Monthly Archives: April 2018

The Case for a Free Market Social Safety Net

One of the big disagreements between the “left” and the “right” is the existence of a social safety net. In the United States, we have SNAPS (foodstamps) and EBT. In theory, these systems exist as a way for people to stay afloat in times of financial hardship until they can get on their feet. They are also designed to ensure poor children and mentally/physically challenged people have their basic nutritional needs met. Unfortunately, these systems are often abused and as a result, billions of dollars are given to people looking for an easy ride, or in cases where community service is required, turning it into a job.

I think most honest, working people will agree this is not an ideal situation. Even if you support having a social safety net that protects people in this way, you are being willfully ignorant if you think this current system is sustainable or efficient.

So how could we have a social safety net that helps people when they hit a rough spot, but abides by laissez-faire capitalist principles and prevents fraud and abuse? Well, we could look to other free market systems that provide similar services in times of struggle such as insurance policies.

What if we used the business model of insurance companies, and privatized the welfare system? How could this work?

Similar to the way that insurance works, it would be an opt-in service. For example, you are working your job, everything is going well but you decide you want to make sure you can sustain your lifestyle if you get hurt or wrongfully terminated. You call your local “lifestyle insurance” company and ask them for their pricing. They ask you questions that are relevant to your situation such as where you work, how much you make, how many dependents you have, what are your total bills/expenses?

After they get the necessary information, they would offer you policies based on your needs. Similar to other insurance policies, there would be a wide range of what they cover. You would be able to get a cheaper plan that only covers work injury, or you could get more expensive plans that cover other scenarios such as termination (wrongful or not), layoff, company closure, hitting retirement age, etc. If you find yourself in a situation where you are able to make a claim, you will do so and the insurance company will pay you out based on what your policy provides.

This sounds like an efficient compromise to the problem, doesn’t it? Of course, there is still the problem of children and mentally ill people who have never worked, but there are a number of ways coverage could be extended to these people. Perhaps entire families would pool together resources and get one plan for everybody? Maybe the lifestyle insurance companies would offer packages where the customers pay a little bit more to help cover services someone who is genuinely disabled, and the company offers them incentives/bonuses for doing so?

There are endless business opportunities for this basically untouched market due to governments monopolizing it. If we want a fair social safety net, we should make the government step aside, and let the free market handle it.