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September 29, 2006

Universal Insurance

Bad news for the middle class in this new CAP report. Wages are flat, average job growth is one-fifth that of previous business cycles, the top five expenditures of most families (health care, housing, food, cars, and household operations) are racing upward, fewer than a third of families have savings that could weather three months of income loss (and that number is going down), and so job loss and health emergencies are more dangerous than ever. They don't call me Happy McSmiles for nothing.

All of which reminds me of an idea I've been meaning to plug. In his new book The Great Risk Shift, Jacob Hacker argues for a new scheme of economic protection he calls Universal Insurance. The plan is to have an all-purpose form of insurance that covers catastrophic expenses from health emergencies, job losses, or whatever. How much is covered depends on the extent of the loss -- did you take a pay cut or lose your job? -- and how high your income is. So a massive income drop for a low-income person will result in relatively generous benefits, while a moderate drop for a wealthy individual will attract less generous compensation.

This all-purpose economic security would protect families from the eventualities and unexpected events that they are, for now, clearly unprepared for, and in doing, would ease the need for bankruptcies, credit debt, and all manner of nasty compensation practices that are bad for both families and our economy. Seems to me like something savvy politicians may want to take a look at.

At le Tapped too.

September 29, 2006 | Permalink

Comments

Seems to me like something savvy politicians may want to take a look at.

If the 'savvy' bit doesn't entail excluding colored people, and still managing to be constitutional it will never fly.

The only curb-to-curb program in this country, Social Security, was adopted a.) in the middle of a depression, and b.) only after excluding domestics and farm workers -- in other words, blacks.

Too many people in this country would volunteer to live with their family in a cardboard box under a bridge and eat sparrows toasted on an old curtain rod if you could promise them that the black or Mexican or gay guy in the next box over doesn't even get the sparrow.

And they vote.

Posted by: Davis X. Machina | Sep 29, 2006 2:28:10 PM

Are you really serious?

What ever happened to "Ask not what your country can do for you. Ask what you can do for your country"

What this guy proposes sounds more like "To each, according to his needs."

Posted by: Fred Jones | Sep 29, 2006 2:42:00 PM

If this is so desirable for people to have, and is not merely a wealth redistribution scheme, then why have private insurance companies not offered this?

Posted by: Dave Justus | Sep 29, 2006 3:34:29 PM

Fred, you've never really grokked that we already live in a mixed economy?

We already use the economic power of the state to offset cyclical economic shifts, to control the boom-and-bust of capitalism. We already use that power to reduce risk and misery amongst our underclass. It is not a great step to conceptualize 'risk' as one of the major aspects of life in our society and economy to guard against.

Posted by: NBarnes | Sep 29, 2006 3:57:29 PM

"If this is so desirable for people to have, and is not merely a wealth redistribution scheme, then why have private insurance companies not offered this?"

Because the private version of this would be carefully tuned to make sure nobody with a reasonable chance of hardship was able to afford it.

It'd be nice to have something like this, but I think it would be logistically difficult and politically impossible. The biggest logistical difficulty for me is with the self-employed - that's a pretty damn big risk you're taking to start your own business, but it's a risk you volunteered for. I think the businessman should retain health insurance and other protections our economy denies him, but the idea of insuring him against the failure of his business seems a bit of a reach.

Posted by: Kylroy | Sep 29, 2006 3:57:30 PM

Kylroy: part of the point of single-payer healthcare and pre-Bushism bankrupcy law is to allow individuals to go off and attempt to start their own small businesses without it being that if they failed, as most will, their lives are ruined. We value entrepenuers, we vallue small businesses, and so we spend money out of the public pocket, including forcing creditors to eat some of the losses for the failed businessman, in order to encourage this kind of small business growth.

In other words, it's a feature, not a bug. We're rich enough to absorb some poorly-considered small business failures, especially when successful small business ventures are a major source of wealth for the country as a whole.

Posted by: NBarnes | Sep 29, 2006 4:00:52 PM

"Insurance" is a silly way to address the problem - what about a basic income guarantee (http://www.usbig.net/). Clearly wealth redistribution - but what's wrong with that?

Posted by: philip | Sep 29, 2006 5:45:59 PM

For every givaway, there those that receive the benefits and those who must provide them.

The first rule of economics: T.A.N.S.T.A.A.F.L.
(There ain't no such thing as a free lunch)

What this author proposes is more wealth redistribution. It smacks of socialism or worse.

Posted by: Fred Jones | Sep 29, 2006 8:21:47 PM

During the great depression, men were ashamed of having to accept federal money. They cowered away from it, in fact many men chose to go hungry rather than accept teh shame of taking federal money.

My what a difference a century makes.

Posted by: joe blow | Sep 29, 2006 9:26:57 PM

Fred: Are you denying the existance of positive-sum games? TINSTAAFL is the invention of a writer with more opinions than facts, and it's not actually true, not even a little. We do not live in a zero-sum society, thank god.

And it's not the first rule of economics. If anything, the first rule of economics is that different people value different goods differently, leading to the existance of positive-sum games. Or, in other words, the first rule of economics is a direct refutation of TINSTAAFL.

Posted by: NBarnes | Sep 30, 2006 1:04:23 AM

And it's not the first rule of economics. If anything, the first rule of economics is that different people value different goods differently,

Interestingly, it is usually the conservative explaining the the liberal that economics is not a zero-sum game (because some perceive the one with the economic clout as exploting the one with less, rather than resulting in a net positive for both).

Also, according to my college economics textbook, the first rule taught in economics is the basics of supply and demand. However, the principle that different people value different good differently is an extremely powerful lesson, as well.

It is ok to love Heinlein as a teenager. I have quotes from "Time Enough for Love" on my yearbook page. However, once you turn 18 or so, you are expected to grow out of it and get over it. Much like Ayn Rand.

Posted by: Constantine | Sep 30, 2006 7:38:28 AM

I don't know about the rest of your post, but when you listed the top five expenditures without including taxes it made me not want to take the post seriously. It makes me suspicious that you are cherry-picking expenditures.

Posted by: Adam Herman | Oct 2, 2006 3:33:33 PM

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