THE ECONOMIC JOURNAL MARCH, 1911 STATE INVALIDITY INSURANCE. THE expression "invalidity insurance" is a novelty in English practice. The insurance by Friendly Societies of an allowance during inability to work through sickness is usually called "sickness insurance," or "sick pay." Is "invalidity insurance" the same thing, or something different? Upon the answer to the question just put several other questions depend. If the two things are the same, and the State is to undertake sickness assurance under the name of invalidity insurance, is it to supersede the Friendly Societies, is it to work in association with them, or is it to work in competition with them? To supersede the Friendly Societies would be to destroy an organisation of which we have always been justly proud as an example of what can be done by voluntary effort. To justify the supersession, it would have to be shown that these Societies. had failed in their mission, or had been mischievous in their action, or that their functions could be better exercised by some other organisation. Have the Friendly Societies failed in their mission? The contrary is the fact. The same spirit of voluntary self-reliance in which they had their origin has been displayed during many years in resolute and self-denying endeavour to improve their position and to secure actuarial soundness. Have those Societies been mischievous in their action? Again, the contrary is the fact. They have not only provided material relief in sickness to their members, but they have developed in No. 81.-VOL. XXI B them a sentiment of friendship and of brotherhood, and have served the community as a most efficient school of affairs. Upon this point we take the liberty to repeat what we have said elsewhere (Forester's Miscellany, January, 1909): "Where so well as in his Friendly Society may the working man acquire a practical intimacy with many branches of knowledge? For instruction in the power of the pence, the operation of the laws of average, the conditions of insurance, the nature and treatment of sickness, the most remunerative means of safe investment of capital, the method of conducting public meetings, the rules of order, the principle of gentlemanly consideration for others, the ethics of debate, and a host of other things, there is no university better equipped than the Friendly Society, and the man who takes his degrees there, whether C.R. or G.M., or under any other form of initials, is ready for any position of civic utility that his fortune may call upon him to fill. Of this there are many instances." Can the State do the work of Friendly Societies better than they can do it themselves? Undoubtedly, it can give the contributor a more effectual guarantee that the benefits for which he has contributed shall be duly paid; for it can make the whole resources of the country responsible for that payment, and can enforce the responsibility by taxation. Whether it can as effectually protect itself against fraud as the Friendly Society can, whether its expenses of management will not be larger, and whether in consequence the responsibility of the taxpayer will not be heavier than it need be, are questions which can only be solved by practice. Can the State work in association with the Friendly Societies? This is a suggestion that has been received with some favour. The association might take the form of a mere agency, the State entering into the contract, and employing the Friendly Society as an instrument for carrying it into effect; or of a subsidy to the Society, upon the State being satisfied with the terms of the contract entered into by the Society; or of a partnership, the State providing a portion of the benefits insured and the Society providing the remainder. By the system of agency, the Society having merely to receive the contributions due to the State, to pay out of them the accruing benefits, and to account to the State for the balance, the Society would be deprived of the direct interest it now has in the management of its business of sickness insurance, and would be reduced in that respect to a mere conduit-pipe, a unit in a great national organisation. Practically, there would be left |