historical trend of targeting benefits on such people.”[27] Embracing its liberal roots, Canada has taken a step to “Americanize itself,” with the Charter of Rights and Freedoms creating a more individualistic and litigious culture.[28] Canada’s bill of rights reflects its shared beginnings with America, as the British North American liberal immigrant society. North America’s shared heritage created very similar countries, but the nuances of revolutionary and counterrevolutionary ideologies created divergent welfare states.


[1]Seymour Martin Lipset, Continental Divide:The Values and Institutions of the United States and Canada ( New York: Routledge, 1990), 1-2.

[2] Ibid, 8.

[3] Ibid.

[4]Keith G. Banting, “The Social Policy Divide: The Welfare State in Canada and the United States,” in Degrees of Freedom Canada and the United States in a Changing World,  eds. Keith G.Banting, Richard Simeon, and George Hoberg ( Montreal: McGill-Queen’s University Press, 1997), 267-8.

[5] Lipset, 212.

[6] Ibid, 20-21.

[7] Ibid, 43, 48 & 225.

[8] Ibid, 48 & 225.

[9] Michael Adams,“Canadian and American Values Divergences: The Narcissism of Small Differences?” in Canada and the United States:Differences That Count, eds. David M. Thomas and Barbara Boyle Torrey (Buffalo:Broadview Press, 2008), 46 &49.

[10]Ibid, 49.

[11]Ibid.

[12]Lipset, 170.

[13] John Harles,“Welfare, Safety Nets, and Values, ” in Canada and the United States:Differences That Count, eds. David M. Thomas and Barbara Boyle Torrey (Buffalo:Broadview Press, 2008),  175 &178.

[14] Robert G. Evans, “Extravagant Americans, Healthier Canadians,”  in Canada and the United States:Differences That Count, eds. David M. Thomas and Barbara Boyle Torrey (Buffalo:Broadview Press, 2008), 141.

[15] Harles, 167 & 175.

[16] Richard Simeon, “Canada and the United States:Lessons from the North American Experience,” in Rethinking Federalism:Citizens, Markets, and Governments in a Changing World, eds.  Karen Knop et al (Vancouver:University of British Columbia Press, 1996), 250.

[17] Banting, 281.

[18] Ibid.

[19] Simeon, 250-251.

[20] Harles, 183.

[21] Ibid, 183 & 184.

[22] Simeon, 253.

[23] Banting, 276-277.

[24] Harles, 178.

[25] Ellen M. Immergut, “Institutions, Veto Points, and Policy Results: A Comparative Analysis of Health Care,” Journal of Public Policy 10, no. 4 (1990): 396.

[26]Harles, 176.

[27] Banting, 284.

[28] Lipset, 225.

 

Evolution of North America’s Welfare States

Originally submitted for an independent research project comparing North America’s welfare states with Professor Antonia Maioni at McGill University.

In light of the Great Depression and World War II, North America no longer blindly trusted the free market in the 1940s, instead Keynes was the economist du jour. Social reformers did not have to decide between capitalism and socialism, but could justify their Keynesian policies as economic necessities to achieve stabilization, regulation and stimulation.[1] Influenced by Keynesian thought, Sir William Beveridge concluded in his 1942 report that there was a need for a national, contributory, social insurance system covering ill health, unemployment, permanent disability, old-age, and need for medical care.[2] While North American social reform was not as comprehensive as Beveridge-inspired British reform, his ideas are seen in North America’s incremental welfare state changes. Until the Golden Age ended in the 1970s, North America’s welfare states expanded program by program to provide income security and health insurance to the politically feasible portion of citizens.

World War II caused America to fully recover from the Great Depression and Americans no longer perceived welfare state expansion as an urgent necessity. Yet, America knew only too well the powerful effect of Keynesian stimulus from the Great Depression and America’s Marshall Plan bankrolled the post-war reconstruction of Europe and its comprehensive welfare states.[3] The exception to the otherwise stagnant post-war period was the U.S.’s amendments to Social Security in 1950, which Berkowitz proclaims “made Social Security America’s largest and most important social welfare program…enab[ling] the elderly, at least, to live in a Beveridge-style welfare state.”[4] Berkowitz notes a nuance in that the successful amendments of 1950 allowed states to continue running their unemployment compensation programs, meanwhile the failed 1943 Wagner-Murray-Dingell bills, based on the British Beveridge plan, proposed that the federal government take over state unemployment compensation programs.[5] Other than the 1950 amendments to Social Security, the U.S. welfare state did not significantly expand immediately following World War II.

Not until President Lyndon B. Johnson’s War on Poverty would welfare be reformed. President Johnson hoped his War on Poverty’s  Economic Opportunity Act of 1964, with its rehabilitation programming, would expand on President Franklin Delano Roosevelt’s New Deal.[6] This law created community action projects to alleviate poverty by developing employment opportunities and improve the living, learning and working conditions of beneficiaries.[7] This rehabilitation program comprehensively attacked what Beveridge saw as the five roadblocks to progress: want, disease, ignorance, squalor, and idleness.[8] President Johnson lived the benefits of the New Deal’s welfare state expansion, as head of  Texas’s  National Youth Administration early in his career.[9] There is no coincidence that LBJ’s War on Poverty would similarly expand the welfare state like FDR’s New Deal.

Compared to the U.S., Beveridge’s report was much more influential in Canada; one of Beveridge’s protégés, Leonard Marsh, wrote a report similarly proposing comprehensive welfare state reform for Canada. Marsh’s 1943 Report on Social Security for Canada outlined how to achieve an ideal social minimum and eradicate poverty.[10] Marsh urged society to recognize that both employment and universal risks were part of modern industrial society; collectively these risks could be alleviated with income-maintenance programs, national health insurance, children’s allowances, and pensions for old age, permanent disability, and widows and orphans.[11] While the Marsh Report would not become a final blueprint like Beveridge’s was for the British, its tenants influenced post-war Canadian welfare state expansion and its values aligned with what  T.H. Marshall coined the social rights of citizenship.[12] Marsh did not become an instant celebrity as Beveridge did, but Marsh’s report proved extremely relevant to the steady expansion of Canada’s welfare state.

The creation of the Canada Pension Plan and the Quebec Pension Plan in 1965 reflects the values of the Marsh Report. These compulsory pension plans covered all employees between the ages of eighteen and seventy plus self-employed individuals; the benefits included retirement, disability, and survivors’ pensions, plus a lump-sum death benefit, just as Marsh had concluded was necessary.[13]  As was Marsh’s recommendation, Guest notes the social minimum was raised with old age pensions allowing the elderly to maintain their living standard during retirement.[14] While Marsh was not praised for his report, as was Beveridge, both were the basis for what became the Canada Pension Plan and the Quebec Pension Plan.

The Beveridge Report influenced North America to recognize that health insurance was a necessary  post-war social reform, yet political realities of each country caused the outcomes to be drastically different. Due to party discipline, the CCF and NDP were able to act as social democratic third parties and policy entrepreneurs specializing in health reform.[15] Meanwhile, the U.S.’s patchwork of health reform reflects the fact that any social reform had to appeal to the broader coalition of the Democratic party.[16] Canada’s resulting health insurance would be universal and comprehensive, while the U.S.’s would cover the elderly’s expenses and those of the indigent.

In light of Canada’s unique political system and various commissions & reports, universal health insurance became a Canadian reality. Marsh broke with precedent, viewing health as a critical aspect of the welfare state, rather than an extra feature.[17] Similarly important was 1943’s Heagerty Report, which concluded there was a need for a joint federal-provincial program of health insurance.[18] In addition to these reports, the precedent set by the CCF in Saskatchewan led to the first of two major health reforms, the first being  the Hospital Insurance and Diagnostic Services Act of 1957.[19] With this legislation, federal general revenue payments funded provincially administered hospital insurance and diagnostic services programs.[20]  Comprehensive and universal in scope, the benefits were provided regardless of age, sex or physical condition and would contribute to a sense of community solidarity.[21] Yet again, the social minimum was raised; Guest explains  “the new social minimum in hospital care became the most medically suitable treatment the provincial government and its various hospital boards were able to provide.”[22] The second major health insurance reform would yet again begin in Saskatchewan; Maioni describes that in 1961, this province introduced “a medical insurance program that combined private fee-for-service delivery with public administration and financing.”[23] Guest explains, The Hall Commission of 1961 concluded “that a comprehensive, universal health service administered by government and financed by means of provincial general revenues, federal government grants, sale or other taxes, or by premiums was the only means of assuring access with dignity to adequate health care services for all Canadians.”[24] The Medical Care Act of 1966 was passed with extra political pressure from the NDP; the law mandated requirements that provinces would have to meet to receive federal funds, including providing comprehensive, universal, publicly administered benefits for all citizens “under uniform terms and conditions” transferable between provinces.[25]  The social minimum had been further raised, as Guest notes that now the majority of the population had uninhibited access to doctor’s services.[26] Canada’s post-war welfare state would expand to include universal health insurance thanks to provincial policy innovation, a unique political structure, and the conclusions of the Marsh Report, Heagerty Report, and Hall Commission.

Missing from FDR’s New Deal, health reform would elude subsequent presidents and only be achieved by LBJ enacting Medicare and Medicaid to provide health insurance for the elderly and indigent. Health reform was not able to be implemented during the Truman and Kennedy administrations as special interest groups, most importantly the American Medical Association, were roadblocks to reform at this time.[27] Berkowitz explains, Johnson’s Great Society was able to amend the Social Security Act in 1965 to include Medicare and Medicaid because there was “an external push, the tragic death of John F. Kennedy in 1963, and good political fortune, the election of a heavily Democratic Congress in 1964.”[28] Medicare included both compulsory hospital insurance coverage and supplementary voluntary insurance for medical and diagnostic services for Americans 65 and over.[29] Medicaid created federal grants to states, who would start health programs for dependent children, the elderly, the blind, and the disabled on welfare or poor enough to qualify as medically indigent.[30] Finally, Berkowitz notes, Medicaid was a policy favored by the AMA as it, “had long favored working with local authorities who ran welfare programs and who restricted benefits to poor people who would otherwise be unable to pay the doctor.”[31] Less than what Beveridge recommended, Medicare and Medicaid were the politically feasible outcome for U.S. health reform. Given the politically astute timing and aligned incentives for both special interest groups and the people, health reform came to both the elderly and indigent.

By the 1970s, the North American welfare states had fully emerged. Specifically in Canada, Rice and Prince note that at either the federal, provincial or intergovernmental level, “all of the categories of social need and risk enumerated by the Marsh Report and others had been provided for in some way.”[32] Yet, as the economy changed, the ideas of Keynes and Beveridge became less relevant, as Esping-Andersen explains, there is now a perceived trade-off between social security and economic growth, between equality and efficiency.[33] Acknowledging that the politics of austerity began to emerge in the mid-1970s, Paul Pierson notes, “interest groups linked to particular social policies are now prominent political actors. The rise of these interest groups is one of the clearest examples of how policy feedback from previous political choices can influence contemporary political struggles.”[34] Overall, the welfare state is now the status quo, and those who try to disband it are at a distinct political disadvantage.[35] The Golden Age ended in the 1970s and no longer would North America’s welfare states greatly expand, yet the fundamental programs were locked in and would weather retrenchment.


[1]James J.Rice and Michael J. Prince, Changing Politics of Canadian Social Policy (Toronto; Buffalo: University of Toronto Press, 2000), 62.

[2] Edward D. Berkowitz, America’s Welfare State: From Roosevelt to Reagan (Baltimore: Johns Hopkins University Press, 1991), 50-51.

[3] Christopher Pierson, Beyond the Welfare State? : The New Political Economy of Welfare (Cambridge: Polity, 2006), 139.

[4] Berkowitz, 56.

[5] Ibid, 63.

[6] Ibid, 111 -113.

[7] Ibid, 113.

[8] Dennis Guest, The Emergence of Social Security in Canada,  (Vancouver: University of British Columbia Press, 1980), 109.

[9] William E. Leuchtenburg, “Lyndon Johnson in the Shadow of Franklin Roosevelt,” in The Great Society and the High Tide of Liberalism, eds. Milkis, Sidney M. and Jerome M. Mileur (Amherst: University of Massachusetts

Press, 2005), 187.

[10] Antonia Maioni, “New century, new risks: the Marsh Report and the post­-war welfare state in Canada,” Policy Options, August 2004, 21.

[11] Ibid, 21.

[12] Ibid, 22.

[13] Guest, 150 & Rice and Prince, 81.

[14] Guest, 151.

[15] Antonia Maioni, “Parting at the Crossroads: The Development of Health Insurance in Canada and the United States, 1940-1965,” Comparative Politics 29, no.4 (1997): 412-413.

[16]Ibid, 412

[17] Maioni, “New century, new risks,”21.

[18] Guest, 138.

[19] Maioni, “Parting at the Crossroads,”417.

[20] Rice and Prince, 75.

[21] Guest, 148.

[22] Ibid, 149.

[23] Maioni, “Parting at the Crossroads,”417.

[24] Guest, 162.

[25]Maioni, “Parting at the Crossroads,”418.

[26] Guest, 163.

[27]Maioni, “Parting at the Crossroads,”419.

[28] Berkowitz, 172.

[29]Maioni, “Parting at the Crossroads,”422.

[30] Berkowitz, 173.

[31] Ibid.

[32] Rice and Prince, 83.

[33] Gøsta  Esping-Andersen, Why we need a new welfare state (New York: Oxford University Press, 2002), 3.

[34] Paul  Pierson, “The New Politics of the Welfare State,” World Politics 48, no.2 (1996):151.

[35] Ibid.

 

Emergence of North America’s Liberal Welfare States

Originally submitted for an independent research project comparing North America’s welfare states with Professor Antonia Maioni at McGill University.

    Industrialization turned what were once rural, intimate communities into urban, anonymous cities. Capitalism’s limitations became apparent to the unemployed, disabled and elderly, who were unable to add value to the capitalist system and were treated accordingly. As suffrage expanded, social policies began to emerge in the North American countries of the U.S. and Canada. These policies upheld North American liberalism and would reflect an integration of social rights into one’s understanding of citizenship.  By 1940, the liberal welfare states of The United States of America and Canada had emerged, as both countries attempted to correct the market limitations of capitalism by institutionalizing welfare.

          Capitalism’s invisible hand lacked a market solution for those who were unemployed, disabled or elderly. Marx would critique that a commodity’s value is a function of the amount of labor used in production.[1] Therefore, if one was unable to participate in the labor force, they were of no value to the capitalist system and were treated as such. Liberal democracies proceeded to institutionalize welfare production, discontinuing the welfare tradition of the private, familial sphere.[2] Capitalism created factory work that was standardized and impersonal, and so too would liberal democracies produce welfare in times of market failure.

        The welfare states that began to emerge as a reaction to industrialization embodied North America’s liberalism. As Banting and Myles explain, while liberal welfare states encourage citizens to rely on the market for economic security, liberal welfare states acknowledge the limitations of the private market, and provide a safety net for the poor.[3]  This development aligned with the power resources model, which describes institutionalized power struggles, “as a struggle between the logic of the market and the logic of politics.”[4] North American liberal welfare states emerged and provided for those unable to participate in the capitalist system’s labor force.

        The U.S.’s welfare state emergence is unique to its history. Following the Civil War, the federal government created a pension system for disabled veterans and dependents of slain soldiers. By the turn of the century, Orloff explains that this social program would morph “into de facto old-age and disability pensions that provided coverage for some one million elderly Americans.”[5] What started out as a necessity for reconstruction, became a political asset and patronage opportunity. Orloff notes that, the U.S.’s “mass electoral democratization preceded state bureaucratization…[therefore] the civil administration was not protected from partisan use, and parties could use government jobs and resources for patronage.”[6] Generally, as countries democratized, Pierson similarly notes, “there is a strong correspondence…between the coming of male universal suffrage and the earliest development of social insurance.”[7] Yet, due to lack of support from Progressive Era politicians, as corruption allegations made patronage systems politically infeasible, the Civil War pension system was not expanded upon and would not be replaced at the federal-level until the 1935 Social Security Act.[8] The Civil War pension system was the first glimpse of a liberal welfare state in the U.S..

           The North American liberal welfare states emerged by addressing income insecurity associated with the capitalist system. Orloff notes the western world’s debate at the time was, “over what the state should do in the face of the increasingly well-publicized problems of income insecurity.”[9] By 1919, thirty-eight states would implement workers’ compensation legislation.[10] According to Guest, “The Ontario Workmen’s Compensation Act of 1914 was Canada’s first piece of social insurance providing compulsory income protection against one of the major risks to the continuity of income in an industrial society– work-related sickness, disability, or death.”[11] Furthermore, enacting a workmen’s compensation law signaled a change in outlook–income security was a right, not an act of charity.[12] Even though this was a monumental reform, this simply was not the most that could be done. Guest notes Roy Lubove’s conclusion  “that compensation laws met the employers’ needs more completely than those of the wage earner, whose real need was for a comprehensive measure to protect him from the risk of earning loss arising from disability or disease regardless of the cause.”[13] Typical of a liberal welfare state policy, the U.S. and Canada tentatively corrected for market failures with workers’ compensation programs.

        Canada successfully enacted the national Old Age Pension Act in 1927. Rice and Prince describe this social assistance legislative milestone, as it provided a means-tested pension to Canadians over 70 years old and the federal government reimbursed 50% of a participating province’s  program expenses.[14] Kudrle and Marmor explain the difference in political timing needed to successfully enact an old age security program in Canada compared to the U.S.:

in Canada, the introduction took place at a time of relative prosperity, while in the United States it came only with the depths of the depression. The Liberals…went on record as favoring national pensions in 1915, and although a means-tested flat grant pension scheme was not actually introduced until 1927 by the Liberal Government of Mackenzie King, the idea had encountered little opposition. In contrast, only Theodore Roosevelt’s 1912 campaign presented social insurance as a national issue in the United States, and until the passing of the Social Security Act in 1935, pensions as a national policy were actively opposed by virtually all major politicians and trade union leaders.[15]

While the need and the political philosophy of a liberal welfare state was present in both countries, the nuances of ideology, party system and special interest groups resulted in Canada instituting the first national old age security program.

        As women gained political influence in society, which would lead to the expansion of suffrage, the welfare state expanded to include mothers’ pensions. Provinces began to expand suffrage to women in the early 20th century, and Guest notes, “it is hardly a coincidence that provincial schemes of mothers’ pensions … should follow in such short order the granting of the franchise to women.”[16] Similarly, by 1919, thirty-nine states had instituted mothers’ pensions, reflecting the steady expansion of  suffrage for women state-by-state; Berkowitz describes this justification: “mothers’ pensions supplied widows with money to keep the family going and functioned as an investment in ‘home life,’ ‘the highest and finest product of civilization,’”[17] Yet again, suffrage was correlated with the expansion of  North American liberal welfare states.

          The Great Depression exposed the extreme flaws of capitalism, and its legacy would further develop North American welfare states. Pierson explains the motivation to institutionalize welfare,  because extreme events of the Great Depression showed:

it was impossible to sustain actuarially sound social insurance under circumstances of profound economic recession… demand for social expenditure (especially unemployment compensation) was inversely related to the capacity of the economy to fund it… to respond to this problem by cutting social expenditure would simply intensify rather than alleviate these economic problems.[18]

Traditionally, social policy was a provincial responsibility, but the Great Depression was an extreme case and the federal government provided temporary unemployment relief.[19] The Great Depression discredited America’s traditional approach of welfare capitalism, yet President Roosevelt proceeded with caution.[20] Orloff elaborates on Roosevelt’s approach,

planning for social insurance initiatives was undertaken immediately, but no legislation was proposed by the administration. In contrast, the president introduced federal emergency relief legislation almost immediately upon taking office, thus responding to the plight of the unemployed–and to the not inconsiderable protests of [the overwhelmed] state and local welfare officials.[21]

 Berkowitz notes Roosevelt’s nuanced approach that would result in the creation of the Works Progress Administration: “if it was necessary for the government to provide relief, Roosevelt believed it should take the form of jobs, rather than straight handouts.”[22] The Great Depression drastically affected both countries; the reaction of each country reflected their own tradition of social policy development.[23] Kudrle and Marmor note Christopher Leman’s generalization: “Canada proceeds in a steady deliberate fashion…whereas the United States tends to move only with a ‘big bang.’”[24]  While following their own traditions, subsequent North American emergency relief embodied the principles of a liberal welfare state.

          Once emergency relief was implemented, Franklin Delano Roosevelt’s administration sought to implement long-term social insurance policies for both the elderly, as well as the unemployed; as Kudrle and Marmor would note, in “the depths of the depression.”[25] FDR and his administration’s members were products of the Progressive movement, and that experience would influence the good government and fiscal responsibility aspects of the social insurance programs they would create.[26] Berkowitz elaborates:

Roosevelt’s advisors regarded old-age insurance, their social insurance proposal, as a dignified alternative to the state pensions, such as the one in Ohio, that nonetheless would not bankrupt the government. Their plan would take the form of a guaranteed contract–an insurance policy–into which workers and their employers made regular contributions and from which they received regular monthly retirement benefits from the federal government beginning at age 65.[27]

Orloff explains the final product, “the U.S. social insurance program for the aged received no financial input from federal coffers, a logical outcome of Roosevelt’s concern to preserve a sharp distinction between social assistance and social insurance programs.”[28] In addition to social insurance for the elderly, the law also created an unemployment insurance system that was state operated and federally coordinated.[29] The Social Security Act of 1935 was the crowning achievement of FDR’s New Deal; America’s liberal welfare state had emerged, as both the unemployed and elderly had insurance for times of market failure.

          During the Great Depression, Canada also sought to implement a long-term program to provide income security to workers during times of a market failure’s unemployment. Prime Minister Bennett’s Employment and Social Insurance Act of 1935 was primarily a system of unemployment insurance copied from the British legislation of 1935.[30] Specifically, Guest explains, “the act required compulsory coverage of all employees over the age of sixteen and earning less than $2,000 per year…A minimum contribution period of forty weeks within a two-year period was required before the worker could claim thirteen weeks of benefit.”[31] This legislative milestone reflected the changing mindset of the time, as unemployment became a national, economic problem, not a local, personal problem.[32] Yet, the Supreme Court of Canada and the Privy Council of Great Britain declared this act unconstitutional, finding that the federal government had intruded on what was a provincial responsibility.[33] Canada recognized the necessity for a federal role in social insurance, so in 1940, Section 91 of the British North America Act was amended; Guest explains that now “the federal government [had] exclusive jurisdiction over legislation in the field of unemployment insurance, the first modification of the original distribution of social service responsibilities.”[34] Following this amendment, the liberal government of Prime Minister Mackenzie King enacted the Unemployment Insurance Act of 1940, which was very similar to both Bennett’s and British legislation, except that “benefits and contributions were wage-related, as opposed to the flat-rate system.”[35] The Great Depression of the 1930s exposed the need for federal involvement in social policy; Canada’s “steady deliberate fashion” coincidentally instituted yet another social policy during “a time of relative prosperity,” namely 1940.[36] Once the British North America Act was amended to reflect the modern federal role in social policy, unemployment insurance became a reality for Canadians.

          The North American countries of the U.S. and Canada revolutionized and institutionalized welfare production, as their countries industrialized and market limitations of capitalism became apparent. The emergence of North America’s  welfare states signaled a collective change in conviction; T.H. Marshall explains that in the twentieth century  social rights were incorporated into the status of citizenship.[37] FDR’s “Four Freedoms”  speech, which would prepare Americans for the notion of entering World War II, echoed this understanding of social rights, “freedom means the supremacy of human rights everywhere. Our support goes to those who struggle to gain those rights or keep them. Our strength is our unity of purpose. To that high concept there can be no end save victory.”[38] The U.S. and Canada created their own unique liberal welfare states to correct the market limitations of capitalism; their advanced view of social rights would contribute to a justification to enter–and positively impact the outcome of–World War II.

[1] Christopher Pierson, Beyond the Welfare State? : The New Political Economy of Welfare (Cambridge: Polity, 2006),12.

[2] Dennis Guest, The Emergence of Social Security in Canada ( Vancouver: University of British Columbia Press, 1980), 2.

[3]Keith Banting and  John Myles, “Introduction: Inequality and the Fading of Redistributive Politics,” in  Inequality and the Fading of Redistributive Politics, eds. Keith Banting and  John Myles (Vancouver: University of British Columbia Press, 2013), 4.

[4] Pierson,30-1.

[5] Ann Orloff, “The Political Origins of America’s Belated Welfare State,” in The Politics of Social Policy in the United States, eds. Margaret Weir, Ann Orloff and Theda Skocpol  (Princeton: Princeton University Press, 1988), 38.

[6] Ibid, 44.

[7]Pierson, 112.

[8] Orloff, 39 & 59.

[9] Ibid,52.

[10] Ibid, 53.

[11] Guest, 39.

[12] Ibid.

[13] Ibid, 46.

[14] James J.Rice and Michael J. Prince, Changing Politics of Canadian Social Policy (Toronto; Buffalo: University of Toronto Press, 2000), 52.

[15] Robert Kudrle and Theodore Marmor, “The Development of Welfare States in North America,” in The Development of Welfare States in Europe and America, eds. Peter Flora and Arnold J. Heidenheimer (New Brunswick: Transaction Books, 1981), 92.

[16] Guest, 51.

[17] Edward D. Berkowitz, America’s Welfare State: From Roosevelt to Reagan (Baltimore: Johns Hopkins University Press, 1991), 96.

[18] Pierson, 121.

[19] Guest, 87.

[20] Orloff, 65.

[21] Ibid, 69.

[22] Berkowitz, 15.

[23] Kudrle and Marmor, 91.

[24]Ibid.

[25] Ibid, 92.

[26] Orloff, 70.

[27] Berkowitz, 20.

[28] Orloff, 73.

[29] Kudrle and Marmor, 95.

[30] Guest, 88.

[31] Ibid.

[32] Ibid, 89.

[33] Ibid, 106.

[34] Ibid.

[35] Ibid.

[36] Kudrle and Marmor, 91 & 92.

[37] T. H. Marshall, Class, Citizenship, and Social Development (Garden City: Doubleday,1964), 96.

[38] Franklin D. Roosevelt, “Four Freedoms,” Franklin D. Roosevelt Presidential Library and Museum, January 6, 1941, http://www.fdrlibrary.marist.edu/pdfs/fftext.pdf.