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A fourth element is the vast increase in public spending and 
taxation as a proportion of Gross National Product, 
which in most industrial countries now ranges between 
40 and 5o p.c.. This increase has no doubt been a major 
factor in the political backlash against the welfare state. 
The increased taxation takes the edge off the incentive 
for enterprise and work; to prop up the weakening 
investment ( weakening not necessarily for this reason ) 
governments have^Mais more and more tax relief and subsidies 
ijfo business. Indirect taxation and taxation of mass incomes 
have been the main sources of finance for the increased 
welfare expenditure in many countries, which tended to 
give the budget an^ inflationary bias. 
The increased marginal taxation has acted as automatic 
stabiliser; paradoxically enough -in view of the complaints 
of business based on the incentive effect of these taxes- 
the automatic stabilisation has mitigated the effects of 
recession especially those on business profits, because 
the budget has acted like a cushion in taking the brunt of 
the income loss. At the same time the protection of the 
unemployed against income loss has blunted the edge of thelT 
opposition against recession policies. The welfare state 
has thus - an irony of history - in more than one way 
facilitated a policy which involves the toleration of 
mass/unemployment. 
Of the criticism of welfare spending two points may be mentione 
The provision of various services has taken littel account 
of the need for effiency and productivity. An example 
valid in most countries, might be hospital service. This 
"industry" seems to have lacked planning and causes 
uncontrollable cost inreases. 
n.r