Question

Public Choice Theory- From Mutual Aid to the Welfare State, David Bieto

1. How did fraternal societies that catered to a membership primarily motivated by their mutual aid assistance avoid the problem of moral hazard?

2. Explain what is meant by the notion that the move from "fraternalism to the welfare state was more than just a bookkeeping transfer."

Answer 1

1.

Societies dedicated themselves to the advancement of mutualism, self- reliance, business training, thrift, and a good moral character. These values reflected a kind of fraternal consensus that cut across seemingly intractable divisions as race, sex and income. The societies despite their differences, had some similarities in outlook. Each society found creative ways to customize the ideas of thrift, self-reliance, and self- government to suit its special needs and interests of members. For example, societies that catered to blacks and women used key credos of the fraternal consensus to overcome disfranchisement, segregation, and discrimination. Regardless of other distinctions, the theme of the loving and extended family found universal fraternal appeal. All the societies advocated self-reliance, a hallmark of fraternalism. All the five societies prohibited formal distinctions based on income and class. The ideals of these societies illustrate the many variants and the breadth of the fraternal value consensus.

2.

The shift from mutual aid and self-help to the welfare state was not just a simple bookkeeping transfer of service provisions from one set of institutions to another. As many of the leaders of fraternal societies had feared, much was lost in an exchange that transcended monetary calculations. The old relationships of voluntary reciprocity and autonomy have slowly given way to paternalistic dependency. Instead of mutual aid, the dominant social-welfare arrangements of Americans have increasingly become characterized by impersonal bureaucracies controlled by outsiders.