ABSTRACT
This chapter first considers the criticisms of welfare states from an economics point of view. Welfare states are often criticized of harming the efficiency of the economy. However, if we consider the imperfect competition, market failures, and the efficiencies brought about by inequality, welfare states can improve efficiency by addressing those problems of the economy. This chapter then discusses what kind of a welfare state Japan should be by clarifying the tasks that it should achieve. Tasks include; promoting globalization and innovation; reforming the economic system; reconsidering the collective bargaining process; reforming public spending and taxation; and addressing aging and shrinking of the population. The welfare state that Japan should aim for could be summarized as a “flexible and resilient welfare state”.
