As 2021 ends, here are some reflections – for the Academy, for social insurance, and for our nation — on the pivotal and potentially transformative times we are experiencing.
The past year has been another extraordinarily distressing one in many ways. The exhausting COVID-19 pandemic continues to wreak havoc on the lives of millions worldwide with no end of its variants in sight. The economy has not fully recovered from the recession, although there are promising signs for some subgroups of the population. America’s grand experiment in governance seems to be at an intensely polarized crossroads. Finally, the financial futures of nonprofit organizations like the Academy remain uncertain.
A transformative time for the Academy
Unlike thousands of non-profits that were forced to close due to the pandemic, the Academy has survived. Our imperative is to build on our momentum, grow, and have more demonstrable impact.
Why this matters: Now more than ever, the Academy’s ability as a trustworthy convenor of expertise is essential to the development of sound public policy. Never before in the Academy’s over 35-year history have we had Study Panels, Task Forces, and other platforms focused on every social insurance pillar:
Social Security (via our Study Panel on Economic Security, our Older Workers’ Retirement Security Task Force, and our COVID-19 Task Force);
Medicare (via our COVID-19 Task Force and December 15th webinar);
Unemployment Insurance (via our Unemployment Insurance Task Force and our COVID-19 Task Force);
Workers’ Compensation (via our Workers’ Compensation Study Panel and our COVID-19 Task Force); and
Universal FamilyCare (via our series of webinars throughout 2021).
Social insurance evolves
The modern welfare state has its origins in the late 19th century in Europe, beginning with “workingmen’s insurance,” which included forms of industrial accident compensation, health insurance, and old-age pensions.
In the U.S., the first form of social insurance was state-based Workers’ Compensation.
The American blueprint was initially devised by Isaac M. Rubinow, whose landmark study, Social Insurance, was published in 1913.
President Roosevelt’s Secretary of Labor, led the drafting of the 1935 Social Security Act. It offered a capitalist alternative to full-fledged socialism.
Historically, social insurance programs like Social Security and Medicare have filled major gaps that the private sector has proven unable to fill.
Our nation has developed a delicate balance among the roles of federal and state governments, businesses as employers, and individuals in providing social protection.
The partisan atmosphere we are facing today has historical roots. Throughout our modern history, political parties have differed on how to achieve the right balance.
The political lexicon is rife with charged labels deployed by ideological opponents of various approaches, like “creeping socialism,” “unfair redistribution,” and “greedy profiteering.” Demeaning and cynical references to public service and government officials are also widespread.
Many times in the past, however, we have come together as a nation to address pressing problems that threatened to disrupt the social and economic stability that a well-functioning representative form of government and a sound economy requires.
The ecosystem of social insurance and related programs is a major factor in increased government spending today.
Our nation has developed a hybrid mix of governmental and market-based policies directed at providing some level of economic and health security to its population.
Unlike most other nations, the U.S. places greater reliance on private sector approaches that feature more “individual self-reliance” offered through a consumer-driven marketplace, which presumes a level of competition and equal access to goods and services.
The American approach to social protection consists of varied, usually uncoordinated and sometimes conflicting, policies with disparate results, especially for communities of color and others.
Inequality remains a persistent source of potential social instability.
This framework is a stark differentiator of the U.S. when it comes to health security, but also economic (particularly retirement) security.
Our nation’s direction
The United States remains seriously divided over a host of critical issues. One of the most significant is over the appropriate role of government in our lives and in the nation’s economy.
A recent issue of The Economist (“The triumph of big government,” November 20, 2021) explored this issue:
Because of the pandemic, governments are spending increasing percentages of their Gross Domestic Products (GDP).
Their debt-to-GDP ratios are increasing.
Many countries have ageing populations that will demand vastly more spending on health care and pensions. It labelled this trend as part of the long-term threat of a big state.
The economic impact of more government spending is that prices of the services welfare states provide, such as health care and education, grow faster than the economy because of their high labour intensity and low rates of productivity increase. The current spike in inflation supports this perspective.
The difference between government and bad will be measured…in societies that are fairer and a lot more prosperous. The nature, not the size, of the state’s interventions will be what matters most.
Academy Members Samuel Hammond, Director of Poverty and Welfare Policy at the Niskanen Center, and a Member of the Academy’s Economic Security Study Panel, and Steven Teles, a Niskanen Center Senior Fellow, co-authored a New York Times guest essay, “Want More Affordable Housing and Health Care? Here’s a Fix.” They described “Cost Disease Socialism” as “addressing the increasing costs of supply-constrained goods and services by spreading the price among American taxpayers while leaving the cause of the underlying costs unaddressed.” They conclude, however: “A sufficiently generous and user-friendly welfare state is a key complement to any modern, dynamic economy.”
One final thing
The difficulty that the current Administration and Congress have had in passing both forms of infrastructure legislation is evidence of a breakdown in the degree of bipartisanship needed to address the nation’s most pressing problems.
While some progress has been made lately, the slow pace and rancorous quality of debate have caused many to question whether our current form of representative government is up to the task. Indeed, some like David Brooks writing in The New York Times on November 19, 2021, believe that we already are divided: “two nations, one highly educated and affluent and the other left behind…(with) cultural hostility, alienation, bitterness, and resentment.” Brooks characterizes the U.S. as a country that is “economically, socially, and morally coming apart.”
In the book These Truths, Jill Lepore posed a fundamental governance question:
“Can a political society really be governed by reflection and election, by reason and truth, rather than by accident and violence, by prejudice and deceit?”
She also observed: “If the Depression and alike the New Deal, created a new compassion for the poor, it also produced a generation of politicians committed to the idea that government can relieve suffering and regulate the economy.”
With over 1,200 of the nation’s leading experts on social insurance, the Academy’s resilience positions us to play a crucial part in national debates. Our nonpartisan and independent nature enables us to set a more civilized tone to policy discussions and formulations based on evidence.
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