All predominantly capitalist societies, in one form or another, have some type of safety net in place. The rationale for them are diverse, but nonetheless compelling. Most obvious is the safety net’s role in preventing citizens from experiencing the suffering of abject poverty, to the extent that their very survival is at stake. Besides this, safety nets play crucial roles in stabilizing the business cycle, reducing structural unemployment (arguably, by allowing people time to find jobs that best match their skill-sets), and boosting productivity by boosting citizen well-being.
America’s complicated web of social assistance programs also serve these crucial purposes, albeit oftentimes inefficiently and rather ineffectively. Multiple programs tend to overlap, and many are desperately under-funded and poorly designed. Yet arguably the most damaging aspect of America’s social safety model isn’t the public element; rather, its the usage of the private sector for purposes of social justice.
Take, for example, the current structure of our post-World War 2 healthcare system. Utilizing tax exemptions, the government essentially subsidizes employer-sponsored health coverage for employees, incentivizing employers and employees alike to obtain generous employer coverage. In other words, the government uses the private sector to achieve the goal of public health. The ACA worsens this via the “employer mandate”, forcing employers with 50 or more “full-time employees” to provide coverage to their employees or pay a penalty. Rather than ensuring skimpy but adequate government insurance for all citizens as a safety net baseline, the government uses the private sector to do its bidding so as to avoid the label of “government takeover of healthcare” and to give the appearance of limited government.
Arguably, the same might be said for the imposition of the minimum wage. Rather than guarantee its citizens a bare minimum financial safety net, it forces businesses to look after employee’s personal well-being themselves (which, obviously, one can make an argument that businesses looking out for their employees and not “taking advantage” of them is a good thing that is to be desired; but the point that the government seems to offload its responsibilities to its citizens by placing it on the shoulders of businesses shouldn’t be automatically ignored).
This (arguably, uniquely American) structure likely has many ill-effects. First, rightly or wrongly, it places the responsibility of minimum standards on institutions whose foremost goal is the achievement of profit (which is not a criticism; it is, rather, the natural aim of businesses) which, although oftentimes in alignment with the goal of worker well-being, is not always so, especially in industries with large quantities of lower-skilled labor. Second, this model inherently has rather large amounts of red tape imposed upon businesses that make it much more difficult to function efficiently and without liability. This can often create scenarios of costs vastly outweighing the benefits, hurting citizens more than it helps. Third, it is an incomplete safety net model, as many people are temporarily (or for longer periods of time) disenfranchised from the labor market, and therefore have little to no interaction with the businesses the government attempts to use to achieve social goals.
None of this is to say there is zero need for internal regulation of businesses or that businesses can’t play a role in the social safety net. But we should consider the idea that there are many circumstances in which the government ought to play a role in provisioning social assistance that is entirely independent and separated from private business – both for the benefit of business, and the benefit of society as a whole. Right now, in my opinion, we have too much government manipulation of the private sector for social aims – and not so much to show for it.