What is welfare? Definition and meaning
Welfare can mean government help for either poor or disadvantaged members of society, or the availability of resources and conditions required to keep a person physically and mentally healthy, secure and comfortable. In the United States “To be on welfare” means to be receiving financial assistance from the state because the person is either unemployed, disabled, poor, etc.
If I say “Your welfare matters a lot to me, “ it means that I want you to be both mentally and physically healthy, generally happy, and without terrible problems that you cannot overcome. The phrase suggests that if you get into difficulties, I would like to help.
What is the welfare state?
The ‘welfare state’ is a concept in which the government plays a major role in the protection and promotion of the economic and social well-being of its people. It is based on the principles of equitable distribution of wealth, public responsibility and equal opportunity.
Barack H. Obama, the 44th President of the United States, was born in Hawaii on August 4th, 1961. (Image: adapted from whitehouse.gov)
According to T.H. Marshall (1893-1981), a famous British sociologist, it is a distinctive combination of welfare, democracy and capitalism.
Dictionary.com says the following about the meanings of the word welfare:
“1. The good fortune, health, happiness, prosperity, etc., of a person, group, or organization. Well-being – to look after a child’s welfare; the physical or moral welfare of society. 2. Financial or other assistance to an individual or family from a city, state, or national government. 3. Informal: a governmental agency that provides funds and aid to people in need, especially those unable to work.”
Etymology of ‘welfare’
Etymology is the study of the origin of words and how their meanings have changed throughout history. Professionals who study the origin of words are called etymologists.
Online Etymology Dictionary says that the term first appeared in the English language in 13th-century Britain, with Wel Faran, meaning ‘condition of being or doing well’. Wel meant ‘well’, while Faran meant ‘get along’.
A similar formation can be found in the Old Norse word Velferð, which meant ‘social concern for the well-being of the unemployed, children, etc.’
The modern term meaning ‘an organized effort to provide maintenance for members of a group’ first appeared in the English language in 1904.
Welfare in America
In the United States, welfare is a government program aimed at helping vulnerable people who are unable to or find it difficult to support themselves. The programs are funded by taxpayers.
In most cases, recipients will be paid either fortnightly or once a month. The aim is to help them find work, get educated, and in some cases improve their standard of living.
How long a US citizen receives financial assistance depends on the circumstances that caused him or her to apply in the first place. If people are permanently physically or mentally disabled, help is provided on an ongoing basis to improve their standard of living.
If the individual lacks education, he or she is expected to receive training or take steps towards eventual financial independence. This person is not expected to be on welfare permanently.
According to welfareinfo.org, whether people can receive welfare benefits is determined by a number of eligibility requirements, which include:
- Whether anybody in the household is pregnant.
- Monthly household income.
- Whether any household members live outside the home.
- Whether there are infirm or disabled people living in the household.
- How much available cash there is for the household, including savings and checking accounts.
- Individual gross incomes for each member of the family.
- How much the utility bills come to for the household.
- How much total rent or mortgage payments for the household are.
- Whether there are seasonal or migrant workers in the household.
- Whether anybody in the household is pregnant.
The lapse of time between being approved for welfare payments and receiving the assistance varies. For example, those processing for child care assistance may have to wait thirty days, cash assistance recipients should expect a wait time of 45 days, while those applying for food stamps should get them within a week.
US states use a basic means test to determine whether somebody is eligible and how much he or she should receive.
Ronald Wilson Reagan (1911-2004), the 40th President of the United States, was born in Tampico, Illinois. (Image: reaganfoundation.org)
Welfare – economic surplus
Welfare can mean economic surplus, also known as Mashallian surplus, named after Alfred Marshall (1842-1924), a British economist, said to be one of the most influential of his time.
The term refers to two related quantities:
– Consumer surplus: also known as consumers’ surplus. This is the monetary gain that consumers obtain because they are able to buy a product for a price that is below the maximum price they would have been willing to pay.
– Producer surplus: also known as producers’ surplus. This is the amount of benefit for producers who sell at a market price that is greater than the minimum they would have been willing to sell their product for.
Alan Greenspan was born in New York City on March 6, 1926. He served as Chairman of the Federal Reserve of the United States – America’s central bank – from 1987 to 2006. In an article in the Brookings Institution website, Ben Bernanke, also a former Chairman of the Federal Reserve, wrote regarding Greenspan: “A mostly self-taught economist, a jazz musician, a skilled political operator and policy adviser, a socialite and lady’s man, and a connoisseur of economic arcana. (Image: brookings.edu)
Welfare economics
This is a branch of economics that uses microeconomic techniques to assess welfare – well-being – at the economy-wide (aggregate) level.
A typical methodology starts with the assumption of a social welfare function, which is then used to rank economically achievable allocations of resources in terms of their social welfare category.
Such functions may include equity, efficiency, and economic freedom. This field of economics is linked to two fundamental theories:
– Given certain assumptions, competitive markets produce efficient outcomes. This theory captures the logic of the ‘invisible hand’, often mentioned in Adam Smith’s works.
– Given further restrictions, any efficient outcome can be supported as a competitive market equilibrium.
Therefore, a sociologist could use a social welfare function to select the most equitable and efficient outcome, utilize lump sum transfers, and then competitive trade to bring it about.
Welfare definition of economics
The welfare definition of economics was Alfred Marshall’s attempt to redefine his field of study. He wanted to expand the field of economic science to include more features of humanity.
Marshall believed that economics studies all the actions that humans take in order to achieve economic welfare.
According to Marshall: “Man earns money to get material welfare.”
That is why economist across the world since Marshall have described his definition as the welfare of economics. His definition widened the scope of economic science by emphasizing the study of both wealth and humanity together, and not just the study of wealth.
In Marshall’s book – Principles of Economics – published in 1890, he defined economics in the following way:
“Political Economy or Economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of material requisites of well-being.”
This definition has the following implications:
- Economics is a study of humankind.
- Human life as a number of aspects: political, economic, religious, and social. However, economics is concerned just with the economic aspect of life.
- The ultimate goal is the promotion of welfare. However, the term ‘welfare’ is used just in the narrow material sense.
Video – Welfare state and social democracy
In this video, the Friedrich Ebert Stiftung’s Academy for Social Democracy explains the relationship between social democracy and the welfare state.