The Importance of Social Security and Insurance

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In 2005, New Orleans is exposed to hurricane Katrina and during that time, more than 50% of the city’s houses is damaged, and 2000 people lose their lives. However, the private insurance company that should be responsible to pay for this damage denied to pay it and tried to pass it on to the state as they said that the damage was done by flooding and not the wind. This calamity is an example of the lack of current insurance structures.
The history of Insurance is first invented in 1744 by the church of Scotland minister.
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During that time, two ministers Robert Wallace and Alexander Webster collected funds from a group of other ministers to make profitable investments, and the profit from these investments would then be given to the minister’s wife when they die. Since then, it grew quickly into a big agency, and the predictability of the payouts is rose. The insurance business became the largest firm in the British, and Britain became the most insurance country.

After that time, Japan decided to join The Second World War. However, it was a huge mistake as they lost against America. The American bombers caused 1/3 of the Japanese population to lose their homes caused a lot of poverty, illness, and unemployment for the eternity of the population. However, they manage to escape from adversity by taking the British model. In 1970, Japan became the world’s first welfare super-power country, and lead the world in terms of education and health.
The welfare state is looked to be working smoothly in Japan.
However, in other parts of the western country and Britain, the welfare state is not functioning, and it caused inflation to rise. In 1769, Milton Friedman a Noble prize winner flew to Chile for his economic experiment under the government of General Pinochet. He said that to revive the capital market, the government needs to decrease the amount of money supply. Jose Panera was a young economist and with his colleagues, they created a new pension system for Chile. They suggested that 10% of the worker wages should be put into an individual retirement account to be managed by private businesses. Also, there will be disability and life insurance too. This system was very successful as it turns Chile into a prosperous country.
Japan is a successful welfare country. But, the problem is that it was too successful, as life Expectancy was the Longest in the World, the number of retirees will take over the workers. Nowadays, most of Japan’s health insurance societies are in deficit, which makes the pension funds almost Out of Money too, this situation threatens Japan to bankrupt their own country.
Katrina is an example of the limits of welfare and insurance. However, welfare and insurance are not the only things we can use to protect us in the future. Another way is the Hedge fund.

Jeanette Martinez

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