Germany became the first
nation in the world to adopt an old-age social insurance program
in 1889, designed by Germany's Chancellor, Otto von Bismarck.
The idea was first put forward, at Bismarck's behest, in 1881
by Germany's Emperor, William the First, in a ground-breaking
letter to the German Parliament. William wrote: ". . .those
who are disabled from work by age and invalidity have a well-grounded
claim to care from the state."
Bismarck was motivated to
introduce social insurance in Germany both in order to promote
the well-being of workers in order to keep the German economy
operating at maximum efficiency, and to stave-off calls for more
radical socialist alternatives. Despite his impeccable right-wing
credentials, Bismarck would be called a socialist for introducing
these programs, as would President Roosevelt 70 years later. In
his own speech to the Reichstag during the 1881 debates, Bismarck
would reply: "Call it socialism or whatever you like.
It is the same to me."
The German system provided
contributory retirement benefits and disability benefits as well.
Participation was mandatory and contributions were taken from
the employee, the employer and the government. Coupled with the
workers' compensation program established in 1884 and the "sickness"
insurance enacted the year before, this gave the Germans a comprehensive
system of income security based on social insurance principles.
(They would add unemployment insurance in 1927, making their system
complete.)
One persistent myth about the German
program is that it adopted age 65 as the standard retirement
age because that was Bismarck's age. This myth is important
because Germany was one of the models America looked to
in designing its own Social Security plan; and the myth
is that America adopted age 65 as the age for retirement
benefits because this was the age adopted by Germany when
they created their program. In fact, Germany initially set
age 70 as the retirement age (and Bismarck himself was 74
at the time) and it was not until 27 years later (in 1916)
that the age was lowered to 65. By that time, Bismarck had
been dead for 18 years. |
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