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A Citizen-Based Social Contract for the U.S.

Is a citizen-based social contract too much for American citizens to handle?

September 13, 2007

Is a citizen-based social contract too much for American citizens to handle?

All too often, the concept of a U.S. social contract is discussed in terms of fear — fear of unemployment, fear of illness, fear of accident. The security provided by private insurance and social insurance is important, to be sure.

But the goal of the U.S. social contract should not be to eliminate all risk. On the contrary, paradoxical as it sounds, it should be to encourage Americans to take more risks — whether those risks take the form of studying for a career with a payoff only in the long run, of quitting one job for a better one, or of founding a business or nonprofit organization.

Freedom defined as the opportunity for self-improvement has always been as important as political and religious liberty in the United States. The American Dream is to move up, not to sit still.

Entrepreneurial energy can be stimulated by a citizen-based social contract that erases the dividing line between full-time and part-time work. Today, only about 10% of U.S. adults are self-employed.

In a country that prides itself on the spirit of personal initiative and enterprise, it makes no sense to tolerate a system that imposes high costs on those who want to try to found their own businesses.

It seems likely that many Americans would be more willing to do so if they could continue to work part-time without losing their health care or critical retirement benefits.

Individuals with economic security and sufficient resources will be more likely to take risks by striking out on their own and founding new businesses, working part-time in order to fulfill family responsibilities, working as independent contractors or accepting the gamble of educating themselves for a new and different career.

Even with an increase in entrepreneurialism in the United States, most Americans will work for others rather than for themselves. And most will work for a series of employers in their careers.

The United States leads the world in labor market flexibility. The average job tenure in the United States is 6.6 years, compared with 8.2 years in Britain, 10.6 in Germany, 11.2 in France — and 12.2 in Japan.

The younger a worker is, the briefer the median job tenure. Between 1963 and 2004, median job tenure for males aged 55 to 64 dropped from 14.7 to 10.0 years. In comparison, for males aged 25 to 34, it dropped from 3.5 to 3.0 years.

Whether such “job churn” hurts or harms individual workers depends on two things: Do they move to higher-paying jobs? And do they lose critical benefits like health care insurance and pensions if they move from one employer to another?

While public policy has a role in promoting a high-wage society, it cannot ensure that every new job pays more than the last. But public policy can ensure that the access of individual U.S. workers to such basic needs as health care, pensions and job training is secure and independent of any particular employer.

Once benefits are separated from particular employers — as the current unsustainable employer-based system has it — Americans will no longer feel inhibited in pursuing their career goals for fear of losing health insurance or pensions that have not vested.

This does not mean benefits cannot be tied to work and individual effort, but employers, for their part, would be freed from the administrative burdens of programs that are properly the shared responsibility of the individual citizen and the government.

Making all benefits citizen-based, universal and portable can make such transitions far smoother and less painful than they are today.

But is a citizen-based social contract too much for U.S. citizens to handle?

No doubt some citizen-based social programs could be too complex for mainstream Americans to understand, while others would present ordinary citizens with unacceptable degrees of risk or vulnerability to deception. But these are problems of program design. They are not flaws of the citizen-based approach.

For example, if there is a consensus that all Americans should have private retirement savings in addition to Social Security benefits, then a universal, portable, private pension program could be designed with limitations on possible investments, so as to benefit from growth while minimizing risk.

In general, though, a presumption of competence on the part of American citizens may help to create the reality. Just as a paternalistic government will create helpless and dependent subjects, so a citizen-based social contract that blends self-reliance with mutual assistance will foster the kind of citizen that the United States’ republican institutions require.

In the final analysis, a community is made up not only of individuals, but also of the families to which they belong. The perpetuation of the nation, through family formation and childrearing, is the public good that makes possible all other goods, including the existence of the republic itself.

A liberal and democratic state should not try to regulate family life in a heavy-handed and authoritarian way. But the public policies that together make up the informal social contract should be designed so that they support strong families — or at the very least do not inadvertently harm them.

Parents of young children would be obvious beneficiaries of a citizen-based social contract. They would not need to fear that they would lose their health insurance or pension rights if they took time off after the birth of a child. And they need to know that adequate funding for the education of their children does not depend on the accident of the school district or state in which they live.

The older members of U.S. families and the relatives on whom they depend for care would also benefit from a citizen-based social contract that would permit a continuous spectrum of effort, from self-employment at one end to full-time employment at the other.

In an aging society, the idea that years of full-time employment come to a crashing halt with retirement could become a thing of the past. Instead, people could gradually move from full-time work to part-time work and finally to complete retirement, if that is what they desired.

The aging of U.S. society will create needs for eldercare that families, as well as the public and business and nonprofit sectors, will need to address. Here, too, a citizen-based social contract that does not penalize part-time work could help middle-aged or young Americans spend part of their time at work and part of their time caring for their children, elderly parents or grandparents.

A citizen-based social contract embodies the historic values of the American republic — in particular, the ideals of the independent and equal citizen-worker.

The citizen-based social contract promotes efficiency, even while realizing American ideals, and serves the utilitarian goals of public policy by liberating entrepreneurialism, making it easier for workers to move from job to job, bolstering the skills of a more competent citizenry — and indirectly strengthening the American family.

The United States’ ideals and its interests alike will be furthered if a citizen-based social contract does even more to enable and empower each American citizen to succeed in what Thomas Jefferson called “the pursuit of happiness.”

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