Introduction
Due to civil and international pressure, modern nations tend to enact various laws that recognize and protect some rights of the civil society. In particular, the worker’s rights are important in modern economies (Williams, 2008). Although it is considered as socialism, most European nations lead to establishing and implementing social security acts within their jurisdictions. However, for the United States to copy this lesson from Europe and other areas, it is necessary to consider the foreseen and expected impacts of such legislation on the society and the economy. Arguably, social security act empowers people with rights to benefit, which help to reduce their economic productivity, increase wage demands and high levels of voluntary and involuntary unemployment. Therefore, social security act will be responsible for a reduced economic growth.
The negative impacts of social security
Social security funding is likely to produce negative impacts on the national economy in three major forms. First, it will provide social security funding to the unemployed and employed individuals. The unemployed people will benefit from social security funding, yet they do not contribute to its creation. In this way, the society will be divided into two groups such as the working group, which provides social security funding to the whole population, and the non-working group, which benefits from the working group (Russell, 2010). In this kind of society, high levels of advantages to the unemployed group will create social laziness. There will be a decline of the desire to search for employment and paid work because people are assured of social security.
Secondly, taxation system will be affected. In fact, social security benefits will entice people to resist paying taxes (Gregg, 2009). It has been shown that evasion and resistance to taxation are common in socialist societies because people feel assured of social security funding. The rate of wage demands, government deficits and inflations will increase rapidly. In this kind of society, economic crises and reduced industrial growth are common phenomena. A government that cannot collect enough taxes cannot meet the demands of its population.
Thirdly, a Social Security Act will ensure people with the rights to a benefit, which is likely to reduce their ability and willingness to save. Most people in nations that have weak social security funding are forced to save as much as possible. A society that does not have a saving culture is less likely to experience social and economic growth. In fact, the rate of investment and economic growth will reduce because people will be spending on unnecessary things, yet they are lazy and resistant to pay tax.
How can we cope with these problems?
To cope with these problems, it is necessary to ensure that the proposed Social Security Act is different from the current examples. For instance, it is necessary to provide social insurance benefits to the population, but also it is imperative to replace it with a negative income tax. Economic growth ensures that people are working and investing, which will give them the ability to take out private insurance against all those risks that social security funding would otherwise provide. It is important that the new legislation considers enticing people to take paid work in order to ensure that they take up private insurance.
Conclusion
The Act should only offer social security benefits to a small portion of the population, especially to the people with disabilities and other minority groups. In this way, the society will increase its economic productivity while still catering for the less fortunate people.
References
Gregg, S. (2009). Markets, Morality and Civil society. New York: Springer
Russell, B. (2010). The case for socialism. Mason, OH: Cengage learning
Williams, W. (2008). The entrepreneurship as American hero. Mason, OH: Mason University