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Unpublished CES Studies |
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Volume IX. Committee Publications |
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What Is Social Insurance? |
WHAT IS SOCIAL INSURANCE?
United States
Government Printing Office
Washington, D.C. 1933 |
WHAT IS SOCIAL INSURANCE?
In the long run everyone suffers if any one section of the people is hard hit by misfortune. Under social-insurance systems governments are able, by spreading the cost among large numbers of the people, to help their citizens who are the victims of adversity. By small regular insurance contributions, usually shared in by the employer, the employee, and the Government, reserve funds are built up out of which a man is paid benefits as a matter of right and of social justice when his earnings are cut off through unemployment, old age, sickness, and other circumstances which are beyond his own control.
While the term "social insurance" should really apply only to compensation which is paid for out of these insurance contributions, it is also frequently used to include gratuitous old-age pensions, assistance to handicapped children, and other forms of government relief. While this aid may not have been paid for by any insurance contributions on the part of those who receive it, governments look on it as a worthwhile investment of the taxpayer's money in insuring the security of groups of the people whose suffering and need would otherwise be a sore spot in the community.
More than 30 countries have already adopted social insurance as a sound permanent national policy. They believe that by protecting the low-income groups from distress and want it keeps up the normal standard of living and helps to stabilize business and industry and by so doing encourages the prosperity and well-being of the whole Nation.
The purpose of these systems is to give the individual in the low-income groups protection against hazards and vicissitudes of life which would overwhelm him if he were left to cope with them single-handed. With the combined strength of a national insur-ance system behind him he is given a feeling of security that removes his fear of the future and makes him a more contented, settled, and efficient member of society.
SOCIAL INSURANCE BENEFITS THE WHOLE COMMUNITY
By spreading the cost of the risk over the whole community itlightens the burden for the individual. When misfortune strikes, he is entitled as a right to financial and other aid that will tide him over the emergency, and help him maintain his normal standard of living, instead of becoming a public charge.
SOCIAL INSURANCE IS NOT A NEW IDEA
The countries of Europe, even the small and so-called "backward" ones, have systems of social insurance which give their people protection against the misfortunes and vicissitudes of life over which they have no control. The most comprehensive system provides old-age pensions and annuities, unemployment insurance, workmen's compensation, health and accident insurance, maternity benefits, and widows' and orphans' allowances. Many of the systems have been in operation a quarter of a century, some even longer.
SOCIAL INSURANCE IS EVOLUTIONARY, NOT REVOLUTIONARY
Not a single country, having once adopted social insurance, has ever given it up. The systems are being constantly extended and improved to meet changing economic conditions.
SOCIAL INSURANCE IS POPULAR AMONG ALL CLASSES OF THE PEOPLE ABROAD
The Worker Likes SociaI Insurance because it gives him a permanent sense of security. He knows that if he loses his job, he will receive help in finding another, and regular weekly compensation in the meantime; if he falls sick, he will receive medical attention and financial aid; if he dies prematurely his widow and orphan children will be given a pension, and when he reaches old age he will be entitled to an annuity.
The Merchant Likes Social Insurance because he finds it helps his business. In normal times the feeling of security among his customers encourages spending, and in times of depression or misfortune the payment of insurance benefits keeps money in circulation.
The Manufacturer Likes Social Insurance because it helps stabilize business and keeps the wheels of industry turning. He finds that his workers are more settled and more efficient if they are not harrassed by anxiety about the future.
Governments Like Social Insurance because it has been found that even during periods of depression it has raised the health, morale, and standard of living of the people. It also stabilizes business, builds up home markets, and thus of itself reduces unemployment. In spite of the length of the depression abroad no country has had such a large proportion of men out of work as the United States has had.
SOCIAL INSURANCE IS NOT EXPENSIVE
The Government contributions to the systems cost the taxpayer far less than the relief which would otherwise be necessary. Drawing insurance benefits as a right is far less demoralizing to the worker than receiving a dole, and far less costly in its social consequences to the community. |
The Committee on Economic Security
1734 New York Avenue
Washington, D. C. |
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www.socialsecurity.gov