China: A Greater Safety Net in the Making

European Straits #65

Dear all,

The role of what I call the ‘Great Safety Net’ is to create a balanced relationship between economic security and prosperity. Many people assume that the two outcomes are mutually exclusive: you can cover people against critical risks, or you can create jobs; but you can’t do both simultaneously.

This assumption is false. What we learn from history and social science—and what my coming book Hedge will try to illustrate—is that providing economic security to the many is conducive to more prosperity for all. In the past, mechanisms such as social insurance and empowering trade unions were not only a lifeline charitably thrown to suffering households. Together they formed a powerful macro mechanism for delivering sustainable economic growth to both households and businesses.

That being said, I’m not sure there’s much correlation between deploying a proper safety net and promoting liberal democratic values. In practice, a well-functioning safety net always reinforces the existing p…