Andrea Di MaioEarlier today I was having a conversation with European clients in the social security domain and we were discussing about the impact of government 2.0 in that domain. The usual examples came up, ranging from the role of communities in child welfare, to how to leverage LinkedIn to re-employ unemployed people. But none of those ideas – most of which are being piloted to different extents in different countries – really sounded transformative.
We then discussed about what are the toughest problems for social security going forward, and it was clear that one was the sustainability of public pension systems. With the economic downturn requiring massive investments to sustain employment, industry and society in general, the affordability of the pension systems – already seriously challenged by demographic changes in Europe – will be an issue going forward. While governments will keep using traditional levers, such as incentives to mixed public-private systems or tax increases, some of these may prove less effective as people’s trust in the financial services sector (including pension funds) is shaken by last year’s events and disappointing performances, and as raising taxes may prove difficult where economic recovery is particularly slow or anemic.
Could web 2.0 help address these issues?
On a more tactical level, social networks could be used to raise workers’ awareness about the need to worry about how to build their pension by actively saving money or seeking for complementary coverage that may complement declining public pensions. The typical demographics of Facebook or other social network are the right target to convey this message and social security agencies could partner with existing or emerging communities to provide advice, simulation packages, discussion forums, best practices and so forth.
On a more strategic level, the question is: could technologies like social software create new ways for people to complement, strengthen or possibly replace public pensions or pension funds? This may sound like a crazy idea, but if people lend money to each other on www.zopa.com, why shouldn’t they save a little bit of money here and there, and put them into a community fund? There are multiple ways they could do this: by monthly installments on their salaries, by lumpsum payments (of different amounts), by adding a very small percentage to their online purchases (one they could decide themselves), and so forth. Money could be administered by the community in various ways, mostly in low-risk, community-oriented services (such as microlending like zopa.com) or in conjunction with professional fund managers and – indeed –social security organizations (at least in an initial phase before reaching critical mass and reliable self-governance mechanisms).
While this requires regulations, oversight, trust mechanisms, I wonder whether any social security organization is reflecting about community models like these and feel ready to try them out in a few years’ time.
Category: social networks in government Tags: crowdsourcing, social security
4 responses so far ↓
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2 Tom Graves September 25, 2009 at 2:05 am
Nice idea.
Not a new idea, though. Your description is a good summary of the old mutual-funds and ‘friendly societies’ that sprung up throughout Britain and elsewhere in the 19th century, and provided a trusted source and agency for pensions and mini-loans. (Not micro-loans, though: the main provider for those was the pawnbroker, which was a far from trusted source…)
The ‘friendly societies’ faded with the development of state-funded pensions in the mid-20th century, but the mutual-funds continued to thrive until the tail-end of the century. At that point, their implied ‘socialism’ was seen as anathema to the ascendant neo-con politicians and their backers. Ideologically-driven deregulation and demutualisation handed over the mutual-funds (and their large cash reserves) to the predators, with the all-too-predictable results that we suffer now.
So yes, re-establishing equivalents of the old ‘friendly societies’ and mutual-funds would be a good idea. But we need to understand the social conditions that created them and, later, destroyed them – otherwise we’ll end up going through the exact same cycle all over again.
3 Andrea Di Maio September 25, 2009 at 2:33 am
@Tom – excellent point, thanks for making it. Friendly society did actually morph (although a bit dramatically) into what we know today as mutual or pension funds: while many are public companies – hence owned by us all – they are (and act like) corporations.
I believe that the faith of initiatives like zopa.com will be interesting to determine whether the idea of “social network funds” can really fly. As far as I know, zopa.com encountered some regulatory issues in Italy, as it was not granted a license to operate like a bank. Other concerns raised for similar initiatives is that they could be used for money laundering and so on. Hence the regulatory and supervisory angle that I made in my post.
I do particularly like your sentence, which I believe apply to many other experiments in government and democracy: some of those who see in “government 2.0″ the seeds of direct democracy should ask themselves why this did not work when applied in ancient Athens (and I do not believe the answer is: they had no Facebook
4 Ariel Pino September 29, 2009 at 8:11 am
Before getting into detail in your idea, we should go back to basics. Social security is the best mechanism for wealth redistribution and relies on fundamental principles. It means that social security schemes must be, at least, universal, redistributive and compulsory. They must also be built on solidarity and equity. Social security must be the basic layer of social protection to all. In doing so, strong and adequate public intervention is of paramount importance. Above this other arrangements, including the private sector, are possible.
It is sometimes complicated for government to provide social security. Some poor countries therefore adopted the idea of microinsurance or community based protection systems. I think your idea is quite similar to this but for those who can afford contributory social security.
If we start to cluster societies by their contributory capacity, we will lose the fundamental principles guiding a social security for all. Moreover, we can lose the public intervention, which in some countries is widely evidenced as a good one, and fall into the individualism trap, which in some countries is widely evidenced as a bad one.
Your idea should be thought in a wider context just to place it adequately in the overall social protection system.