ideological pressures on the welfare state have intensified, governments have made decisions
about the size and allocation of losses across contributors and beneficiaries of social programs. In
this sense, scholars of retrenchment have depicted the post-industrial welfare state as the Titanic
cruising into an iceberg: facing imminent collision between rising demands and shrinking
resources, governments must make excruciating decisions about who gets lifeboats and who must
sink-or-swim.
Like most of the study of government activity, however, the study of welfare state reform
has almost completely ignored the matter of timing. In fact, the timing of cost-imposition in
response to crisis can often be critical, just as it made all the difference when the Titanic’s captain
chose to swerve. As the IMF has written about the demographic threat to old-age security
arrangements, acting sooner may be easier than acting later:
For the average industrial country, a delay of ten years in addressing pension plan
imbalances will permanently increase the contribution rate that will eventually be
needed by 0.7 percent of GDP; a 30-year delay would increase the gap to almost
5 percent of GDP. The earlier an adjustment is made, the smaller the adjustment
needed.
In navigating oncoming social and economic obstacles, governments that swerve early – that
invest in adjustment – may greatly ease the painful choices that have to be made later. At the
same time, the decision to impose costs now for future gain carries its own grave risks: such
plans implicitly rely on the capacity of governments or individuals to accumulate resources and
dedicate them over extended periods of time to a specific long-term purpose.
Thus, politicians seeking to control social spending have faced not only choices about
who should pay the costs of adjustment and how large they should be, but also stark intertemporal
dilemmas about when those costs should be imposed. As I seek to demonstrate, the relentlessly
distributive focus of the retrenchment literature occludes substantial variation in governments’
choices about timing – variation that does not line up neatly with retrenchment outcomes. Those
3
International Monetary Fund, "Fiscal Challenges Facing Industrial Countries," in World Economic Outlook,
(Washington, D.C.: IMF, 1996). Emphasis mine.
2
Convention