Social insurances and the welfare state form the cornerstone of a strong and stable economy.
Every economy requires productive labor; yet labor productivity ceases when purchasing stops. Greater productivity comes from the reorganization of the factors of production, at the expense of creating economic disruption and localized recession and poverty.
Social insurances provide collective risk sharing against disability, unemployment, and other poverty factors. Beyond simply protecting families, this stimulates the economy local to economic damage, helping recovery and increasing the overall national productivity by keeping the labor force employed.
Familiar social insurances such as Social Security’s retirement pensions, disability insurance, Medicare, and unemployment benefits drove our recovery from the Great Depression. Further insurances, such as a Universal Citizen’s Dividend and universal healthcare, are standard elsewhere in the world.
Social insurance differs from welfare in being self-funded, whereas welfare comes from general funds and applies to need.
Social insurances receive a premium such as Social Security’s OASDI, Medicare’s HI, and Unemployment Insurance’s FUTA. Social Security Retirement Benefits pay based on OASDI payments, and a Universal Citizen’s Dividend takes a flat-rate premium and pays a flat-dollar benefit. In contrast, SNAP and HUD housing assistance pay by a means-test.