Free «The Downfall of the Welfare System» Essay Sample


There has been a lot of debate on welfare in that it is prone to abuse. However, there are many benefits of welfare to the country.  The government should use taxes to support the provision of services to the public because this will ensure that every one has access to basic services and also help in reducing inequalities. If a cost-benefit analysis is done the benefits outweigh the costs.

One key important area where welfare helps is when it comes to poverty alleviation. The government support to poor families helps a lot. Under the welfare programs, for the poor to receive financial assistance the family must meet some work requirements for eligibility. The aim of the government is to help the recipients become self-sufficient by finding employment. According to Welfare Information, the reform in welfare through the introduction of TANF (Temporary Assistance for Needy Families) has helped reduce over-reliance of welfare by needy people. According to Wickenden (2010) “The adults, who are being assisted, have to start to work two years after receiving financial aid. If the adults have not started working, the support is reduced and actually in some states the support is completely withdrawn” (p. 4). Moreover the states that do not place their welfare citizens on work programs will suffer federal financial penalties. There is a limit for the number of years one may be on welfare, which is five years. This ensures that the welfare support is temporary. The welfare also encourages families, since states are given more flexibility to support families with both parents. The states with the highest reduction of non-marital births and abortion get a bonus. The welfare helps reduce the dependency of parents on welfare by promoting work and marriage (Song, 2010). Through welfare there has been an increase in employment rate of single mothers. Social welfare also aids in distribution of wealth. It reduces the gap between the poor and the rich. Social welfare also helps in the market. In any market there is need for demand and supply.



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If an economy has production but no buyers the prices of goods go down, creating high losses. Social welfare contributes to employment as it gives money to the poor. It gives them purchasing power to buy products. Secondly, the poor are able to use the benefits of new products and services in the market. Furthermore, there are people who are unable to work, such as the young, elderly and disabled. These people need to be taken care of. “In the country people may be willing to work but there are no employment opportunities. Welfare takes care of the unemployed before they are employed” (Azimzadar, 2).

 Additionally, provision of welfare by the government helps in improving the healthcare of citizens. Through providing healthcare, the social workers have people to take care of, creating a healthy workforce. Social welfare is important in healthcare. It is important that a country has a healthy workforce to work and help in development. The sick, when not taken care of can, become an immense burden to the working people. Instead of letting diseases become serious problem, providing welfare is a way of providing preventive healthcare. The people are treated early and the burden on the working people is removed. An individual is important as he/she is the one who contributes to the development of a country. It is great to invest in people. Human beings are a resource. Everyday there are people who die, yet they could have been assisted with social welfare. This contributes to reduced productivity levels in the country, especially if it’s the young people, who are dying. Through social welfare there are diseases and conditions that may be discovered and that assist the whole society as the country looks for drugs to treat the patients. The doctors are also able to run different kind of tests on the patients without restrictions. As a result, it  benefits the society. People with pre-existing conditions are helped.

Finally, provision of use taxes by the government ensures that there is an adequate provision of welfare and childcare. Children are the future of the country and investing in them leads to a greater future. A country that engages in social welfare prevents or reduces criminal tendencies. Children are being given food, which means they will not be desperate to steal and commit other crimes in order to have food to make it through the day. Most of the people in jail today started criminal activities when they were young, indicating they are repeat offenders (Dixon & Scheurell, 2002). It is important that the families with children are given extra welfare assistance, so that the children have a comfortable atmosphere to concentrate on academics and extra-curricular activities like sports.

The childhood development and growth of a child is highly impaired when they grow up in a harsh environment with inadequate food and healthcare. The personality and behavioral traits of an individual are mostly shaped at birth. Dixon & Scheurell (2002) further add that Welfare towards children, especially healthcare, also decreases the infant mortality rates. More children have higher immunity against diseases. Public welfare towards children also aids towards social development. Through involvement of children, the country is made aware of a dysfunction or social need that is contributing to social disorder (Wickenden, 2010). The society then works to rectify the problem and this contributes to development. For example, with a rise in child truancy, the society has to involve itself more in shaping the teenagers` attitudes. As the nation develops, a wealth surplus is created and it is used to distribute wealth to the poor families. Furthermore, the elderly and women are freed to contribute to social change. These are people who determine whether social reform can occur or not. When the burden of taking care of relatives and wider family is transferred to the state they are free to participate more in social reforms.

Provision of welfare to the public is an avenue through which the government can ensure that the citizens can access basic requirements, like health, education and food.  It is therefore imperative that these efforts should be supported by every citizen, since they go a long way in helping to alleviate poverty and inequalities in society.

In most occasions, political economical situations have been used towards the explanation or the analysis of impacts of the welfare state on immigration, the aging population and globalization. Most states financial allocations are based on the political will.

Financial constraints are a significant challenge to achieve well being that is associated with finances. It is arguably evident that sustainable development is measured in economic terms. Economic variables, such as Gross Domestic Product, Income per Capita and poverty levels serve as measures of wellness at the national level. Any financial constraint has an effect on economic variables, and it is posed as a challenge to the nation and an individual from attaining some levels of economic and financial wellness. Generally, economic variables have an impact on other issues, related to the achievement of well being in the social and material domains. The financial meltdown, witnessed during the onset of the 21st century, is bound to have an effect on social services such as education, health, food, shelter and clothing, which are important aspects in the attainment of well being. The economic state, experienced during the 21st century, led to the acceleration of the onset of the social vice such as increased crimes deviant behaviors and lack of social services that do have an impact on the achievement of the well being. It is also evident that the economic challenges in the 21st century have affected the delivery of the vital services like the health care insurance to the vulnerable population. Therefore, the extreme economic conditions serve as a constraint towards the realization of most domains of well being both at the national and individual levels. It is consented that relative income is one of the significant drivers of achieving well being, since it influences a person’s and social relationships, such as factors related to employment, physical well being and most importantly, emotional well being. An important aspect of well being is economic growth. Research studies indicate that high economic growth, characterized by high incomes and Gross Domestic Product per capita, is one of the factors that influences individual satisfaction. This implies that the limited economic growth is a constraint towards the achievement of individual satisfaction. Based on this argument, the economic constraints, experienced during the 21st century, are of the significant challenges towards the stability of the welfare system performance. In addition to this, another greatest challenge to the welfare system during the 21st century is the political turmoil of the 21st century. Political aspects, such as good governance, are key determinants of welfare system at the national and individual levels. There is a relationship between the poor governance and lack of welfare in a society, because poor governance results to poor decisions that may affect the political well being of individuals in a society. A significant challenge to welfare is the political warfare evident between the countries, resulting to mass killings, economic problems and a general disruption of normal life. Political issues also influence the internal state of affairs within a country; as a result, it has an impact on social affiliations, and government involvement in the delivery of basic services to its citizens, which, in turn, affects the quality of life and well-being of its citizens. Therefore, it can be inferred that the political turmoil of the 21st century is one of the greatest challenges to achieving a healthy welfare system.

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Among other reasons, some of the major reasons that have led to the downfall of the welfare system are illegal immigration to the United States of America. The United States is one of the most multiracial societies in the world today. The population in the USA is composed of all races with origins spanning from the Far East, Europe and the Americas. This multi-ethnicity has been attributed to immigration that has been taking place for several centuries. Most institutional teachings on American ethnic backgrounds concentrate on the United States after the British invasion and subsequent colonization. However, history indicates that the Spanish had been on the continent way before the British.  In fact, southern parts of the United States, such as Texas and California, were occupied by other communities other than Indians and English speaking communities.  As a matter of fact, some of these communities were Spanish speaking with distinct culture, heritage and customs (Odem & Lacy, 2009). Today Latinos are a part of the American society and contribute to the national goals and aspirations.

The immigration has resulted to numerous increases in the populations.The motivation behind such illegal immigration is mainly due to poor economic conditions in their home countries. Mexico, just like any other Latin countries, has its economy remaining a dire state with high inflations, high unemployment levels, poor security situation and extremely high levels of corruption. Therefore, these immigrants relocate to the US and mainly reside in metropolitan areas. For instance, Long Beach Santa Ana in Los Angeles is known as the metropolitan region with the largest number of its population being Mexican. About 16% of all Mexican immigrating to the US end up at Long Beach (Odem & Lacy, 2009). Other cities that host Mexican immigrants include Chicago, Dallas, Houston, Phoenix and San Diego.

Mexicans immigrating to the United States are not proficient in English. For this reason, they resort to any blue collar jobs that they can find. Mexicans are found in many construction sites, shipping yards, warehouses and other handy jobs. However, when these jobs are unavailable, Mexican immigrants join illegal gangs so as to earn some living. These gangs are violent and lead to the death of many immigrants.

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The wealth in the United States of America is unevenly distributed. Some states consist of the largest cities and therefore they become a critical economic center for the nation. The slums in Columbia, like other slums in the developing world, arose due to the rapid increase in the population, yet there were no adequate housing facilities to cater for the incremental population. There has been high rural to urban immigration due to poverty and violence in the city. There has also been occupation and development of the marginal areas of the country by the immigrants. As the urbanization is increasing in the city, there has been a deterioration of the physical and social structures. The inner city slums have also accommodated a lot of people who came from lower socio-economic classes (U-N Habitat, 205).

There are, therefore, several factors that have led to the development of the inner city slums. There have been subdivisions in the marginal lands. The subdivisions are due to the lack of sufficient physical and social structures. The buildings are later improved by the government or the self-help organizations. There have also been squatter settlements in the region with even more dire social and physical limitations. There were also relocations of the industrial and military functions away from the traditional urban centers to better locations. These urban areas, therefore, deteriorated due to the urban abandonment. These areas face a lot of dire social conditions such as poverty, high rates of drug abuse and delinquency.

The houses are dilapidated rental units and there is a high level of overcrowding. The inner slum houses are usually rented, but the squatter houses in the marginal areas are owner-occupied.  There are higher levels of violence and crime in the inner city slums than other city areas as people struggle to cater for their material needs.

With the increase in population and urbanization, the slums will continue to increase in the future. In 1994, 19.4% of the population was living below the poverty line but by

2000, the population increased to 23% ((U-N Habitat, 205).

The people in the slums do not participate in enjoying the economic progress of the country. They live in urban isolation. It is hard for them to get physical and social amenities. There are also high levels of poverty and unemployment. The positive thing that occurs in the slums is that people look for areas of common interests. Through social activities there a platform arises, through which changes can be auctioned. The social structures get stronger and lead to empowerment of people. They gradually get the will and desire to act and react. There is a lot of social class stratification with the non-slum dwellers, viewing the people who live in the slums as undesirable. They describe these people, using such terms such as tamps, commoners and street boys. The government, however, in the last few years has been trying to address the problem of the slum areas.

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There were administrative changes in the social policies that promoted efficiency and reduced corruption in the government. The change enabled the policies to be implemented in the critical sectors, such as social housing, transportation and education. There were therefore political transformations and reforms that uplifted the living standards.

The government faces a challenge in addressing the housing resources for more than 500,000 units and spreading the increase of the informal settlements (U-N Habitat, 205). The challenge, however, can be overcome by real political involvement and knowledge of the social problems that these people face. There will be valuable lessons learnt by the leadership on handling the poverty in the country.

According to the US government information sources, the health care costs have increased in the recent past thus challenging the effectiveness of the welfare system in regard to the increasing population. The health care costs in the United States have recently doubled, which is higher than even those of the developing countries. Increasing health care costs are becoming a heavy burden for the government to effectively manage the situation; hence there is a need for urgent measures. To reduce the rapid increases in the health care costs, organizations need to reform by reducing the total medical care costs. Though this is seen as an immediate measure of reducing health care costs, it will actually drug down the innovation associated with health care industry. This is due to the fact that in the health industry treatment innovations are better for treatment rather than for prevention (Dapice, 2009). The swallowing of investments by the United States towards developing countries will lead to a lower budget deficit and low capital flows directed to the United States funding debt hence weakening health care industry.

With a fact that insurance costs are raising in the United States, it is actually hard for the people to buy insurance, which makes it hard for individuals to afford the premiums, enabling only those who are rich to pay the premiums. Actually one of the incidences, which happened in relation to this, was an incident where a given insurance gave its clients the mandate to use any doctor to get any procedure without outside review (Dapice, pp.30-78, 2009). This actually led to a situation where the clients were forced to pay more for services which were not beneficial to them. As a result of this, many companies in the United States are close to death spiral with the increasing health care costs. Effective management of health care costs by the US government has become a problem to the nation, which actually impacted the nation’s economic budget and corporate competitiveness. Though many individuals currently are aware of the health insurance costs, most of the rich countries that are comparable to the United States spend less on health care costs, where it is approximated that they cost 3000-4000 dollars per individual. The Americans actually spend approximately 7400 dollars per individual. This has greatly affected the life expectancy in the United States, which is approximately 77.4 years, compared to Australia, Canada, UK, Sweden and Netherlands where the life expectancy is approximately 78-81years. According to statistics, the health care in the United States in 2007 rose to almost 16% of the overall US income, compared to 1990 where the costs were 12%.This actually impacted the per capita spending from 2700 dollars to almost 7400 dollars in the entire period. This has been articulated by the mere fact that people pay full costs for the health care directly. Secondly, the cause of the increase of the health care costs is the mere fact that the insurance companies currently don’t care about effective costs management as well as the government but they only focus on the costly new treatments, avoiding the use of cheaper preventative strategies (Dapice, 2009).

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Since the health care costs are rising quickly, this will greatly impact the budget of the United States, given the fact that most private companies are going bankrupt. According to General Motors, the health care costs almost added up to around 1400 dollars per vehicle, which is more than in foreign transplant factories. Though the companies are currently dumping and minimizing costs of health insurance, not all the workers have this insurance; less than 60% actually own the insurance scheme. The other impeding disaster, currently facing this industry, is the admirable insurance initiatives, developed by the Obama administration, which is concerned with health care costs (Dapice, 2009). The growth of health care industry is actually approximated to be close to 3%, instead of the prior 6%, and this will therefore lead to lower spending. The move initiated by President Obama to expand the coverage of substantial savings would actually lead to lower federal spending, deficits and borrowing. The costs savings will actually lower the pressures on the global markets, increasing domestic savings. Even though these slowdowns are implemented, health care costs will still be high within the next ten years. Moreover, the slowdowns will actually impact greatly on the real health care spending, which will actual put the level of per capita income in real danger. Spending restriction  in health care industry will actually dampen the innovation hence causing a great decline in the total revenues and profits. Therefore, it is very important for the United States to find a way of reducing these costs as this will actually reduce the tax payer’s burden. Additional, the United States government will actually have less friction, since it will lead to an increase in global savings. Failure for the US government to put in place successful control strategies will weaken the economy, making the government and the insurance companies suffer greatly (Dapice, 2009).

In regard to globalization, the global financial crisis is one of the crises, which caused devastating effects to various economies as well as the world, thus affecting the welfare system in countries like the United States of America. From the case study it is quite evident that the occurred global financial crisis can be described as both unplanned and planned. The financial crisis, occurred in 2007, came as a surprise to most countries as well as economies, affecting economic activities of many countries as well as organizations. Since the global financial crisis came as a surprise to many people and organizations thus it was not anticipated by many organizations; and they did not have in place a strategic plan to address the changes and their effects (Taylor, 2009). Hence what began initially as mere difficulties in the United States subprime mortgage market eventually escalated and rapidly spilled over to various financial markets and then to the real economy in different countries around the world, including Australia (Greenlaw et al., 2008).

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Due to the lack of planned strategic plans of various organizations and economies to address global financial crisis and its associated changes, the crisis later on spilled tremendously, causing enormous effects to the world. First and foremost, the crisis led to the collapse of the subprime mortgage market in 2008, the situation, which caused many mortgages to be taken out at low interest rates by customers, who could not afford to pay them when fixed rates reverted to variable market rates. The crisis led to the immediate stock market crisis in the United States, losing 34% of its value, causing the collapse of Lehman Brothers and the government bailout of non-bank mortgage lenders Freddie Mac and Fannie Mae as well as Insurance group American International Group AIG (Adrian & Shin, 2009). In addition, it caused drop in the house prices in the United States and elsewhere in the world. The financial assets, related to mortgages, lost value and banks restricted issue of credits, making it difficult for many individuals to access credits, which became apparent in Australia after the onset of the crisis.

On the other hand, the global financial crisis can be described as planned change in relation to United States strategic plan action. It is quite evident from the case that prior to the crisis subprime mortgages were securitized, pooled into investment vehicles and sold to investors, including British and Australian banks and even local councils in cities such as Perth (Herring, Wachter, 2003).  Since these investment pools were perceived by these organizations as constituting much of the so-called toxic assets at the heart of the crisis, it was necessary for these organizations to sell them in order to avoid losing a great value of the financial assets in the event of the crisis. With the planned strategy, the economy of United States was not adversely affected as other economies, which had no planned strategies to address the global financial crisis before its beginning (Lewin, 2008).

The harmonization of the taxes in some states, like Ontario, did affect the welfare system due to the reduced government income to finance its parastatals or agencies. The Government of Ontario did announce in 2009 that it would harmonize the provincial sales tax with the federal taxes into a single harmonized tax, called the Harmonized Sales Tax (HST).  This new kind of taxation seeks to eliminate the cascading kind of taxes, abolished by other economies, and to replace it with the value added tax.  This then implies that the harmonized taxes for Ontario will be 13% with the provincial portion being 8% (Balby, et al, 24). This new kind of tax system was effective as on 1st July 2010. The Harmonized Sales Tax was first introduced in Canada in 1996, when three Atlantic Provinces of Nova Scotia, New Brunswick and Newfoundland together with the federal government introduced a harmonized tax system.  It was left to the federal government through the Canada Revenue Authority to collect the taxes and remit the appropriate amounts to the participating provincial provinces. The introduction of the new system had an immediate impact on the eastern provinces. Consumer prices soon decreased due to the competitiveness introduced by a harmonized tax system.  Consumers enjoyed somewhat better value for money as small business took advantage of simple taxation system and a few tax exemptions (Deloitte, 1).

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The Harmonized tax system was introduced in Ontario and provoked mixed reactions. While a majority of the Canadians in the affected regions were initially opposed to the HST, it provided a means for the poor families to receive tax credits of up to $260 per adult or child.  HST will affect businesses but in a good away.  Evidence indicates that the Harmonized Sales Tax has significantly raised business investment in Ontario.

Due to economic downturns, some welfare systems may have decided to reduce their budget spending by moving the organization to a more team based structure, turning beneficiaries into the middle level receptors. Given the reduced income and status, many beneficiaries will resist the change even if it’s in the best interest of the organization. In some cases organizations may be forced to close down or merge with other organizations, hence in most cases these organizations usually close down as a result of the lack of finances to support the society (Ford et al 2008).

From the case study, various governments and organizations resorted to particular actions in order to survive the crisis. According to the case study, the United States government took the unprecedented step of injecting a stimulus package of about US $ 700 billion into the economy to keep US financial institutions active. This US $ 700 billion was in fact money that United States did not have, as it was already massively in debt. In addition, the United States government took over many default mortgages in return for partial re-regulation of the finance industry and it also injected a rescue package of many billions to sustain its inefficient car industry. In August 2007, central banks and the interbank markets were forced to inject massive liquidity in the market due to the considerable financial pressures.  Various Federal governments, including Australia, were forced to introduce a wide range of measures to try and improve the money markets functioning (Reinhart & Rogoff, 2008).

During the fall of 2007, the prices of subprime securitization dropped drastically, forcing many financial institutions to come under strain. In order to control the situation, the United States government in March 2008 bailed out Bear Stearns by means of a merger with J.P Morgan. The collapse of Lehman Brothers in September 2008 caused a rapid effect on the US economy hence sending a wave of fear around the world financial markets. This caused many banks to virtually stop lending to each other. In addition, the risk premium on interbank borrowings increased sharply to almost 5% from zero, while the risk premium on corporate bonds rose to over 6% (Allen & Carletti, 2006). The Rudd government was quick to act in response to the crisis. Within months it issued a guarantee of bank deposits up to a million dollars and announced a $ 10.4 billion injection of money from a budget surplus into the Australian economy. Various stimulus payments were given to the public to stimulate spending (Reinhart & Rogoff, 2009). The Rudd government also put $ 22 million into ABC Learning childcare centers after the company had been placed in receivership. The actions undertaken therefore can be described as transitional change, since most of them were aimed at controlling the situation as well as ensuring the survival of various organizations and economies during the crisis (Kotter, 2003).

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The Social security and individual retirements also affected the welfare system in most of the states that were using the system. The viability of the economy of national old-age social security systems has been increasingly deteriorating in the recent past. Despite the recent 2000 population census, carried out in the United States of America, does reveal some of the encouraging signs indicating that the process of aging can be checked with the aid of the noted increasing rates of fertility and immigration, initiated by young population. When certain populations of the country grow fewer, the government pension systems will automatically sink deeper into the red. Countries, like Germany and Italy, have been trying to push some of their sixty four private-sector alternative with the aim of boosting their economy. It has not been that easy. It is said that Seven-tenths of the German pensions do emanate from a state scheme with roots in Bismarck’s day. The financing is mainly dependent on the tax levy on the wages. From the statistics, it is said that Germans, aged twenty to fifty nine years, who do support the pensioners and their 2030 projections, could be more than half of the expected. In this case, most of the states just cannot be able to folk out any finances to fill up the gap. In any project usually there are challenges, and one of them is meeting effectively community demands and expectations. Selfish interests in the management have always manipulated the operations, thus affecting the entire process of service provision. To overcome this challenge it is important to involve them in the entire planning process. This may create a conflict of interest between the stakeholders and community members; hence it’s important that team members ensure that there is a mutual agreement between the two groups and that there are solutions to their problems whenever they arise. Some problems can be solved while other will prove to be difficult, such as financial problems and political issues. Team members should deal with them diligently by ensuring that they don’t affect the overall planning process (Friend et al, 2003).

Racial profiling has been also a contributing factor towards the welfare downfall. Racial profiling is the use of a person’s race to ascertain one`s participation in the criminal aact without considering available evidence. It has been a burning issue in the United States and all over the world, especially to the extent when the action breaks the fundamental human rights and civil liberties. The approach chosen by the law enforcement agencies is seen to be ineffective, as they overlook the fundamental evidence. Mainly any type of suspicion is generally based on the race, ethnicity or society’s perception related to these two categories. For instance, illegal drugs and urban crime are commonly  associated with African-Americans. In the same way, the Arabs and Muslims are associated with terrorism. Thus, the attacks in 2001 presented a great opportunity to introduce racial stereotyping against the Arabs and Muslims, especially those of the Middle East origin, in the United States,. The September 11 attacks had an enormous impact on the racial profiling in the USA and later on in the rest of the world.


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