During the Biden administration, we will hear many argue that we should hand out more benefits to more people. Now when we economists argue for policy, we usually make economic efficiency arguments. So it is worth noting that for many of these policies, the main economic efficiency rationale for such handouts is “social insurance”. We are already seeing related arguments regarding pandemic relief and school loan forgiveness.
Some of these conditions would require very high premiums; and for others, like the last two, cash compensation seems pointless. It's not like the insurance company can resurrect a dead child or make your children love you.
We do; it's a settled question that Communism doesn't work. It seems "obviously" true that neither zero nor the maximum amount of wealth transfer is ideal; the exact amount that actually is ideal is an empirical question that I don't have the data to answer. (Similarly, the tax rate that maximizes revenue collected is somewhere between zero and 100%, but I have almost no idea what it actually is.)
Hmmm. This must be considered in the light of historical and contemporary examples. It seems that some degree of enforcement of within-family equality is desirable but it is also easily taken too far.
In the past, some societies have enforced the opposite of social insurance. The custom and law of primogeniture among European nobility ensured that wealth (in the form of land) could not be divided among multiple heirs, ensuring that there would always be one descendant that remained rich and powerful; the others were left to fend for themselves. One notable thing that happened after the American Revolution was that the new country banned primogeniture and required by law that property be divided among heirs, so that there wouldn't be a class of de facto lords that could control things by owning most of the land and wealth.
There are also societies that have pushed too hard to the other extreme (or so I've heard), in which extremely strong obligations to extended family keeps individuals in poverty. Nobody can save money or invest it in productive capitial, because anyone who is known to have wealth ends up besieged by relatives begging for help.
A small amount of inter-family wealth transfer seems desirable, but only a small amount...
If the proposal is to have the law allow X, declaring that the law does not allow X is not an adequate response. The claim isn't that it would give exactly the same result as social insurance, but that it would give most of the same insurance effect.
True, but 1) it would be very hard to argue that I should be legally bound by such contracts, 2) while there are countries and insurance companies that are centuries old, such a contract places a lot of faith that the relevant institutions will still exist generations hence, rather than, say, taking the money and shutting the business down at some point in the next 60 years or so after everyone currently working there is retired or dead, 3) the policy would have to cover an unknown number of great-grandchildren, whom the insurer would have to be able to identify and track, and 4) to whatever degree mating is becoming more assortative over time by wealth and class, it's unclear whether relevant effects diminish "enough" after "just" 3 generations to achieve the same goal as social insurance
I am not sure how many think this way, but I've always assumed the main risk social insurance protects against is "having been born to/conceived by/raised by the right parents." If there is a way to set up a private insurance market that efficiently addresses *that* problem, I'd very much like to know what it is.
Because a transactional relationship is the way people tend to deal with strangers with whom there is less trust and a greater chance they will disappear while the transaction is part way through and sitting in their advantage, so borrowings and similar are delt with via contracts and calculations. Family, friends, neighbours etc are different categories of people to differing degrees. Their status as such is degraded by being treated as strangers are treated.
How is it legally enforcable for me to enter an agreement that requires nothing from me nor benefits me in any material sense, but requires only that my yet to be born richest grandchild pay money to my poorest yet to be born grandchild?
You misunderstand the insurance proposal. The agreement would be that later the rich descendants would pay out and the poor descendants would get paid. Their ancestors don't have to pay anything.
Many people in poverty today have *no* ancestors that could have afforded to buy "poverty insurance" for their descendants. Those that did, left inheritances.
Some of these conditions would require very high premiums; and for others, like the last two, cash compensation seems pointless. It's not like the insurance company can resurrect a dead child or make your children love you.
We do; it's a settled question that Communism doesn't work. It seems "obviously" true that neither zero nor the maximum amount of wealth transfer is ideal; the exact amount that actually is ideal is an empirical question that I don't have the data to answer. (Similarly, the tax rate that maximizes revenue collected is somewhere between zero and 100%, but I have almost no idea what it actually is.)
If inter-family transfers are not very desirable, we should think similarly about larger society transfers.
Hmmm. This must be considered in the light of historical and contemporary examples. It seems that some degree of enforcement of within-family equality is desirable but it is also easily taken too far.
In the past, some societies have enforced the opposite of social insurance. The custom and law of primogeniture among European nobility ensured that wealth (in the form of land) could not be divided among multiple heirs, ensuring that there would always be one descendant that remained rich and powerful; the others were left to fend for themselves. One notable thing that happened after the American Revolution was that the new country banned primogeniture and required by law that property be divided among heirs, so that there wouldn't be a class of de facto lords that could control things by owning most of the land and wealth.
There are also societies that have pushed too hard to the other extreme (or so I've heard), in which extremely strong obligations to extended family keeps individuals in poverty. Nobody can save money or invest it in productive capitial, because anyone who is known to have wealth ends up besieged by relatives begging for help.
A small amount of inter-family wealth transfer seems desirable, but only a small amount...
Does Singapore really offer social insurance?
If the proposal is to have the law allow X, declaring that the law does not allow X is not an adequate response. The claim isn't that it would give exactly the same result as social insurance, but that it would give most of the same insurance effect.
True, but 1) it would be very hard to argue that I should be legally bound by such contracts, 2) while there are countries and insurance companies that are centuries old, such a contract places a lot of faith that the relevant institutions will still exist generations hence, rather than, say, taking the money and shutting the business down at some point in the next 60 years or so after everyone currently working there is retired or dead, 3) the policy would have to cover an unknown number of great-grandchildren, whom the insurer would have to be able to identify and track, and 4) to whatever degree mating is becoming more assortative over time by wealth and class, it's unclear whether relevant effects diminish "enough" after "just" 3 generations to achieve the same goal as social insurance
Great-grandparents who could sign contracts that bound you could help with that.
I am not sure how many think this way, but I've always assumed the main risk social insurance protects against is "having been born to/conceived by/raised by the right parents." If there is a way to set up a private insurance market that efficiently addresses *that* problem, I'd very much like to know what it is.
Because a transactional relationship is the way people tend to deal with strangers with whom there is less trust and a greater chance they will disappear while the transaction is part way through and sitting in their advantage, so borrowings and similar are delt with via contracts and calculations. Family, friends, neighbours etc are different categories of people to differing degrees. Their status as such is degraded by being treated as strangers are treated.
The law can be whatever we want the law to be.
I don't see why.
Yes. That's what he said. Non family can be transactional, and we want them to be, but family can't.
How is it legally enforcable for me to enter an agreement that requires nothing from me nor benefits me in any material sense, but requires only that my yet to be born richest grandchild pay money to my poorest yet to be born grandchild?
You misunderstand the insurance proposal. The agreement would be that later the rich descendants would pay out and the poor descendants would get paid. Their ancestors don't have to pay anything.
Many people in poverty today have *no* ancestors that could have afforded to buy "poverty insurance" for their descendants. Those that did, left inheritances.