Preparing for the Next Economic Collapse: Should Social Insurance Play a Bigger Role?

Article

Preparing for the Next Economic Collapse: Should Social Insurance Play a Bigger Role?

September 29, 2020

Abstract

This essay appears in the National Academy of Social Insurance’s forthcoming compendium, The Future of Social Insurance: Insights from the Pandemic. The compendium was published as part of the Robert M. Ball Award Campaign for Social Insurance events that took place from June through September 2020.

For millions of Americans, the COVID-19 recession is their second once-in-a-lifetime economic crisis. Previously considered aberrations, these economic collapses could happen more regularly, which we cannot ignore. The combined risk of these threats, such as cyberterrorism and biological warfare, that could cause economic catastrophe might justify preemptive measures.

To best prepare for another downturn, policymakers could create two sets of objective conditions: one that automatically activates recovery efforts and one that, when recovery is reached, ends those efforts. With an automatic basic relief response, lawmakers can accelerate the delivery of ameliorative aid, avoid partisan debate that leads to delays, improve infrastructure to respond efficiently, and reduce Americans’ uncertainty around how long the assistance will last. This social insurance could build public trust in the government’s response while maintaining flexibility for officials to fine-tune response policies.

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