Government should concentrate on eradicating poverty

Contrary to expectation, there appears to be no link between the size of the welfare state and the level of well-being within it. In countries with generous social security schemes, people are not healthier or happier than in equally affluent countries where the state is less open-handed. Increases or reductions in social security expenditure are not related to a rise or fall in the level of health and happiness either. Source given here.

In my forthcoming book I argue that, when it comes to targeting societal well-being, the case for government intervention is strongest when there is a high correlation between government spending and measurable indicators of social welfare. It is mainly at lower levels of real income and wealth that the correlation between a quantifiable indicator and social welfare is strong and therefore valid as a guide to policymakers. At higher levels of income numerical targeting can be futile or even counter-productive. I suspect this is what lies behind the research that led to the conclusion quoted above. It is the poor who are also most in need of government intervention and it is the poor who would most benefit from it by any objective criteria. But too much government spending has been hijacked into the provision of subsidies to corporations, the wealthy and the middle class. From at least one angle then, western countries have the worst of both worlds: big and remote government, large (absolute) tax revenues, co-existing with pockets of real poverty.