Pros And Cons Of The Welfare State System

Burts 1
Western governments are approaching a crossroads. The current Welfare State system has proven to be unsustainable. Of the twenty countries with the highest amount of external debt, eighteen of them are Western nations; if you measure debt on a per capita basis, this number increases to nineteen. Yet governments continue to promise more benefits to citizens and citizens are growing ever more accustomed to receiving benefits from the governments. On top of this, the current “pay-as-you-go” system of the working paying for the pensions of the retired proves to be increasingly unstable as birth rates drop and life expectancies improve. In general, government intervention into markets creates inefficiencies. The lack of competition in areas
But few if any suffered more than the elderly. As they were often to be laid off and the last to be retired, poverty amongst seniors rose to above 50%, compared to 10% today. The nation was crying out for a solution to this catastrophe, and one man struck that chord harder than any other. In 1933, a 66-year-old unemployed physician named Francis E. Townsend published a proposal for old-age insurance in his local Long Beach, California newspaper. Designated as The Townsend Plan, the plan quickly became popular and the next year was published as a pamphlet and distributed throughout the U.S.. A few years later were 7,000 Townsend clubs advocating the plan with a reported membership of over 2.2 million, about 2% of the countries population. The proposition called for for a universal pension of $200 per month for those of the age of 60 or above funded by a 2% national sales tax. Although The Townsend Plan counted President Roosevelt as an ally, the president saw the plan as unrealistic and impractical. In fact, contrary to popular belief, there is great evidence that FDR was in a way forced to introduce the Social Security Act, in order to nip the growing support the The Townsend Plan in the bud. Frances Perkins, Roosevelt's Secretary of Labor, revealed this quote from the president in his 1946 memoir The Roosevelt I
Instead, the American medical insurance industry grew out of a relationship between employers and employees. Between 1939 and 1945, the percentage of the American population covered by employer-based health insurance plans rose from 8% to 25%. To further fuel to growing fire, in 1943 the IRS declared that group insurance purchased by employers on behalf of employees does not qualify as a taxable expenditure. By 1965, approximately 80% of the population had medical insurance through their employer. These advances led the proponents of nationalized health care in the 1950s and 60s to shift their focus to the uninsured, and since the retired could not receive insurance through their non-existent employers, these focuses shifted in particular to the elderly. By the beginning of the sixties, several bills were competing to become the first forerunner to Medicare. The winner came in a bill passed in September 1960 sponsored by senator Robert Kerr (D-Oklahoma) and representative Wilbur Mills (D-Arkansas). This bill bestowed states with federal grants to partially subsidize the medical costs of the elderly. The momentum picked up when John F. Kennedy, a progressive who was an open supporter of health care being included in the Social Security system, was elected and then inaugurated on January 20th, 1961. In the face of strong