ABSTRACT
Although Arthur Okun's own discussion of the relationship between equality and efficiency is a model of academic broad-mindedness and without a trace of the vulgarism that has later become not unusual. This chapter suggests criteria of internal efficiency in social policy. The social policy system of a welfare state consists not only of abstractions, such as 'programmes' and 'redistributions', but is also a huge physical apparatus of personnel, buildings, equipment, bank accounts, and so on. More directly in the social policy field, a series of Swedish studies have confirmed that productivity tends to be low here too. The problem of macro-economic performance is related to the welfare state because it is the growth of the welfare state that explains the growth of the public sector, at least as measured by public spending. More important for the interpretation is the distinction between cost and welfare loss and between economic and non-economic inefficiencies.
