51. An Expanded View of Government’s Role in Providing Social Insurance and Investing in Children
- Author:
- Sandra E. Black and Jesse Rothstein
- Publication Date:
- 01-2019
- Content Type:
- Policy Brief
- Institution:
- Economics for Inclusive Prosperity (EfIP)
- Abstract:
- While private provision of goods often yields the efficient outcome, there are a number of goods that are not efficiently provided in the private market. Here, we outline two such situations: investments in child care and education, and insurance against risks created by business cycles, poor health, and old age. Because private markets work poorly for these goods, and the costs of market failure are large, standard economic reasoning implies a significant role for government provision. The reduction in economic insecurity that this would bring could help to improve political stability as well, by reducing the stakes that people perceive in discussions of trade, immigration, technological change, and countercyclical policy (Inglehart and Norris, 2016). Many observers (e.g, Hacker, 2018) have pointed to economic anxiety as a potential contributor to populist reactions in the U.S. and many European countries; a public sector that acts to reduce the risk that households face could ameliorate this, generating political spillovers and improving the state of the country more broadly.
- Topic:
- Economics, Education, Health, Health Care Policy, Children, Economic Policy, and Economic Theory
- Political Geography:
- United States and Europe