Beware “Social Insurance” Salesmen

Redistribution is a vital topic for conservatives as we question stale orthodoxies and reexamine how first principles can help to address modern challenges. In this respect I agree entirely with recent comments by Sam Hammond, both here on The Commons and at The American Conservative, insisting that the right-of-center must get beyond “hostility to anything that smacks of ‘redistribution’” and not “preemptively dismiss any form of new social spending.” As Sam notes, I have long argued that conservatives should focus their attention on improving social spending’s effectiveness rather than reducing its level, for instance by creating a wage subsidy.

I disagree, though, with Sam’s perception that conservative concerns about redistribution are rooted exclusively or even primarily in “market fundamentalism.” He writes of “the extent to which ‘free market fundamentalism’ is simply shorthand for … spend-thrift, ‘small government’ libertarianism” and identifies two standard objections:

• First, that redistribution is “anti-growth”;
• Second, that, when targeted at particular behaviors (like marriage or child-rearing), it is “social engineering.”

Throw out those (bad) arguments, I take him to be saying, and the pathway to redistributive policy is cleared. As he puts it, the fundamentalist objection to redistribution, “more than anything is ‘what’s gonna give’” in existing orthodoxy.

(Digressing briefly, this assertion that resistance to redistribution is “what’s gonna give” illustrates precisely why I characterize the Niskanen Center’s general orientation as focused on expanding ex post redistribution rather than intervening ex ante in market conditions. For goodness sake, the 2018 Niskanen manifesto describes its vision as “the free-market welfare state.” Conversely, when Sam tries to show that the manifesto goes beyond “liberate markets,” he is left citing its discussion of public education, a “social good[] where markets need a complex web of regulation, subsidy, and changes in customs or belief to work.”)

Putting bad arguments to the side, conservatives still have very good reasons to worry about redistribution. Some, shared by libertarians—and many liberals as well (see Clinton, Bill)—have to do with the economic incentives created by programs that provide a benefit to households in poverty and then withdraw it if they move toward self-sufficiency. Others, more uniquely conservative, are rooted in the society’s understandings of duties and rights, obligations and entitlements.

Should the State assume the primary responsibility otherwise held by families, communities, and mediating institutions as the provider for all citizens? I think not. For one thing, such a fundamental shift in the social structure pushes us further toward an atomized world of individuals and Leviathan. For another, it displaces what would otherwise be vital roles for institutions of civil society. As Robert Nisbet observed in The Quest for Community:

Community is the product of people working together on problems, of autonomous and collective fulfillment of internal objectives, and of the experience of living under codes of authority which have been set in large degree by the persons involved. … Community thrives on self-help (and also a little disorder), either corporate or individual, and everything that removes a group from the performance of or involvement in its own government can hardly help but weaken the sense of community. People do not come together in significant and lasting associations merely to be together. They come together to do something that cannot easily be done in individual isolation.

And where the State assumes the family’s obligations, it dilutes the pride and dignity of carrying them on. Can the father say that he is working to put food on his family’s table, if Uncle Sam has already dropped off the groceries? What role does the elder fulfill by taking care of the grandchildren, if free daycare is available down the block? As I wrote in The Once and Future Worker:

Taking pride in providing for a family becomes much harder when the government’s package of safety-net benefits offers to do so almost as well. For men, especially, the idea that they provide a critical function by working to support their families can be hard to square with lived experience in a community of broken families where single-mother-headed households are the norm. … In a community where dependency is widespread, illegality a viable career path, and idleness an acceptable lifestyle, the full-time worker begins to look less admirable—and more like a chump.

None of this is an argument against redistribution per se, but it is a strong argument against casually expanding the safety net because that seems like the direct way to help people. It is an argument for ensuring that when the State does step in, as a provider of last resort, it distinguishes clearly between categories of recipients, makes assistance temporary, and gives benefits in-kind. That cash is “better” and “more efficient” is precisely why it should not be part of the package provided by the State to those who could work but do not.

Sam, joined here by his colleague Ed Dolan, argues that the redistribution they advocate is special because it constitutes “social insurance.” Sam chastises conservatives who “lost touch with the vocabulary of social insurance, and began to equate any and all social spending with ‘redistribution.’ This suppressed the important distinction between programs in which citizens contribute to mutual insurance systems that protect against common risks, and purely egalitarian transfers designed to provide relief to the poor while soaking the rich.” Ed explained here on The Commons that “many of us at Niskanen advocate a larger social safety net, or, as we prefer to say when we are being careful, a stronger system of social insurance. In that regard, we are firmly in the classical liberal tradition of Friedrich Hayek.”

This sounds great. Social insurance would seem to clear all the key conservative hurdles just described. It is something paid for and earned by its recipients, and claimed when needed. One might envision applying the framework to a broader unemployment-insurance system or programs of retraining for displaced workers; maybe a creative financing mechanism for higher education. New institutions and perhaps better-functioning unions could participate.

But this is not what Sam or Ed proposes—it is they who have “lost touch with the vocabulary.” Ed suggests “Integrated Cash Assistance” (ICA), a “social insurance system” built on “a universal grant sufficient to protect everyone from absolute destitution regardless of work status, family status, or other personal considerations.” So it is not insurance, it is a universal grant, of cash, funded from general revenue, received whether you have ever worked a day, for the express purpose of guaranteeing “income security.” Indeed, it’s a universal basic income. Ed’s program would include $6,200 in cash per adult and $4,500 per child, or $21,400 for a family of four, before anyone had worked a day. On top of this, for low-income households, he proposes to “cover medical expenses in full.” Sam, commenting on Ed’s proposal, likewise seems to characterize a basic income as “social insurance”: “I support a social insurance program of any type that helps working age people pay the bills between jobs or in times of crisis. A basic income does that but is unnecessarily expensive.”

If this is “social insurance,” then the phrase has lost all meaning except as a sophisticated-sounding synonym for redistribution. Fine—redistribution is a perfectly plausible plan to advocate and there are many good debates to be had about why to do it, when to do it, and how to do it. But frankly, if this is “conservatism,” then I’m not sure what meaning that term retains either. Conservatives need to say much more on these questions than they have in the past. My suspicion and hope is that “we can best solve our problems if the government just guarantees everyone’s income security by giving them money” will not be how that sounds.