Social Security and Private Insurance: The Great Change

Abstract

The quarter-century since the creation of the Geneva Association will remain marked by major changes in social security. For 20 or so years after the first oil crisis, most industrialized countries continued to extend the Welfare State. Rising expenditure was reflected in the increased proportion of social costs to national income, since over this period GDP tended to grow much less quickly that it had done during the post-war years. Over this period also, thinking about the foundations and consequences of various social insurance mechanisms deepened considerably a process which is manifestly far from complete and in which the Geneva Association has had a significant part to play. We now have a better understanding of why it is preferable for an industrialized country not to allow social transfers to grow indefinitely, and of why, indeed, they should rather examine the practical functioning of the various transfer mechanisms so as to avoid or limit their adverse effects while maximizing their advantages, encourage households to insure against the risks of life by complementing social insurance, and thoroughly overhaul monopolistic public arrangements so as to build into them the now familiar virtues of competitive practice. We shall start by reminding ourselves of the development of social protection over the last quarter-century ?art 1), and then summarize the main results of research into the microand macro-impact of social protection on the economy (part 2). We shall thereafter attempt to examine some of the main phenomena that have progressively undermined the efficiency of social protection (part 3), and conclude by outlining what the relationship between social and private insurance in future is likely to be (part 4).