Courtesy of Shelby Murphy-Figueroa
Every few years, the welfare state debate resurfaces with the same familiar script: the right warns of dependency and fiscal ruin, the left counters with statistics on poverty and inequality, and nothing much is resolved. Jeffrey Sachs put it plainly in Common Wealth: these arguments are “seldom tethered to the facts.” After decades of empirical research, the dependency narrative has largely failed to hold up. But that doesn’t mean the welfare state is safe. The real threat isn’t economic overreach. It’s something harder to legislate: eroding social trust in an age of deepening diversity and identity-driven politics.
Let’s dispense with the dependency myth first, because it crowds out the more urgent conversation. The image of welfare as a “hammock”, lulling recipients into comfortable inertia, has intuitive appeal but weak empirical grounding. Studies from the 1980s and 1990s consistently found that most welfare recipients, including single mothers navigating job loss or divorce, exited programs relatively quickly and returned only temporarily when life circumstances deteriorated.
Today, the picture is even starker: Princeton professor of Sociology Matthew Desmond has documented that billions of dollars in eligible benefits go unclaimed each year, because the bureaucratic hurdles of applying are themselves a deterrent. People aren’t staying on welfare because it’s comfortable. Many aren’t even accessing what they’re owed.
At the macro level, the alleged tension between generous social provision and economic dynamism is similarly overstated. Nordic countries, Denmark, Sweden, Norway, pair some of the world’s most expansive welfare systems with high employment rates, strong innovation ecosystems, and robust GDP growth. Sachs argues that “capitalism is not a fragile reed,” and that high social protection and high economic performance are not mutually exclusive. Welfare functions less as a disincentive to work and more as insurance against the shocks, illness, layoffs, and family crises that can otherwise permanently derail economic participation. The case against welfare generosity on economic grounds is, at best, unproven.
So why does the welfare state remain politically precarious? The answer lies not in economics but in sociology and political coalition-building. Gosta Esping-Andersen’s canonical work on welfare regimes reminds us that these systems are not merely redistributive mechanisms; they are structures of social solidarity. The Nordic model succeeded, in part, because it was universalist: benefits reached across class lines, making the middle class as invested in the system as the poor. When everyone benefits, and everyone contributes, political support is broad and durable. As Esping-Andersen observed, “all benefit; all are dependent; and all will presumably feel obliged to pay.”
That solidarity, however, was historically underwritten by social homogeneity. Sachs has acknowledged that “Nordic ethnic homogeneity has been an important enabling social factor” in sustaining welfare states; not because diversity is inherently corrosive, but because shared cultural identity made it easier for citizens to perceive redistribution as a mutual endeavor rather than a zero-sum transfer. As European and American societies have grown more diverse, that perceptual foundation has come under stress.
Robert Putnam’s influential research on social capital offers the clearest account of this dynamic. His findings showed that in the short to medium term, greater ethnic and social diversity correlates with a “hunkering down” effect: people trust their neighbors less, participate less in civic life, and invest less in shared public goods. Crucially, this is not primarily about intergroup hostility. It is about the erosion of generalized social trust; the diffuse confidence that the people around you share enough values and interests to make collective action worthwhile. Welfare states depend on exactly this kind of trust.
The evidence of strain is not merely theoretical. Marika Eger’s study of Sweden, perhaps the paradigmatic strong welfare state, found that immigration was the only county-level variable consistently associated with lower support for welfare spending, including universal programs. That matters because universalism is supposed to be the armor that protects welfare states from identity-based backlash. If even Sweden’s universalist structure cannot fully insulate public support from demographic change, no system is immune. In the United States, Desmond’s research traces how racial integration prompted many white Americans to reinterpret taxation as coercive transfers to racial outgroups, which is a shift that has shaped American welfare politics ever since, producing what he characterizes as a lopsided system where substantial public investment fails to reach those who need it most equitably.
Into this already strained landscape comes what Francis Fukuyama calls the dominance of identity politics: the tendency for political life to organize around questions of recognition, dignity, and group belonging rather than shared economic interests. This shift matters for the welfare state because redistributive coalitions have historically depended on class solidarity — broad, cross-ethnic alliances of working and middle-class voters who perceived a shared stake in social insurance. Identity politics, by contrast, encourages political actors to prioritize narrow constituencies and specific grievances over the kind of encompassing collectivities that welfare politics requires. Pippa Norris and Ronald Inglehart add another layer: cultural issues are structurally less amenable to compromise than economic ones, generating the polarized “us-versus-them” dynamics that make coalition-building across differences so difficult.
This is a genuinely difficult problem, and it would be intellectually dishonest to pretend otherwise. But neither Putnam nor Fukuyama treats this trajectory as inevitable. Putnam observes that successful immigrant societies have repeatedly managed to construct new, more encompassing forms of social identity that eventually restore civic trust, the United States being a historically imperfect but instructive example. Fukuyama notes that identity “can be used to divide, but it can also be used to unify.” The challenge is political and cultural will: building institutions and rhetoric that cultivate solidarity across lines of difference, rather than simply managing its absence.
The welfare state debate in 2026 is not primarily a debate about whether generous social provision is economically sustainable. The evidence on that question is fairly settled. It is a debate about whether pluralistic democracies can generate the social trust and political coalitions that redistribution requires; whether we can, as Putnam argues, create identities capacious enough to make collective obligation feel legitimate across a diverse citizenry. Welfare states can survive diversity. They cannot survive the collapse of the shared sense of membership that makes paying into a common system feel worthwhile.
The goal, then, is not to roll back diversity or retreat from identity; it is to reimagine solidarity for the world as it actually is. That means deliberate investment in cross-cutting civic institutions, political leadership willing to frame redistribution in universalist rather than targeted terms, and the patient, unglamorous work of building trust across communities that do not yet fully recognize their common interests. The welfare state’s survival, in the end, depends less on tax rates and benefit levels than on the quality of democratic imagination we bring to the question of who counts as “us.”
Sources drawn from:
Desmond, M. (2023). Poverty, by America. Random House.
Eger, M. A. (2010). Even in Sweden: The effect of immigration on support for welfare state spending. European Sociological Review, 26(2), 203–217.
Esping-Andersen, G. (1990). The three worlds of welfare capitalism. Princeton University Press.
Fukuyama, F. (2018). Against identity politics: The new tribalism and the crisis of democracy. Foreign Affairs, 97(5), 90–114.
Norris, P., & Inglehart, R. (2019). Cultural backlash: Trump, Brexit, and authoritarian populism. Cambridge University Press.
Putnam, R. D. (2007). E pluribus unum: Diversity and community in the twenty-first century. Nordic Political Science Association, 138–164.
Sachs, J. (2008). Common wealth: Economics for a crowded planet. Penguin.
