Discuss the view that the modern state has an allocation, distribution and stabilisation function, because of the instability of the markets and the social unacceptability of some market outcomes

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Discuss the view that the modern state has an allocation, distribution and stabilisation function, because of the instability of the markets and the social unacceptability of some market outcomes

Public sector is the part of the economy concerned with providing basic government services. The composition of the public sector varies by country, but in most countries the public sector includes such services as the police, military, public roads, public transit, primary education and healthcare for the poor. Public sector must provide services that benefit all of society rather than just the individual who uses the service that encourage equal opportunity.

In the United Kingdom, the Prime Minister Toni Blair, who has an determinate very public version, returned to public sector debate few months ago being very concrete with the next speech:

´The point ,very simply, is this: the user comes first ,if the service they are offered is failing they should be able to change provider, and if partnership with other sectors can improve a service the public sector should be able to do it .’

Modern welfare states developed through a gradual process beginning in the late 19th century and continuing through the 20th.

Examples of early welfare states in the modern world are the Sweden and New Zealand of the 1930.

In a central feature of the UK system is its universal welfare state with an extended scope but a limited generosity, so the size of the public sector  in UK is lower than in other EU countries.

There are several arguments in and against the Welfare State.

Arguments in favour:

  • Humanitarian, the idea that people should not suffer unnecessarily
  • Democratic, voters in most countries have favoured the gradual extension of social protection
  • Ethical, the doctrine of altruism treats charity as a moral obligation
  • Economic, social programs can achieve goals in welfare economics
  • Social, social programs promote goals regarding education, family and work

Arguments against:

     

  • Libertarian, state intervention infringes individual freedom; the individual should not rely on others to subsidize his own consumption
  • Conservative, social spending has undesirable effects on behaviour, fostering dependency and reducing incentives to work
  • Economic, social spending is costly and requires high taxes. The welfare state has undesirable economic effects and tends to create a cycle poverty
  • Individualist, social spending reduces the freedom of wealthy or successful individuals by transferring some of their wealth to others.
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The fact is that, nowadays, welfare provision tends to be more advanced in the countries with stronger and more developed nations, poorer countries generally have more limited welfare services.

Now that this term has been defined, it is necessary to focus our attention in the main functions of the modern state:

The economic functions of the modern state come from people’s needs and in general by the society. It means there is a demand for goods and services that should be provided, but we have to evaluate the composition and derivation of the demand.

Besides, what is ...

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