Wednesday, December 11, 2019

Economic Freedom and Compulsory Social Insurance Are Not Compatible

Every time I speak on the theme of social security I am in danger of being accused of going beyond my brief. . . . The social market economy cannot flourish if the spiritual attitude on which it is based — that is, the readiness to assume the responsibility for one's fate and to participate in honest and free competition — is undermined by seemingly social measures in neighbouring fields. . . .

I have repeatedly stressed that I consider personal freedom to be indivisible. With this conviction I have worked since 1948 to reduce all economic restrictions. A free economic order can only continue if and so long as the social life of the nation contains a maximum of freedom, of private initiative and of foresight.

If, on the other hand, social policy aims at granting a man complete security from the hour of birth, and protecting him absolutely from the hazards of life, then it cannot be expected that people will develop that full measure of energy, effort, enterprise and other human virtues which are vital to the life and future of the nation, and which, moreover, are the prerequisites of a social market economy based on individual initiative. The close link between economic and social policy must be stressed; in fact, the more successful economic policy can be made the fewer measures of social policy will be necessary. . . .

If we desire to guarantee a permanent free economic and social order, then it becomes essential to achieve freedom with an equally freedom-loving social policy. That is why, for example, it is contradictory to exclude from the market economic order private initiative, foresight and responsibility, even when the individual is not in a material position to exercise such virtues. Economic freedom and compulsory insurance are not compatible.

—Ludwig Erhard, Prosperity through Competition, trans. and ed. Edith Temple Roberts and John B. Wood (New York: Frederick A. Praeger Publishers, 1958), 185-186.



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