The Accommodationist Welfare State: Government Spending, Poverty Reduction, and Extractive Markets

This lecture charts the transformation of the American welfare state from an interventionist to an accommodationist policy regime, one that no longer seeks to regulate markets but to distribute relief when they fall short. America’s laissez-faire welfare state, characterized by targeted social provision in the context of market deregulation, has become increasingly inefficient as wages stagnate and the cost of basic necessities increase. As rents rise, federal housing programs cost more each year to subsidize the same number of households. As wages for the lowest earners stagnate, wage subsidies redirect an increasing share of their benefits toward the highest-earning recipients and away from the lowest. As healthcare costs spiral upward, government health insurance enrollment has risen as employers increasingly cancel plans. These dynamics of market capture and market abandonment help explain why increased antipoverty spending has not resulted in commensurate poverty declines. Achieving meaningful poverty reductions will either require different market dynamics or different public policies.