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After 25 years of expansion and liberalisation in the post-war period, social security policies in industrial countries have been encountering stresses and strains in the 1970s and 1980s in an environment of slower economic growth, concern over inflation and high unemployment. This has led to intensified controversy between conservatives, who blame economic instability on the generosity of the welfare state and liberals who defend the role of social security programmes in contributing to economic stability and preventing people from falling into poverty. The discussion focuses on questions such as the relative merits of earnings-related, income-tested and universal benefits; who bears the financial burden; and the impact of social security benefits on incentives to work. Among the controversial issues receiving considerable attention are the arguments over the persistence of high unemployment in Western Europe, the attacks on 'entitlements' that benefit the middle class and the growing problem of disadvantaged youth, especially in the ghetto areas of large cities in some of the Western European countries and in the United States.