The Third Pillar: How Markets and the State Leave the Community Behind

by Raghuram G. Rajan

It would not be much costlier to replace informal support with formal Beveridge-level support since it would indeed be at a basic level. For the same reason, such support would not raise significant public concerns about ‘undeserving’ others getting help. Nevertheless, it would constitute a reliable safety net, a necessity for a civilised society in the possibly volatile days ahead, especially if it has not fostered basic capabilities in all. No rich country should create uncertainty among its people about whether they will have enough to live. If there were political appetite for more support, it could be delivered through the community to those who have resided in the community for a while (and to preserve mobility, the community would bear responsibility for a while for those who move out, with any conditionality porting to the beneficiary’s new location). Community support should be relatively equal across proximate communities – else beneficiaries could swamp communities where the benefits and conditions are most favourable. Communities should bear a share of the cost of benefits so that they have skin in the game, with the share increasing in average community incomes. Who would pay the rest? Ideally it would be regional or state governments, who are close to the communities and can monitor performance. In countries where regional or state governments tend to discriminate against certain communities, the federal government would have to monitor flows or take over.

No individual should feel the fear of not having enough to live