PRESIDENTIAL ADDRESS. 675 



appropriate remeay — bearing in mind the critical distinction already drawn 

 between different classes of risks. 



Moreover, by 'insurable risk' I do not mean a risk which can be iully 

 covered by insurance, but one the consequences of which may be mitigated by a 

 payment which nevertheless falls far short of complete indemnity. It hardly 

 needs demonstration that full indemnity against the risks of unemployment 

 could not be offered without disastrous results, inasmuch as a large section of 

 persons regard idleness as in itself more attractive than work. The universal 

 practice of organisations, voluntary or public, which insure against sickness, 

 accident, or unemployment, is to make the benefit payable much less than the full 

 rate of wages, and in all that follows this condition is assumed. 



For the purpose of the present inquiry the causes of unemployment group 

 themselves naturally under three heads — periodic fluctuations, local and industrial 

 displacements, and personal causes. 



Of these I have already touched on the first group in discussing cyclical and 

 seasonal fluctuations of employment. Seasonal changes are, of course, the direct 

 result of cosmical causes, and whether or not cyclical fluctuations are ultimately 

 psychological or (as Jevons thought) cosmical phenomena, there can be no doubt 

 that for our present purpose we may regard them as ultimate facts beyond 

 the control of the individual. These two elements in unemployment are pre- 

 eminently insurable elements, since, being due to recurrent oscillations and not to 

 progressive changes, they can only be met by some method, either individual or 

 collective, of spreading the earnings of good periods over good and bad alike, 

 and not by any remedy which aims at altering the permanent relation between the 

 demand for labour and the supply. Moreover, of the two alternative methods, 

 collective insurance is more appropriate for the purpose than individual providence, 

 because while the oscillations are fairly well defined, their intensity and (in the 

 case of cyclical fluctuations) their wave length are affected by many uncertain 

 elements, climatic, financial, industrial, and political, which are incapable of 

 exact prediction, and (what is even more important) the personal incidence of 

 the unemployment due to the oscillations is uncertain. 



The next group of causes includes changes in industrial processes or methods 

 or in the local distribution of industries, or in the character of industrial demand. 

 How far are these classes of risks properly insurable ? 



As regards local distribution, the answer mainly depends on the scope of 

 the insurance scheme. No purely local fund can, of course, compensate a 

 workman for the shifting of his industry to other districts, without incurring 

 ruinous expense besides impairing the mobility of labour. If, however, the 

 insurance scheme be national in scope and be worked in conjunction with 

 systematic machinery for notifying to the workman the existence of vacancies 

 in other districts, the risk of unemployment due to local displacement is clearly 

 an 'insurable' risk. As no national scheme could embrace a wider area than the 

 United Kingdom, the above argument does not apply with its full force to the 

 risk of displacement of industry by foreign competition, and this case needs 

 separate treatment. It is undoubtedly a risk beyond the individual's control, 

 and it has, therefore, one of the essential marks of an insurable risk; and if the 

 scheme embrace a large group of trades of sufficient variety to insure each other 

 against the risk of some particular branch being attacked by foreign competition, 

 there is no reason why this class of risk should throw an excessive burden on a 

 national fund. _ The only question to be considered is, therefore, whether the in- 

 surance of British workmen in an industry liable to be transferred by competition 

 to a foreign country will operate prejudicially by checking industrial mobility, 

 there being obviously not the same opportunity for the workman to follow the 

 work as in the case of local redistribution of industry within the limits of the 

 ircsuring country. 



In this respect the case we are now considering is on all fours with that of a 

 trade decaying through a permanent change of industrial demand, or an alteration 

 of industrial processes. If there is appreciable mobility of labour between the 

 decaying trade and other healthy branches embraced within the scope of the 

 insurance scheme, and if its magnitude is small as compared with the total area 

 of industry covered by the scheme, then the risk is fairly insurable. If, however, 

 these conditions are not fulfilled, the case of the permanently decaying trade may 



