ABSTRACT
This chapter provides evidence that presidents and prime ministers of sovereign states have two mountain peaks to climb on their way to save their governments from bankruptcy. By involving the state, however, Bismarck's social insurance scheme was a new departure. In Gustav von Schmoller classic book, Socialism, Ludwig von Mises, the Austrian economist and mathematician, says that Bismarck's social security scheme was a more momentous pioneering on the way towards socialism than was expropriation of the backward Russian manufacturers. Some economists say that the mistake made by Otto von Bismarck, Lloyd George, Franklin Roosevelt, Lon Blum and other heads of state was to base social security on the working people's contribution rather than investing that money and make it grow. Critics say that the first reason is that the public sector is too paternalistic and the second is that the true cost of social security pensions is not being properly estimated.
