The standard conservative rap on the social safety net is that it turns people into slackers by providing a comfy hammock and discouraging work and initiative.
Yesterday, President Obama offered a diametrically opposite analysis: Programs like Social Security and Medicare, he argued, actually enable people to reach higher:
these things do not sap our initiative; they strengthen us. They do not make us a nation of takers; they free us to take the risks that make this country great.
That may be the strongest defense of the safety net in a nation like the U.S., where the values of self-reliance and individualism run so deep, providing fertile soil for libertarian attacks on government assistance.
More interestingly, this logic chain offers insights into how to spur growth and innovation. In a nutshell, if we can strengthen the safety net and de-link it from employers, we'll encourage more risking taking, entrepreneurship, and job creation.
Take healthcare as an example (which Obama didn't mention). Right now, the lack of affordable healthcare options for entrepreneurs and the self-employed stands as a formidable obstacle to striking out on one's own with a new business. That's especially true if you have a family. And if you have a preexisting condition, you're really stuck.
The Affordable Care Act takes big steps toward remedying these problems, but will likely fall short in terms of guaranteeing that the self-employed can find affordable high-quality insurance. It's time to start pushing for another round of reform that includes a public option.
Another thing you give up in the U.S. if you go it alone is your 401(k), and the options for individuals -- like SEPs and IRAs -- are not so great because nobody is offering any kind of matching contribution. To create a society more friendly to entrepreneurs and risk-taking, we should scrap the 401(k) and create universal and portable Guaranteed Retirement Accounts where the government matches individual contributions.
We also need to de-link the unemployment system from the workplace. Rigth now, unsuccessful entreprenuers or small business owners can't easily collect unemployment benefits -- another deterrent to rolling the dice with a start-up.
The United States, with it's supposedly entrepreneurial culture, is actually a hostile environment in some ways for those who want to captain their own ship. I was surprised to learn that many European countries have higher rates of self-employment than the United States -- until I reflected on how much the safety net in those countries backs up people who start businesses. Of course, Europe is not business-friendly in other ways -- for example, with laws that make it hard to fire employees.
If the United States can strengthen its safety net in key ways we can have the best of both worlds: a fair amount of economic freedom coupled with a strong commitment to catch people when they fall. (I spelled out an agenda along these lines in an article last year in the American Prospect.)
President Obama didn't say all that yesterday. But he pointed us in the right direction.