Thursday, March 05, 2009

Incorporation is Social Insurance

Strictly speaking the title is not true. A well accepted definition of social insurance can be found here at Wikipedia, and incorporation would not quite meet the definition. However, I will argue that the incorporation is essentially a type of insurance supplied by the government, and therefore should be considered the same sort of thing as social insurance. The reason for making the connection is the right wing's supposed horror at the existence of social insurance while at the same time adoring incorporation.

When a business is incorporated only the assets of the business are subject to being seized to pay off creditors or to satisfy other debt and payments. But the debts and payments still exist, they are effectively paid off by some other members of society. Generally they are not paid off by the government itself, rather by various members of society who get caught by the falling company. The various assets of the owners of the company are not subject to paying off the debts, with the exception of the money invested in the corporation. Essentially, if you are an owner or part-owner of a corporation, due the intervention of the government you are insured against the failure of the company, with your investment being the deductible.

While not strictly "social insurance" according to the Wikipedia definition, it is, in substance, a government run insurance program.

My point is to note that this then is really the first major government insurance program created by the U.S. government, far predating Social Security, unemployment insurance, or any of the other bugbears of conservative angst. The implication of this observation is that the main dispute between conservatives and liberals is not whether the government should provide social insurance, but rather whether it should be supplied only to a select group of privileged individuals. The liberal position is that government is well suited to provide insurance like incorporation, as well as the others, that are valuable to people throughout the entire income scale. The conservative position is that it should be reserved only for a special, privileged portion of society. I am not a conservative.

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