This is the second edition of a text whose title once defined its focus as the ‘European Union’. That change has enabled the authors to continue to include the United Kingdom, at least for now! From time to time, data from the USA also appears to make a contrast or show a similarity. The main focus is on ‘social protection’ – pensions, health and long term care, sickness insurance, unemployment and family support. It does not include education or housing as is more common in the British usage of the term ‘welfare state’. Its approach is largely economic. The book begins by discussing a range of economic dilemmas that are common to all these services before treating each in turn.

A particular contribution the text makes is to take seriously Arthur Okun’s (Reference Okun1975) analogy of the welfare state as a ‘leaky bucket’ – the loss of economic efficiency that occurs when we tax individuals and firms and provide services outside a consumer driven market. How big is this effect, how far should we take it seriously and how does it differ according to the different ways we deliver social policy in Europe? How far has this effect increased or been mitigated over time?

Both authors have done detailed work on this topic and their summary European findings are interesting and worth reading. How far have different countries gone in achieving the goals of reducing poverty, inequality, joblessness or gaps in life expectancy for example? There has been some improvement and some convergence between countries over time and the UK is one of those that has ‘improved’. There is some guidance if a student wishes to follow this up. But I suppose I would have liked more discussion of the comparable leaks that are evident in private insurance buckets – high private health and pension transaction costs and their market failures. These are discussed to some extent in a separate later chapter but it might have been better to discuss them together. How large are they in comparison? In Continental Europe such ‘private pension buckets’ are smaller but growing. The same issue arises in the structure of some continental health systems. Both have their advantages and trade-offs.

Related is the very limited treatment given to the investment role played by social policy. One of the reasons we have failed to see large negative effects of welfare spending on countries’ GDP growth historically is that a lot of that social expenditure has been growth enhancing. Not covering education and training as part of their welfare state definition perhaps makes this less obvious but building more cohesive, less confrontational, healthy societies with dual earner families can pay off economically. That we could have all done this better and may be paying the price is a separate point.

There is a good chapter on the negative and positive effects of globalisation on social and economic outcomes. The authors contrast an Anglo Saxon pattern of generating more jobs at low or stagnant pay with higher wage growth and higher unemployment in Continental Europe. Is this the unpleasant choice? Is there an inevitable race to the bottom in taxing capital, given its mobility? What about labour mobility and its effects? The authors argue that technical change has been more important in driving wage disparities than globalisation but fear of fiscal competition has made financing welfare states more difficult. It is possible to disagree with their conclusions but these are exactly the issues students should be discussing.

A key argument of this book is that despite their achievements welfare states have been insufficiently adaptable, particularly in meeting the challenges of rapid economic change, hence the rise in populism – ‘the traditional recipes of our welfare states are not working’ (p 25). The authors are less helpful in outlining what recipes might work. They argue that entitlements to generous pensions and services to well-off people are difficult to take away and redirect. Old welfare states are therefore creaking at their joints and slow to adapt – perhaps the less I say about that analogy the better – but we have been remarkably bad at compensating societies’ losers who have suffered from economic and policy change and that was always meant to be economists’ notion of an efficient solution.

The chapters on specific policy areas at the end of the book pull together useful comparative statistics though the chapter on family policy is largely about child benefits and not the wider topic of the laws relating the family, child care, who pays what and for what standards. Those wanting this will need to look elsewhere.

I miss more discussion of the different political economies of the member states – the national local balance of politics and economics and roles of the employer and trade union ‘partners’ in the more arms-length relationship between providers and the funding agencies that we see in many Continental European countries. Indeed, the whole chapter on funding sources and their varied economic consequences is a bit thin.

This text is not as theoretically deep or extensive as Barr (Reference Barr2012), for example, but it has more material with a Continental European focus.