Wednesday, March 04, 2009

Health Insurance Before the Welfare State

The Independent Review has an interesting article on the various social institutions that existed into the 1920's, and how pervasive they were in America and Britain. They argue that these organizations were quickly wiped out of existence with the emergence of government conscription of their members into the welfare state. Here is the summary of the paper from their newsletter:
At their peak, fraternal organizations and
friendly societies provided health insurance for
millions of Americans and Britons, mostly lowermiddle-
class tradesmen and skilled artisans. By
1886, the Independent Order of Oddfellows and
the Ancient Order of Foresters each claimed more
than 600,000 members worldwide. In the 1920s,
roughly every third adult male in the United States
belonged to a fraternal organization.

These groups were characterized by independent
lodges, democratic governance, a ritual,
and mutual aid for members (and often their
families). Although camaraderie was a leading
incentive to join, disability insurance was also
an attractive benefit.

Despite their popularity, however, such groups
had all but vanished within two decades after being
pushed aside by the surge of the welfare state.
What accounts for their rise and fall?
The answer, according to Pavel Chalupníček
and Lukáš Dvořák (both from the University of
Economics in Prague), lies in the concept of social
capital, an individual’s ability to use his or her network
of friends and acquaintances for economic
gain. Social capital, they explain, enables many
people to function better in society, but its value
depreciates rapidly in the presence of certain
kinds of government activities.


Native Power said...

Health Insurance Before the Welfare State is a model for reform.

The reason this will not happen is because the organization of many small interest groups throughout the US is contrary to the interests of a prudent and pragmatic federal politician which needs that loyalty given to him/her, not to a local--homegrown--group which can take a position contrary to the position of the federal elected representative.

"Divide and Conquer" does that ring any bells?

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