No matter how many times the issue of safety nets is addressed by a libertarian like myself who believes in the efficacy and compassion of the private sector to provide assistance for the poor and handicapped and to provide retirement and health security for everyone, the common modern liberal will ignore the libertarian response and accuse libertarians of not answering how a limited government can handle these issues. The only answer I have for the persistence of this liberal lie is that the State has become so important to the modern liberal, and the modern liberal has invested so much emotional energy blaming private enterprise for the problems of the poor and disadvantaged, that the modern liberal is caught in a closed system of thought from which there's no easy escape.
Any reasonable person who objectively studies the issues of healthcare, retirement, unemployment and assistance for the poor without liberal or progressive bias should come to the conclusion that there's more than one way to access healthcare, achieve security in retirement, meet the emergency of unemployment and help the needy. Anyone who says that the State is necessary to achieve these goods is either ignorant or simply justifying statism for the sake of statism.
Nothing prevents a free society from developing delivery systems for all these security and assistance goods outside State involvement. The money used by the State to create a welfare system comes from the private sector, and it's ridiculous to say the money has to go through the State before it can be spent on healthcare, unemployment, retirement or assistance to the poor. As a matter of fact, running taxpayer money through government bureacracies is an inefficient way to spend the money, and therefore there would be more money for the goods if government is cut out of the picture.
Private insurance/savings plans can deal with healthcare, unemployment emergencies and retirement for the great majority of the public. Without government involvement in healthcare and unemployment and retirement, insurance plans in the private market would answer all these needs for security and peace of mind -- people will know that they have to get policies from the very beginning and parents will have to purchase policies for their children at birth. Will everyone do it voluntarily? No. But the great majority will, because it will be to their benefit to do it, and society will expect people to buy these policies -- societal pressure will force the issue of having a policy, and those who think they can freeload on the compassion of others will be seen as pariahs at the mercy of others. There will be people who can't afford policies, but they will be a small minority requiring other solutions. Just because the purchase of policies won't be 100% is no reason to say the private sector failed. Keeping all this money invested in the private sector will be an economic boon, and income taxes should be practically non-existent -- plus, the economy will be much sounder without the burden of an inefficient welfare state, so jobs will be plentiful and foreign investment in our sound and rapidly growing economy will be at an all-time high. There will be no reason that anyone capable of working can't have a policy to meet safety-net needs. Buying a policy will be as common as finding a place to live or having clothes to wear. The competitive market for policies will keep prices reasonable, and the flexibility of policies will address different lifestyles and needs.
We can't imagine how it will turn out once companies begin competing for customers -- this is the nature of the free market -- it's not planned, so the market will creatively find ways to meet all needs. To say a free society can't work this out for the great majority of people is cynical and ignorant. What developes will exceed anything anyone can imagine beforehand.
As for those who can't help themselves, a properous society in a free market will be so comfortable with life and grateful for a high standard of living, that compassionate individuals will address this problem too, through creative private assistance organizations. There's no doubt in my mind that our society will take care of its own if challenged to do so. I've seen what people are capable of achieving when it comes to helping others, and in a prosperous happy society, the assistance will be abundant. When society is operating form a position of prosperity, abundance and freedom rather than scarcity and dependence due to statist stagnation and misdirection of resources, then this society will be generous and compassionate. You can believe in scarcity and dependence, but I choose abundance, responsibility and compassion, as I think most people will if challenged to realize the vision. The idea that we're pettily selfish, powerless and dependent is an old idea which needs to go the way of all old ideas that block progress.