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Friday, July 29, 2016

Why Does the United States Lack a Comprehensive Social Insurance System?

William J. Arnone, National Academy of Social Insurance

Thoughtful commentary on how we got from there to here

In a recent issue of the Boston Review, Elizabeth Anderson, Professor of Philosophy and Women’s Studies at the University of Michigan, wrote a provocative analysis ("Common Property: How Social Insurance Became Confused with Socialism", 7-25-16) of the origins and evolution of social insurance worldwide and in the United States. Her article includes key points that are critical to an understanding of the positioning of social insurance in our economic and political system, and in our culture. She poses a fundamental question: Why does the U.S. lack a comprehensive, universal social insurance system?

Among her major contentions are the following:

  • Ideological opposition to social insurance has portrayed it as a “socialist or communist scheme designed to undermine private property and free markets.”
  • This ideology is based on the assumption that “poverty was either inevitable—in the case of disability or death of able-bodied workers within the family—or caused by vices such as laziness, alcoholism, gambling, and sexual licentiousness.”
  • Social insurance represented a novel way to address poverty — “one compatible with individual liberty, universal dignity, equal democratic citizenship, and distributive justice.”
  • Thomas Paine is the true godfather of social insurance in our nation. His approach’s “key features…were generosity, universality, and entitlement” and “these features ensured every adult’s personal independence, with no one forced to forgo their liberty as a condition of subsistence.”
  • For Germany’s Otto von Bismarck, who instituted the first such plans, as well as for Paine, “social insurance was erected as a defense against communist and socialist revolution, and as proof that a system of private property and markets could deliver a decent standard of living and security to all.”
  • Most importantly, social insurance was positioned more broadly than as an anti-poverty program. “(C)ontemporary social insurance schemes… also promote the security of the middle class. This accounts for their worldwide popularity.”

Anderson summarizes, furthermore, the major objections to social insurance that have been an ongoing refrain in our country. Among these are: intergenerational injustice; paternalism; moralism; the absence of means-testing; and fraud. She offers cogent counterarguments to each.

Her conclusion is one that proponents of social insurance need to emphasize:

Robust and universal social insurance is a constitutive feature of a sound economy based on private property and markets, not a threat to it.

Well said, Professor Anderson. In fact, it is right in sync with our Academy’s mission: “To advance solutions to challenges facing the nation by increasing public understanding of how social insurance contributes to economic security.”

What’s your take on the current perception (or misperception) of social insurance systems in the United States?  What role can the Academy play in elucidating those perceptions?   I look forward to your comments.


William J. Arnone is Chief Executive Officer of the National Academy of Social Insurance.
 
 
 

All Comments

This discussion is worthy of wide distribution, especially since misinformation seems too often to drive out facts. In a way, it's analogous to Gresham's Law. I'm not sure that Paine, in his day, would have been concerned about communist and socialist revolution. Certainly Bismarck was, as well as wanting to get some people to retire and make room for others to be employed. However, FDR did employ such so-called socialist means to cure capitalist ills. The premise of intergenerational transfer and responsibility, on a macro (or collective) basis, is an important foundational concept. It allows for dignity across society, especially for the less fortunate. The use of the term entitlement as a pejorative is unfortunate, revealing a (perhaps willful) misunderstanding of the premise of insurance (pooling of risk) means.
What a wonderful post summarizing and lifting up Professor Anderson's wise words! It is so important to be reminded of the historical context of these critical programs. I think the words "entitlement" and "welfare" impact public perceptions of both social insurance systems and means-tested anti-poverty programs. I value Professor Anderson's view and Mimi Abramovitz's, outlined in "Everyone Is Still on Welfare: The Role of Redistribution in Social Policy," and think strategically re-framing property and benefits using their combined logic may help to elucidate misguided perceptions.

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