Evening star., 1932-02-21
BY ROBERT L. LUND,


expert The irst article follows:
BY ROBER
President, National Assoc
As Told to J. "
The subject Of compulsory public !
Germ to everv worker, taxpayer and emp
1t is vital to the worker because l
individual independence and initiative 6
would have to foot the bill for such sy
facturer and other employer, because
mounting costs on industry, business an
The National Association of Man
unemployment insurance, is sympathetic
a sound solution possible. but not along
alternative but to oppose the enactme
compulsory public unemployment insura
Although it is true that there are
proposed, and that some provide that
private hands, 1t still remains that the I
ton. and all experience has shown tn
minister a scheme Of this sort properly.
Beyond Plant Control.
To use workmen's compensation as an
analogy justifyins compulsory unem-
ployment insurance is not sound. for
there is q great difference between in
duStrial accidents and industrial unem-
ployment. Accidents occur for the most
part within the plant, and are subject
to prevention by proper training. educa-
ton and installation of protective safe
guards. Unemployment is usually the
result of outside conditions over which
the individual plant and even the indus
try itself have no control.
However, with industry highly organ
lied, there is reason to believe that pro-
lection against unemployment may be
similarly organized and a plan. OF in
surance found that will afford maximum
security to the wage Garner. 1t is to be
had IN mind, however, that funds taken
from the earnings of industry for this
purpose might be paid direct to the
wage Garner, and 1t is no doubt true
the great majority of wage earners
would prefer to have the opportunity to
work out their own salvation rather
than to have their potential savings
placed in a general fund from which
many would receive nothing.
In justice to the wage Garner. pitfalls
must be avoided in setting up unem-
ployment protection. and many tucll
pitfalls are apparent III plans proposed
The most obvious Is the proposal CT TIE
up unemployment protection on the
same basis as insurance against things
that can be predicted from experience,
such as death, age, accidents illness and
fire Unemployment, with the data now
available, cannot be predicted accurately
enough to determine even approximately
the proper funds for protection.
A Different Problem.
It is conceivable that an actuarial
basis for unemployment protection may
1n
could hardly be more difficult problem.
It seems clear this problem could best
be solved by the private companies
which for almost a century have been
at work on actuarial studies and have
built up tremendous businesses in fire.
life and other forms of insurance based
upon actuarial data. The National As
sociation of Manufacturers would favor
authorizing these companies to write
unemployment insurance.
Even If an acturial plan for unem-
ployment insurance were available it
would seem unwise to intrust its execu-
ton to legislative enactment. It would
be difficult, if not impossible, to keep
such a plan actuarially sound and SOL
vent for the reason that any legislature
might at any time destroy the actuarial
basis. For example, If plan provides
for maximum benefits of l3 weeks year
and the whole plan is related to this. a
legislative session may increase the
period to 20 weeks and entirely destroy
the acturial soundness of the scheme.
as the amounts previously paid into the
fund would not be sufficient to pay for
benefits over the longer period.
Consider further the amount Of bene-
fits to be paid. Sir Hubert Llewellyn
Smith, one Of the two principal authors
of the British public unemployment in
Surance scheme, says: 1T Is essential
that the rate of Unemployment benefit
payable shall be relatively low" as "a
lsrge section Of persons regard idleness
as In itself more attractive than WORK" ="
But 1t Is certain that there can be no
assurance that legislators will not, as a
result of election promises or organized
pressure, disregard this essential of any
sound system and increase the amount
of benefits without regard to conse-
quences to the individual or to industry.
Changes Mean Uncertainty.
The experience with the English dole
has proved that political control in an
unemployment insurance scheme will
lead almost inevitably to legislative
changes which soon destroy any con-
servative basis it may have originally
possessed. The possibility of changes at
every legislative session leads to busi-
ness uncertainty and employment fluc-
tuations.
In addition to these obvious dangers
in governmental insurance schemes, un-
employment insurance, If compulsory,
would actually tend to add to unemploy-
ment, because it would stabilize the very
things that cause unemployment. and
create new conditions which would in
crease 1t.
These results would be brought about
by preventing or delaying the adjust
ment of wages to industrial conditions.
creating an immobility of labor, and
slackening the individuals enterprise
and industry.
Public unemployment insurance tends
to create unemployment also as re-
suit Of provisions such as that Dement'S
will be paid while the worker Is "un-
able to find suitable employment" Any