From the loyal:
Safety nets, what kind (if any) is desirable.
Yes, we should have a safety net. This is a huge topic, but here are a few select points:
1. The more time a person has spent working in private philanthropy, the less likely he or she is to think that private charity can substitute for the government’s safety net.
2. It remains a puzzle why we don’t have more insurance for long-term risks to health and income, but we don’t. In the meantime we have to assume institutional failure.
3. I am a fan of David Beito’s Tocquevillean work on workingman’s societies and private club insurance in early 20th century America. But it is a tale of how insurance institutions changed over the course of a century, and not a new recipe for how market completeness was on its way until government botched it.
4. Some societies, such as in East Asia, use the family to pick up a greater share of income and health risks. I doubt if the highly mobile United States could do the same, but even so this option is costly. Most of all, the welfare state liberates the productive and the creative from their sometimes burdensome family ties. The welfare state is the Randian’s secret dream, and that is what clinches the case for a government safety net.
5. I’ll invoke an argument from authority for my libertarian readers and note that both Hayek and Friedman favored a governmental safety net.
6. A safety net (strict Asian families aside) is probably a prerequisite for a well-functioning capitalist democracy, even if its curative powers are sometimes overrated.
But on the other side of the debate, we are all going to die. Nasty outcomes await us, no matter how much is spent on a safety net. The "You can’t let that happen to a human being" posturing isn’t especially helpful. We cannot rely on a safety net to remedy every human tragedy, but if society is rich enough, let’s do some safety net.
#34 in a series of 50.