Reforming the welfare state in postsocialist societies

The communist system led to a ''premature welfare state,'' with universal entitlements out of all proportion to the country's resources and the fiscal capacity of the state. Many citizens suffer heavy losses when the proportions are restored. Great progress has been made with the postsocialist transformation in several fields, but reform of the welfare sector has lagged behind-dominant state ownership, bureaucratic centralization and a lack of competition remain. There are a number of obstacles in the path of reform. Citizens are unclear about the tax burden imposed by state welfare services. Damage can be done by populist politicians, who make irresponsible promises to raise welfare spending while concurrently cutting taxation. Economists have a duty to make a sober appraisal of the situation and present realistic alternatives. (C) 1997 Elsevier Science Ltd.