Who the welfare state protects shapes a country’s financial openness
Summary
The article argues that advanced economies did not fully abandon capital controls after Bretton Woods; welfare states quietly absorbed cross-border financial risk, enabling financial openness for those with strong social protection. It analyzes how welfare spending composition (pensions, protective, productive) interacts with capital controls and presents four welfare-capital configurations, concluding that austerity can lead to financial protectionism. The piece frames welfare policy as macroprudential, shaping openness and stability in the global financial system.