Modern welfare states have been built on insurance mechanisms, such as healthcare, pensions and unemployment benefits. In other words, in exchange of the payment of taxes, they compensate their citizens for losses induced by a vast array of risks.


"The modern state, as Paul Krugman put it, is an insurance company with an army. It is the insurer of last resort for risks ranging from financial collapse to health care, unemployment benefits or pensions. Even if this function might be less visible in some countries, it is still the heart of how the welfare state has emerged from the late 19th century in France, Germany, Scandinavia, UK or USA. The factor that allows such a development was the choice made by governments, for various social risks, to tune down individual responsibility (i.e. not to care so much whether citizens are responsible of their bad health or of being unemployed). The idea behind was that the political community was better off by mutualising some losses. Therefore when you receive unemployment benefits or pensions, it is not thanks to other citizens' charity or generosity. It is due to being a member of an insurance scheme to which you have contributed, are contributing or will contribute. This is what is endangered right now. We are likely to witness increased political instability and strengthening of populism because of this discourse that individuals should be held responsible for all or the majority of the losses incurred because of unemployment, being ill, etc. combined with growing inequalities and climate challenges."

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