This article by Mike Konczal combines politics, history, philosophy, sociology, and economics to explain why the idea that volunteer-based private individuals and charities could do a better job helping the poor/providing social insurance than the government is based on historical fallacies and ideological fantasies. He focuses on ubiquitous risks facing members of nearly any society,
[what] progressive economist and actuary I.M. Rubinow described in 1934 as the Four Horsemen of the Apocalypse: “accident, illness, old age, loss of a job. These are the four horsemen that ride roughshod over lives and fortunes of millions of wage workers of every modern industrial community.”
I think one of the most compelling points for people who care deeply about private charities is that government-provided public services and social insurance can actually allow private charities to become narrow, flexible, and, ultimately, more effective by allowing them to focus on specific issues and groups.
In our real world, attempts at private social insurance have not helped those who need it most and can easily become drivers of inequality by subsidizing the rich (and even hurting the poor!). The two most obvious Horseman we’ve failed to deal with are illness and old age. Our health insurance system is a bloated, private-sector mess, which still often subsidizes the rich and healthy at the expensive of the poor, unlucky, unemployed, and/or sick. Obamacare has made significant improvements, but, I believe, we cannot actually fix until health insurance is socialized.
Our social insurance system for old age, in the form of Medicare and Social Security, are the most effective anti-poverty programs in history. But we had relied upon private-sector defined benefit pension programs to provide better standards of living for seniors (not just raw poverty-prevention), unfortunately defined-benefits are going into extinction, and to replace them we have tried to use defined-contribution or 401(k)-type programs. This post by Ryan Cooper at The Week highlights Economic Policy Institute research about the failure and insufficiency of the 401(k)-based retirement saving system that has left millions of seniors who are about to retire with almost nothing to supplement their only source of future income, Social Security. The logical conclusion, though I’m sure many people won’t come to it, would be to expand Social Security benefits (instead of cutting them) to continue to keep seniors out of poverty and ensure them decency and dignity living to old age in the future.