The United States has been blessed with an abundance of natural resources unlike most any other nation in the world from the very beginning of our nation. Plentiful rich land for expansion, an abundance of coal, oil, natural gas, and a mostly congenial and mild climate combined to make this a haven for those willing to work hard and have an independent spirit for the better part of three centuries now. Combine this with rich soil, and almost limitless supplies of fresh water and wild game and you begin to get a feel for how uniquely rich this country has been since its inception. It is hard to overstate the fact that much of the rich character of our nation is directly attributable to the vast bounty in natural resources that our part of the continent of North America contained when the first settlers from Western Europe set foot here. We as Americans are fond of bragging about the individualism and entrepreneurial spirit that made us the greatest economic and military power in the world today without giving due credit to the vast richness the land held when we came here.
At the outset of the experiment that the United States government is we were almost overwhelmingly an agricultural nation. What made this country unique from so many of the nations of Western Europe where so many of the original immigrants came from was the heretofore unimaginable amount of land available for the taking. This is the only nation of the western world where for centuries there was more land available than people to work it. This led to low prices on land and high prices on labor; both uniquely and vastly different from what the rest of the western world knew as normal. It was this great abundance of land that financed much of our government expense for most of the first two centuries of our existence as a nation. Money from the public sale of these lands along with moderate tariffs on imports from overseas provided the great majority of revenues that our government needed to survive. While much of Western Europe struggled with high taxes and all manner of attempts to raise enough revenue to cover expenditures Americans were for the most part completely unconcerned with such problems.
Indeed the American Revolution by which we as a country gained our independence from Great Britain was largely fought over Americans refusal to pay taxes to the British government. Great Britain believed that since she had provided the military that fought two wars against foreign powers and Native American allies to these powers, the colonies should share in the high taxes these expenditures had levied on her citizens in Great Britain and other colonies of the crown. American colonial leaders disagreed. It is worth noting here that even at that time the preponderance of this tax burden fell upon the first wealthy class that had sprung up in this nation. These taxes that American colonial leaders found so objectionable were not levied on the average American small farmer they were taxes on the merchant and planter class; the wealthiest Americans.
As Adam Smith in his "Wealth of Nations" notes; it is the division of wealth that is in many ways the root cause of government expense to begin with. If all nations are equal in wealth there is little motive for one nation to attack another. If all citizens within a country are equal in wealth there is little reason for the expensive protections government provides in the form of justice systems, police, and standing armies. It is the division of wealth, furthermore the unequal division of wealth that makes stronger central governments necessary. Central governments from the very beginning of civilization have been necessary to support property rights. John Locke, the enlightened thinker from whom Jefferson borrowed the immortal "Life, Liberty, and the Pursuit of Happiness" in the opening of the Declaration of Independence, stated the function of all government more clearly as the protection of "Life, Liberty, and Property". While both Jefferson and Locke agree that all true governments receive their power from the consent of the governed Locke was much more honest about the three basic rights governments have the duty to protect. In other words, justice systems, courts, police, and to a great extent national armies are necessitated by the need to protect property rights. In largely agrarian societies with equal wealth smaller, less expensive governments have always sufficed. An axiom that Smith well recognized is that the larger the division of wealth within a nation, the more complex and expensive the government system that is needed to support it.
Smith spends a great deal of time in his book explaining this theory. It is the basis for his justification for taxing the populace in proportion to their wealth. After all, if they are the reason why a larger more expensive government is necessary, they should be willing to pay for it in proportion to their need. This is an important point and one that we seem to have lost sight of in this country in the recent past. Much of our governmental effort goes into protecting the business interests of our wealthiest citizens. Our nation's foreign policy since the beginning of the 20th century has been overwhelmingly slanted towards protection of the largest business interests in the country. When we were an isolationist nation with little business interests outside of our borders we had little need of a huge military or a large and expensive state department. As corporate giants began to dominate the market place both here and abroad our government grew to protect and support their interests.
When the bulk of this nation was agrarian we had little need of a large central government. For much of the first 120 years of our history as a nation this held true. However, with the growth of corporations, manufacturing interests and international trade interests at the end of the nineteenth century this began to change. This change was manifested in our growing involvement in international affairs on a national basis. We didn’t become intimately involved in international affairs through a national referendum; we became involved because of the growing influence of a wealthy class of Americans whose financial interest necessitated a strong military and diplomatic international presence to support their interests. Anyone who takes the time to read the writings of our founding fathers will find them almost unanimous in their disdain for a strong central government supported by large standing armies. This is because as an agrarian nation, we had no need of such exigencies, but as an economic leader in world financial centers this is no longer the case. I don’t think anyone would sensibly argue we don’t need a standing army today or an international diplomatic corp. Aside from those who believe we should revert to being an agrarian nation, everyone understands this is simply a necessity in today’s world.
It was our nation’s rise as an industrial nation that necessitated the growth of our government. In other words, the growth of wealth in this country led to our becoming a leader in the world and this wealth also has costs associated with it that we pay in the form of a larger, more expensive government. You simply cannot have one without the other. Therefore, since it is the wealthiest among us who profit the most from this system they should pay the largest share of the expense in maintaining it. This has been the basis for a fair system of taxation from the very beginnings of organized governments. To quote from Smith again;
The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state. The expence of government to the individuals of a great nation is like the expence of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation.
The growth of corporate power in this country is another reality that we seem to not understand very well as a voting public. Corporations have gained legal status that allows them to have many of the same rights as individuals without the requisite liability of an individual. Just for example, the Supreme Court recently ruled that corporations have the same right of free speech as individuals so they should not be limited as to how they contribute to campaigns of their favorite candidates. While this may seem plausible on its surface it covers up the fact that as an individual you and I are responsible for all of our actions to the very limits of our financial ability to cover them while corporate leaders are only liable as far as their corporate finances while their individual finances are beyond the ability of a court to reach. This is just one example of how the vast capabilities of large corporation’s wealth don’t match their culpability in our legal system. There are many others that favor corporations which is exactly why their success has been tied so closely with the growth of our nation’s power and the growing division between the wealthiest 1% of Americans and the rest of us. I don’t believe corporations are evil entities but they are favored entities under the legal system of this country which is exactly why they have so much wealth and requisite power in our government today.
It is in their best interests that many of the foreign policy decisions that the rest of us pay for are routinely made. Receiving the great abundance of favor that such decisions afford them, one would think that they would happily pay the heaviest share of the expenses put forth to gain them but that is not what is going on in this country today. Since the Reagan revolution we have seen a steady increase in corporate profits along with a steady decrease of the amount of revenue the government receives from them. It is true that the Corporate Tax Rates in this country are high compared to most other industrialized nations (close to 35%). However, what is also true is that tax loopholes that have progressively been extended throughout the last 30 years have reduced the actual tax liability of corporations to all time lows. In 1978 the percentage of total tax revenue raised in this country off of tax revenue on corporations was 15% as opposed to some 47% in individual income taxes at the same time that corporations took in some 40% of the total profits realized. In 2009 the percentage of revenue gathered from corporations was 6% as opposed to 46% in individual income taxes. In other words, corporations which took in some 70% of the total profits made in this country paid 6% of the taxes collected. Looked at another way if corporations earn 70% of the profits and pay 6% of the revenue they are paying a vastly smaller percentage of the cost of the government that makes their profit margin possible while at the same time capitalizing on the protection government affords them. Taking into account the recent rulings on campaign contributions by corporations it is easy to see how this vast increase in profit margins will allow them to continue to consolidate control over the election process in the near future.
Beyond the unlevel playing field of corporate America is another level of unequal taxation the Reagan revolution ushered in that is just as devastating to the deficit. The highest tax brackets in this country have historically paid some 70-90% in income taxes. Again, this is the group of Americans who profit the most from the business environment that our large government creates through subsidies, government research and development grants, and foreign policy decisions built around protecting the financial interests of this same group of people. This same group of people today typically pays some 15% on their income taxes by the time all the loopholes available to them through tax attorneys and favorable legislation are assessed while the average upper middle class citizen pays close to 30% on their income taxes in direct payroll deductions. This is exactly why the upper 1% of the wealthiest Americans now own 45% of the wealth of this country as opposed to the 18% they owned when Reagan came into office.
Without a doubt we as a country have some serious problems as far as our financial situation. We are continually spending more than we take in which is obviously unsustainable. The question is what do we do about it? Do we continue to slash government programs until we can subsist on the lower revenues our present tax codes provide or do we believe that it is both necessary and proper for the government to provide basic services and increase our revenues through higher taxation on corporate profit? The ugly truth we seem to be ignoring is that our government which has steadily grown more and more to be controlled by corporate interests in the financial interests of the wealthiest Americans has at the same time continuously reduced their responsibility for paying the bills. The good news is that we are approaching a point to where these questions will have to be answered. The bad news is that we don’t seem to realize why or how we got into this situation. Corporate interests of the wealthiest Americans continue to gain more control of our government while at the same time increasing their profit margins by cutting the amount of taxes they pay while pointing to the poorest among us as the financial drain on the economy. The choice is ours to make. We can either institute a taxation system based upon the timeless values of equal taxation espoused by Adam Smith above or we can continue our present system of unequal taxation and see the eventual financial collapse of our government as we now know it. What we cannot do is expect to continue on the path we are presently on without facing up to where it is leading us.
Wednesday, March 23, 2011
Thursday, March 17, 2011
Observations Concerning Governments and Taxation
In this country today we have some serious problems with deficits. Anyone who takes the time to look into the situation soon understands that this is a problem that has consistently grown since the Reagan revolution. After the national deficit had basically stabilized since the early 1940’s Reagan’s Administration managed to double the deficit in just eight years. The vast mobilization of armed forces that the United States won WWII with temporarily doubled the deficit but it was quickly paid back down shortly afterwards. Reagan and his policies managed to double the deficit during peacetime with the added legacy that the policies he espoused have directly led to the fact that we still have not managed to get it back under control in the thirty years since.
Governments, unlike personal budgets have regularly and routinely run budget deficits since the beginnings of organized governments in Sumeria some 4000 years ago. The reason for this is very simple. Revenue for governments can come only from taxation and taxation is based upon last year’s expense so there is always a time delay in the reaction of taxation to expenditure. While this is a little alien to the way the most people understand budgeting on a personal level, it is inherent in government expenditure. It is only in recent modern history that methodologies for predicting expenditure have come into common usage for governments and the success rate of these methods is not exactly stellar as governments are frequently faced with situations that require immediate response. We must always remember that any government’s ability to raise revenue is not immediate; it is always lagging behind the need to make expenditures. Modern budgeting methods are predictive modeling attempts at seeing future need and setting money aside accordingly. Barring a discovery of omniscient future sight governmental budgeting will always be at best a very inexact science.
From the very beginnings of organized governments it has been necessary to match revenues (money coming in) with expenditures (money going out). While there is an inherent delay in this process it is still necessary to adjust expenditures and revenues accordingly. While most everyone understands this process from their own efforts to balance their household budgets the public at large in this country today seems unnaturally predisposed to seeing only one side of the budgeting method of our country; expenditures. In a nation as large as ours with as many different obligations as we have it is inevitable that we will disagree on the relative importance of expenditures. Largely these disagreements center on regional interests but they are often further divided based upon our individual status in the economic hierarchy. Farmers in Iowa consider government agricultural subsidies to be of prime importance while government workers in Alabama who work on government facilities are much more likely to favor government investment in military research and development. This discussion can go on ad infinitum without respite, the point being that part of belonging to such a diverse country is an inherent disagreement on priorities. While this diversity is a weakness when it comes to budgeting it is in many other ways the source of our greatest strength as a nation.
Let’s look at some history of governments and taxation to better understand the problem. There is a large push in this country today to do away with big government; to go back towards smaller government and more of a pure capitalist system. Virtually everyone seems to believe this is the path we need to take to recover our economic strength and upgrade our standard of living. Unfortunately for the proponents of this theory, history seems to teach us just the opposite. The advents of organized governments throughout history have directly corresponded with marked advancement in civilization. The Sumerian city states were the first organized governments and marked the beginnings of advancement in cultivation techniques that allowed the growth of populations that had never before been seen on this planet. It is the combined efforts of groups of people and the resultant division of labor that has led to all advancement in living conditions since the beginning of recorded history, not the individualistic efforts of the strongest amongst us. The pooling of labor resources and revenue resources led to large irrigation projects that simply could not have occurred by individual effort. The source of this combined effort, whether in labor or capital was taxation. Each individual by contributing his part in the group effort advanced his own standard of living infinitely quicker than he could have in isolation. This is the root source of all government, the bonding of individual effort for the common good.
Government provides stability. Stability is necessary for advancement. Without government, people are forced to fend for themselves spending large proportions of their time defending their gains from becoming plunder for others. Division of labor collapses and efficiency collapses along with it. Even a cursory glimpse of the history of civilization proves the indivisibility of these two concepts; progress and government. The larger and more effective the government the greater the progress and the higher the standard of living for its citizens; there is an undeniable and direct correlation.
Sumerian civilization with its localized city state governments was closely followed by Greek civilization with its larger city state governments. Each led to rapid advancements in agriculture, science, and business practices that led directly to rapid advancements in standards of living for its citizens. Along with these governments came taxation which also directly corresponded to this advancement. It was the advances in taxation policies which gave the governments the labor and capital they needed to protect and advance this standard of living, allowing it to further advance.
Roman civilization featured even larger governments with further refined systems of taxation that led to stronger central government and more rapid advancement in standards of living for its citizens. With the collapse of Rome and the drift of European civilization towards feudalism and this system's inherent individualism we had the advent of the dark ages which saw standards of living regress and scientific knowledge collapse. It was the inherent inability of governments to centralize power that led directly to these problems and the resultant drop in standards of living all across the western world.
As western national governments began to re-emerge and consolidate power we saw the return of economic advancement and a corresponding steady increase in the standard of living for their citizens. Larger, more centralized governments subsidize economic prosperity by providing security for their citizens and allowing ever greater divisions of labor which in turn lead to higher efficiency. In short, the strength of central governments and their ability to raise revenue for the common good have always directly corresponded to increases in standards of living. Smaller, less centralized governments have always had just the opposite effect throughout the history of the civilized world.
This leads to the United States and our own history of economic growth compared to governmental strength. The United States, even though it possessed the greatest abundance of natural resources of any one nation, was basically a third world power economically and militarily until the consolidation of power in our central government began to take place. Our economic prosperity is directly correlated to the size and strength of our central government and this has held true throughout our nation’s history. For the same reasons that western civilizations advance has always been tied to the strength of government, the explosion of economic power that the United States experienced happened along with the growth of the central government and the resultant revenue increases that came with it.
The United States financed much of the world’s economic recovery after WWII through the ability to raise revenue. The growth of our national educational system, our national road system, our national electrical power system, and virtually every other economic engine that led to our world leadership in both standard of living and economic capacity are all directly related to the strength of our national government and its ability to raise revenue and disburse it for the common good. Individuals didn’t build the road systems, they didn’t build the schools, they didn’t subsidize the space exploration that led to most of the technologies that have so rapidly advanced our standard of living in this country. The central government with its vast ability to raise revenue for the common good did. Individual companies didn’t bring the cost of food down to its lowest relative level the world has ever seen, the central government with its subsidies of crops did.
Americans once understand this concept. No one likes paying taxes but it is a necessity to finance government and government of the people, by the people, is the guarantee that makes the whole system work. The idea that our government, the one we elect and control, is somehow an evil thirsty beast that must be slain so that we can inherit economic prowess is directly in conflict with the truths that our own history conveys. We have been sold a bill of goods by a small wealthy minority in this country who believe they should have the benefits this national system allows them without paying the costs associated with maintaining it.
Adam Smith, in his “Wealth of Nations”, which is widely espoused as the founding tome of capitalist theory addresses the idea of taxation as follows:
The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state. The expence of government to the individuals of a great nation is like the expence of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation.
This is exactly why we as a people voted in a progressive income tax in 1916. The people of this nation well understood the idea that those who prosper greater under the protection of the government are most responsible for paying its costs. The top tax brackets in this country were historically in the 70-90% range previous to Ronald Reagan. Since he was a product of some very wealthy patrons it is only natural that he would attempt to advance their interests but it is literally amazing to me that the general public fails to make the obvious connection between the drastic cuttings of this tax rate with the immediate rise of the deficit. The theory that cutting taxes on the wealthiest Americans and Corporations would lead to economic growth has been tried for the last thirty years and we find ourselves in the same kind of depression that this kind of fiscal irresponsibility netted us in 1929. George Bush Senior was right, it is "Voodoo Economics".
If cutting taxes on the wealthiest Americans leads to economic prosperity we should be in the biggest economic boom this country has ever seen right now because we have been doing it for 30 years now. What we have actually seen is the distinct degradation of every facet of our national economic infrastructure along with a drastic redistribution of the wealth of this country from the middle class to the wealthiest one percent of Americans. The tax burden has shifted dramatically to the middle class while the wealthiest Americans get relief. We have the highest deficits ever seen along with the lowest tax burdens for those that prosper most under the umbrella of protection our government affords.
Government finance is always an adjustment between revenue and expenditure. We cannot solve the problems we have by attacking only one of the two basic levers that control our system. The only way we will regain our economic strength is to return to the proper balance between what is earned under the protection of the government and what is owed in its support and that means raising the tax rate on those who prosper most.
Governments, unlike personal budgets have regularly and routinely run budget deficits since the beginnings of organized governments in Sumeria some 4000 years ago. The reason for this is very simple. Revenue for governments can come only from taxation and taxation is based upon last year’s expense so there is always a time delay in the reaction of taxation to expenditure. While this is a little alien to the way the most people understand budgeting on a personal level, it is inherent in government expenditure. It is only in recent modern history that methodologies for predicting expenditure have come into common usage for governments and the success rate of these methods is not exactly stellar as governments are frequently faced with situations that require immediate response. We must always remember that any government’s ability to raise revenue is not immediate; it is always lagging behind the need to make expenditures. Modern budgeting methods are predictive modeling attempts at seeing future need and setting money aside accordingly. Barring a discovery of omniscient future sight governmental budgeting will always be at best a very inexact science.
From the very beginnings of organized governments it has been necessary to match revenues (money coming in) with expenditures (money going out). While there is an inherent delay in this process it is still necessary to adjust expenditures and revenues accordingly. While most everyone understands this process from their own efforts to balance their household budgets the public at large in this country today seems unnaturally predisposed to seeing only one side of the budgeting method of our country; expenditures. In a nation as large as ours with as many different obligations as we have it is inevitable that we will disagree on the relative importance of expenditures. Largely these disagreements center on regional interests but they are often further divided based upon our individual status in the economic hierarchy. Farmers in Iowa consider government agricultural subsidies to be of prime importance while government workers in Alabama who work on government facilities are much more likely to favor government investment in military research and development. This discussion can go on ad infinitum without respite, the point being that part of belonging to such a diverse country is an inherent disagreement on priorities. While this diversity is a weakness when it comes to budgeting it is in many other ways the source of our greatest strength as a nation.
Let’s look at some history of governments and taxation to better understand the problem. There is a large push in this country today to do away with big government; to go back towards smaller government and more of a pure capitalist system. Virtually everyone seems to believe this is the path we need to take to recover our economic strength and upgrade our standard of living. Unfortunately for the proponents of this theory, history seems to teach us just the opposite. The advents of organized governments throughout history have directly corresponded with marked advancement in civilization. The Sumerian city states were the first organized governments and marked the beginnings of advancement in cultivation techniques that allowed the growth of populations that had never before been seen on this planet. It is the combined efforts of groups of people and the resultant division of labor that has led to all advancement in living conditions since the beginning of recorded history, not the individualistic efforts of the strongest amongst us. The pooling of labor resources and revenue resources led to large irrigation projects that simply could not have occurred by individual effort. The source of this combined effort, whether in labor or capital was taxation. Each individual by contributing his part in the group effort advanced his own standard of living infinitely quicker than he could have in isolation. This is the root source of all government, the bonding of individual effort for the common good.
Government provides stability. Stability is necessary for advancement. Without government, people are forced to fend for themselves spending large proportions of their time defending their gains from becoming plunder for others. Division of labor collapses and efficiency collapses along with it. Even a cursory glimpse of the history of civilization proves the indivisibility of these two concepts; progress and government. The larger and more effective the government the greater the progress and the higher the standard of living for its citizens; there is an undeniable and direct correlation.
Sumerian civilization with its localized city state governments was closely followed by Greek civilization with its larger city state governments. Each led to rapid advancements in agriculture, science, and business practices that led directly to rapid advancements in standards of living for its citizens. Along with these governments came taxation which also directly corresponded to this advancement. It was the advances in taxation policies which gave the governments the labor and capital they needed to protect and advance this standard of living, allowing it to further advance.
Roman civilization featured even larger governments with further refined systems of taxation that led to stronger central government and more rapid advancement in standards of living for its citizens. With the collapse of Rome and the drift of European civilization towards feudalism and this system's inherent individualism we had the advent of the dark ages which saw standards of living regress and scientific knowledge collapse. It was the inherent inability of governments to centralize power that led directly to these problems and the resultant drop in standards of living all across the western world.
As western national governments began to re-emerge and consolidate power we saw the return of economic advancement and a corresponding steady increase in the standard of living for their citizens. Larger, more centralized governments subsidize economic prosperity by providing security for their citizens and allowing ever greater divisions of labor which in turn lead to higher efficiency. In short, the strength of central governments and their ability to raise revenue for the common good have always directly corresponded to increases in standards of living. Smaller, less centralized governments have always had just the opposite effect throughout the history of the civilized world.
This leads to the United States and our own history of economic growth compared to governmental strength. The United States, even though it possessed the greatest abundance of natural resources of any one nation, was basically a third world power economically and militarily until the consolidation of power in our central government began to take place. Our economic prosperity is directly correlated to the size and strength of our central government and this has held true throughout our nation’s history. For the same reasons that western civilizations advance has always been tied to the strength of government, the explosion of economic power that the United States experienced happened along with the growth of the central government and the resultant revenue increases that came with it.
The United States financed much of the world’s economic recovery after WWII through the ability to raise revenue. The growth of our national educational system, our national road system, our national electrical power system, and virtually every other economic engine that led to our world leadership in both standard of living and economic capacity are all directly related to the strength of our national government and its ability to raise revenue and disburse it for the common good. Individuals didn’t build the road systems, they didn’t build the schools, they didn’t subsidize the space exploration that led to most of the technologies that have so rapidly advanced our standard of living in this country. The central government with its vast ability to raise revenue for the common good did. Individual companies didn’t bring the cost of food down to its lowest relative level the world has ever seen, the central government with its subsidies of crops did.
Americans once understand this concept. No one likes paying taxes but it is a necessity to finance government and government of the people, by the people, is the guarantee that makes the whole system work. The idea that our government, the one we elect and control, is somehow an evil thirsty beast that must be slain so that we can inherit economic prowess is directly in conflict with the truths that our own history conveys. We have been sold a bill of goods by a small wealthy minority in this country who believe they should have the benefits this national system allows them without paying the costs associated with maintaining it.
Adam Smith, in his “Wealth of Nations”, which is widely espoused as the founding tome of capitalist theory addresses the idea of taxation as follows:
The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state. The expence of government to the individuals of a great nation is like the expence of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation.
This is exactly why we as a people voted in a progressive income tax in 1916. The people of this nation well understood the idea that those who prosper greater under the protection of the government are most responsible for paying its costs. The top tax brackets in this country were historically in the 70-90% range previous to Ronald Reagan. Since he was a product of some very wealthy patrons it is only natural that he would attempt to advance their interests but it is literally amazing to me that the general public fails to make the obvious connection between the drastic cuttings of this tax rate with the immediate rise of the deficit. The theory that cutting taxes on the wealthiest Americans and Corporations would lead to economic growth has been tried for the last thirty years and we find ourselves in the same kind of depression that this kind of fiscal irresponsibility netted us in 1929. George Bush Senior was right, it is "Voodoo Economics".
If cutting taxes on the wealthiest Americans leads to economic prosperity we should be in the biggest economic boom this country has ever seen right now because we have been doing it for 30 years now. What we have actually seen is the distinct degradation of every facet of our national economic infrastructure along with a drastic redistribution of the wealth of this country from the middle class to the wealthiest one percent of Americans. The tax burden has shifted dramatically to the middle class while the wealthiest Americans get relief. We have the highest deficits ever seen along with the lowest tax burdens for those that prosper most under the umbrella of protection our government affords.
Government finance is always an adjustment between revenue and expenditure. We cannot solve the problems we have by attacking only one of the two basic levers that control our system. The only way we will regain our economic strength is to return to the proper balance between what is earned under the protection of the government and what is owed in its support and that means raising the tax rate on those who prosper most.
Wednesday, March 2, 2011
Is Our Health Care System Broken?
Is the Health Care system in this country broken? This is the basic question we need to ask ourselves as Americans. I think there is a lot of evidence to suggest that it is; that we are paying for a Cadillac and receiving a Yugo with warranty issues. I often hear it said that we have the greatest health care system in the world but I seldom hear that particular sentiment out of anyone who is not a right wing Republican, a doctor, an insurance spokesman, or a drug company executive. This issue really isn’t that different from any other; it is all a matter of perspective.
Let’s look at that argument of those who like the system as it is. First off, if you are a doctor in this country you make almost twice as much as a doctor in the rest of the world on average. This number climbs to four times as much for specialists but on the average it comes out around twice as much. There are probably numerous reasons for this but the ones most often presented as justifications are the costs of doing business as a doctor. Education to become a doctor is extremely expensive and time consuming. There is little doubt about this but I would also point out that it is the AMA who controls the medical education field. The AMA controls how many doctors get into the field and how long it takes to get a medical degree. The AMA, as a union for doctors, well understands that the best protection for high fees is a moderate supply of doctors and almost all studies agree that we have a shortage of doctors in this country so I would suggest that they are doing a very good job of controlling the supply of doctors which can be directly correlated to the pay of doctors by the simplest rules of supply and demand. The AMA also regulates who can practice medicine in this country which is why we don’t have nurse practitioners, holistic doctors, and other types of medical practitioners treating many patients in this country. In alliance with the AMA, private insurance providers refuse to provide payment to non AMA approved practitioners even though they are much more cost effective for most common ailments.
The next argument that the AMA puts forward as a reason for high costs is tort policy in this country. It is without doubt that high malpractice insurance adds cost to the practice of medicine. However, experiments in tort reform policies in Texas and several other states have shown that such reforms actually only lower medical costs some 1-2%. While this is not something to be ignored it hardly goes towards explaining why health care costs in this country are higher than in any other industrialized nation in the world but I will get back to tort reform a little later. As a percentage of GDP we are fast approaching 20% for health care costs in this country while no other industrialized nation in the world has more than 12% of their GDP associated with health care costs. It is also worth remembering that our GDP is larger than any other country in the world.
Let’s look at some numbers to see if we can decide how our health care system fares when compared with the rest of the industrialized world. The US GDP is estimated to be 14.1 Trillion dollars. If you are anything like me you have a hard time visualizing this type of number but I decided to do some comparisons with other countries to try and make sense of this number. If you add up the GDP totals of Germany, France, United Kingdom, Italy, Canada, Spain, Belgium and Australia you get a number just a little less than the 14.1 Trillion dollars of the US GDP. Therefore, the combined total of these countries’s GDP is roughly equal to the US GDP. If you add up the averages of these western countries percentage of GDP spent on health care and average it out it comes out to a roughly 9%. Currently in this country the best estimates put our percentage of GDP spent on health care at 17.3% (and projected to grow at an astonishing 6.78% per year in the near future).
To decide what this means in actual dollars per person I looked at the population totals. The population total in the US is presently some 307,212,123 people. If you take 17.3% of our 14 trillion dollar GDP and divide that by the number of people in the US you get $7883.00 per person as the average cost per person in this country. If you take the total population of the eight countries I listed above (352,179,713) and do the same calculation based upon 9% of their GDP the total comes out to $3552.00 per person. In other words we pay on average 221% higher health care costs per person in this country than do the people in these eight nations which I would argue are probably the closest to this country in culture and standard of living.
This is exactly why so many of the supporters of the present system are so adamant about saying we have the best system in the world. It better be; as it is more than twice as expensive as any other system that is directly comparable. Let’s look at some comparison studies to see if this theory holds water. In terms of general health and measurable statistical information I am afraid that the numbers don’t support this theory at all. According to the CIA World Factbook the US ranks 41st in the world in infant mortality rate which is hardly something to brag about. There is controversy over how these figures are gathered in that many countries vary according to how they specify when an infant is alive but the US also ranks 41st in the world in infant low birth weight which I think anyone can see is directly correlated to infant health. We rank 46th in the world in life expectancy and it is worth noting that there is a rapidly growing disparity in this country between life expectancy for the wealthy upper classes and life expectancy for the financially lower classes. Those who can afford our best health care simply live longer.
There are other basis for doing relative comparison studies on health care efficiency that are based upon years of life lost under the age of seventy in cases amenable to being saved by health care. The Organization for Economic Cooperation and Development publishes studies based upon these cases under the heading of “years of potential life lost”. This is where we should shine as a nation if our health care system, which is heavily slanted towards cure instead of prevention, is actually efficient. Unfortunately, the US ranks third from the last for women in the study just behind Mexico and Hungary. For men, we rank fifth from last for men just ahead of Slovakia and Poland. Being in a class with Mexico, Hungary, Slovakia, and Poland is not necessarily something I think we need to be bragging about; especially when we pay more per person than anyone in the world to get there.
The fact of the matter is that the US leads the world in specialized care for many types of technologically complex treatment systems. This is one area of health care where our system shines and this is exactly the area that is so often highlighted by proponents of the system. If you have plenty of money and inexhaustible insurance coverage this is the place to come for such treatments and people from all over the world come here for that reason. However, if you don’t have insurance and a lot of money besides this is not something you will likely be afforded access to in this country. After all, the medical industry has to make a profit in this country too; that is how capitalism works.
As I have covered in several posts already the private insurance industry in this country well understood the pitfalls of providing health care insurance from the beginning and they have avoided them admirably. By tying insurance to employment from the beginnings of the rise of private health insurance in this country they effectively assured themselves that they could control profit margins by providing insurance for the healthiest people (those that are gainfully employed) while removing those from their rolls who are the worst risks (the elderly and those who get too sick to work). While this is good business for private health insurance companies it is a problem for those who actually need medical care and one that continues to add exponentially to actual health care costs. As is often the case, the goals of meeting profit margins and providing needed services are frequently in direct opposition.
For example, a very high percentage of personal bankruptcies in this country are directly attributable to health care costs. Estimates range from 50-80% as far as percentage of people filing bankruptcy because of medical bills depending on which agency you get your information from. The story that is repeated over and over again is the same. Person A, who has health care insurance through their work, is unlucky enough to get cancer or some other debilitating medical condition. This person soon loses their ability to work and with it their health care insurance (some 80% of medical related bankruptcies come from people who originally HAD health care insurance through their work but later lost it). Being unexpectedly unemployed bring many financial hardships to working class people and very few of them can afford the higher rates they are forced to pay to keep insurance after being removed from a group plan where they work. Therefore, they are soon without insurance and the bills instantaneously get higher without insurance. If any of you have been to a hospital recently you know that the bill you get is usually two to three times higher than what the hospital eventually accepts from the insurance company as payment. However, if you don’t have insurance you also don’t have the power to barter with the hospital to get this same reduction. The truth is that the hospital recognizes that people cannot afford to pay the high costs associated with a long treatment and they fully expect to take a loss on the costs so they are not willing to barter. They would much rather take a loss and write it off on their taxes while collecting what they can through government sponsored Medicaid. It is just good business sense for them and they too are part of the capitalist system wherein profit is the final motive. The end result is bankruptcy for the individual who is unlucky enough to need the care. Even worse, if this person is lucky enough to survive the disease, the treatment, and the bankruptcy they are now faced with the certainty of not being able to attain private health insurance for this condition for the rest of their lives. This leads to the surprising conclusion (and one that most working class people aren’t aware of until it is too late) that having private health care insurance through your work is a lot like playing Russian roulette; everything is fine until you hit on the chamber with the bullet in it.
Let’s talk about the uninsured for just a moment. Some 15% of the population in this country is currently uninsured. While a good percentage of these people are younger workers who are not working in industries that offer employer health care programs the fact remains that all of these people are at risk of accident or catastrophic disease that would quite literally bankrupt them if it were to occur. Russian roulette is equally deadly whether you are aware you are playing it or not. If an uninsured person does need routine medical care, no matter how innocuous, the large majority of them show up at emergency rooms where health care costs are the most expensive because most emergency rooms are required to provide the care they need. Because there is often no other choice these people get the most expensive care possible; often for problems that could easily be taken care of much more efficiently at a clinic by a nurse practitioner were lobbyist from the AMA not actively making sure this is not legal. Between the government’s reluctance to help set up such alternative programs and the AMA’s insistence on protecting their memberships ability to make exorbitant amounts of money we have another situation wherein the worst solution is the only possible one for people without insurance.
Tort reform is another solution that is often tossed about as something that will cure the problems we currently have with health care costs. The theory is that by protecting doctors from high lawsuit settlements we can thereby bring down the costs of malpractice insurance which will be reflected in lower overall costs for the consumer. Even though there have been several instances in the last few years where such plans have been tried out, the results are not encouraging as costs have simply not come down appreciably from such efforts. If we had a nationalized health care system where everyone was guaranteed health care coverage this whole argument would disappear because the whole system of high settlements is based upon the recognition that health care costs are so high. This isn’t a chicken or egg argument, it is more like a cow and calf argument in that it is quite evident which one came first in this situation; the high health care costs. If you pursue a lawsuit against a doctor for malpractice the vast majority of the settlement set aside it is to cover the costs of future medical expenses. If you had nationalized health care insurance that will cover these costs already; there is little reason to collect a high settlement outside of pain and suffering incurred due to the doctor’s negligence. Without the high settlement possibilities the very volume of such lawsuits will steadily diminish as lawyers are capitalists too.
There is yet another aspect to this marriage of employment and private health insurance that we as consumers are now being forced to deal with. In an economic downturn such as we just experienced in this country unemployment is one of the first symptoms. With unemployment comes loss of employment based insurance for the workers who lose their job; involuntary Russian roulette for both the worker and his immediate family. Therefore, the Medicaid costs in the states where they live grow as well as these people are still going to inevitably have the normal every day health care needs even if they are lucky enough to avoid catastrophic disease or accident. The states are forced to come up with money to make up this difference at the same time they are suffering loss of revenue associated with the recession; both from payroll taxes and from dwindling sales tax revenues. The net result is higher deficits for the state at the same time they need more revenue; in effect a double blow to the economy. We are currently seeing this played out all across the country as states struggle to balance their budgets with rising costs and dropping revenue. The Kaiser Family Foundation released a study in 2008 that suggested a 1% increase in unemployment equates to roughly 1 million extra people without health care insurance in this country which winds up costing some 3.4 billion dollars in extra health care costs. This is a direct result of the fact that our current system of private health care insurance is largely weighted towards employment benefit packages and simply would not occur with a nationalized health care system.
Aside from same tired old mass hysteria argument that the right always trots out about the country being overrun by socialists who want to turn us into a communist state, the main fear surrounding a nationalized health care system is that it would be too expensive for us to afford. Unfortunately, as we have seen and continue to see on a yearly basis, health care costs are the real issue and we have to be able to control these costs to deal with health care issues. The average administrative cost of private health care servicea in this country is about 12% of total costs. Add to that a 3-6% profit margin for the company and we now have an additional 15% levied on top of our health care costs with the present system that is quite unavoidable. I would start out by saying that adding 15% to the costs right off the bat by having private health insurance belongs in the tally of problems rather in the tally of solutions. In any case, as a worker who has employment provided insurance my costs have steadily risen over the last ten years as costs have increased. The national average for such coverage has risen 78% since 2001 while employee compensation has risen just 19% during the same time period. Plainly, rising health care costs are the source of the problem and we have to make strides toward solving this problem. However, I now pay some $350 a month in payroll deductions for my health care insurance with the promise that it will only grow more in the future while the problem itself continues to spin out of control due to all the reasons I have listed above. A lot of these issues would be solved by integrating a national health care system and if we took what we are all paying into private health insurance plans that add to the problem and put that money into taxes that would help alleviate the problem I think it would be a step in the right direction.
The unvarnished truth about our system’s private health insurance is that the only way it is profitable to sell and administer is if there are enough healthy people paying premiums to offset the costs of those who need care. Insurance executives recognized this fact from the very beginning which is why they were so anxious to tie insurance to employment in the beginning. In our system the private health care insurance companies get to reap the benefits of insuring the healthiest Americans while skipping out completely on paying for health care for the unhealthiest. When people in this country retire or are unemployed the government picks up the tab for their health care which is exactly why Medicare and Medicaid programs are so expensive; they are forced to deal with the unprofitable refuse that private health insurers have tossed overboard after they have milked them for all the money they can get. If we had a comprehensive health care system like the rest of the civilized world we would be able to offset the high health care costs for the elderly with the premiums in the form of taxes paid in by the healthiest citizens; the young working class people. Is this a socialist idea? Of course it is but so are Social Security, Medicare, and Medicaid. These programs were put in effect originally because we were faced with the choice in this country of providing steadily rising health care costs for retiring citizens with little or no savings or letting them die. Capitalism had no solution for the problem so we adapted a socialist idea to solve the problem.
Over the course of the last 30 years we have proven that the combination of rising health care costs and an aging population have contributed to another situation that Capitalism has no solution for so maybe it is time we started to admit that what we need is another socialist solution. I shouldn’t say Capitalism doesn’t have a solution as the unseen hand of the free market always has a solution. The only problem is that this solution is the same as all others in the free market. If you can’t afford health care do without. To paraphrase our esteemed Speaker in the House of Representatives when told that the Republican spending cuts proposed recently would cost 800,000 jobs in an economy already in recession, “So be it.”
Let’s look at that argument of those who like the system as it is. First off, if you are a doctor in this country you make almost twice as much as a doctor in the rest of the world on average. This number climbs to four times as much for specialists but on the average it comes out around twice as much. There are probably numerous reasons for this but the ones most often presented as justifications are the costs of doing business as a doctor. Education to become a doctor is extremely expensive and time consuming. There is little doubt about this but I would also point out that it is the AMA who controls the medical education field. The AMA controls how many doctors get into the field and how long it takes to get a medical degree. The AMA, as a union for doctors, well understands that the best protection for high fees is a moderate supply of doctors and almost all studies agree that we have a shortage of doctors in this country so I would suggest that they are doing a very good job of controlling the supply of doctors which can be directly correlated to the pay of doctors by the simplest rules of supply and demand. The AMA also regulates who can practice medicine in this country which is why we don’t have nurse practitioners, holistic doctors, and other types of medical practitioners treating many patients in this country. In alliance with the AMA, private insurance providers refuse to provide payment to non AMA approved practitioners even though they are much more cost effective for most common ailments.
The next argument that the AMA puts forward as a reason for high costs is tort policy in this country. It is without doubt that high malpractice insurance adds cost to the practice of medicine. However, experiments in tort reform policies in Texas and several other states have shown that such reforms actually only lower medical costs some 1-2%. While this is not something to be ignored it hardly goes towards explaining why health care costs in this country are higher than in any other industrialized nation in the world but I will get back to tort reform a little later. As a percentage of GDP we are fast approaching 20% for health care costs in this country while no other industrialized nation in the world has more than 12% of their GDP associated with health care costs. It is also worth remembering that our GDP is larger than any other country in the world.
Let’s look at some numbers to see if we can decide how our health care system fares when compared with the rest of the industrialized world. The US GDP is estimated to be 14.1 Trillion dollars. If you are anything like me you have a hard time visualizing this type of number but I decided to do some comparisons with other countries to try and make sense of this number. If you add up the GDP totals of Germany, France, United Kingdom, Italy, Canada, Spain, Belgium and Australia you get a number just a little less than the 14.1 Trillion dollars of the US GDP. Therefore, the combined total of these countries’s GDP is roughly equal to the US GDP. If you add up the averages of these western countries percentage of GDP spent on health care and average it out it comes out to a roughly 9%. Currently in this country the best estimates put our percentage of GDP spent on health care at 17.3% (and projected to grow at an astonishing 6.78% per year in the near future).
To decide what this means in actual dollars per person I looked at the population totals. The population total in the US is presently some 307,212,123 people. If you take 17.3% of our 14 trillion dollar GDP and divide that by the number of people in the US you get $7883.00 per person as the average cost per person in this country. If you take the total population of the eight countries I listed above (352,179,713) and do the same calculation based upon 9% of their GDP the total comes out to $3552.00 per person. In other words we pay on average 221% higher health care costs per person in this country than do the people in these eight nations which I would argue are probably the closest to this country in culture and standard of living.
This is exactly why so many of the supporters of the present system are so adamant about saying we have the best system in the world. It better be; as it is more than twice as expensive as any other system that is directly comparable. Let’s look at some comparison studies to see if this theory holds water. In terms of general health and measurable statistical information I am afraid that the numbers don’t support this theory at all. According to the CIA World Factbook the US ranks 41st in the world in infant mortality rate which is hardly something to brag about. There is controversy over how these figures are gathered in that many countries vary according to how they specify when an infant is alive but the US also ranks 41st in the world in infant low birth weight which I think anyone can see is directly correlated to infant health. We rank 46th in the world in life expectancy and it is worth noting that there is a rapidly growing disparity in this country between life expectancy for the wealthy upper classes and life expectancy for the financially lower classes. Those who can afford our best health care simply live longer.
There are other basis for doing relative comparison studies on health care efficiency that are based upon years of life lost under the age of seventy in cases amenable to being saved by health care. The Organization for Economic Cooperation and Development publishes studies based upon these cases under the heading of “years of potential life lost”. This is where we should shine as a nation if our health care system, which is heavily slanted towards cure instead of prevention, is actually efficient. Unfortunately, the US ranks third from the last for women in the study just behind Mexico and Hungary. For men, we rank fifth from last for men just ahead of Slovakia and Poland. Being in a class with Mexico, Hungary, Slovakia, and Poland is not necessarily something I think we need to be bragging about; especially when we pay more per person than anyone in the world to get there.
The fact of the matter is that the US leads the world in specialized care for many types of technologically complex treatment systems. This is one area of health care where our system shines and this is exactly the area that is so often highlighted by proponents of the system. If you have plenty of money and inexhaustible insurance coverage this is the place to come for such treatments and people from all over the world come here for that reason. However, if you don’t have insurance and a lot of money besides this is not something you will likely be afforded access to in this country. After all, the medical industry has to make a profit in this country too; that is how capitalism works.
As I have covered in several posts already the private insurance industry in this country well understood the pitfalls of providing health care insurance from the beginning and they have avoided them admirably. By tying insurance to employment from the beginnings of the rise of private health insurance in this country they effectively assured themselves that they could control profit margins by providing insurance for the healthiest people (those that are gainfully employed) while removing those from their rolls who are the worst risks (the elderly and those who get too sick to work). While this is good business for private health insurance companies it is a problem for those who actually need medical care and one that continues to add exponentially to actual health care costs. As is often the case, the goals of meeting profit margins and providing needed services are frequently in direct opposition.
For example, a very high percentage of personal bankruptcies in this country are directly attributable to health care costs. Estimates range from 50-80% as far as percentage of people filing bankruptcy because of medical bills depending on which agency you get your information from. The story that is repeated over and over again is the same. Person A, who has health care insurance through their work, is unlucky enough to get cancer or some other debilitating medical condition. This person soon loses their ability to work and with it their health care insurance (some 80% of medical related bankruptcies come from people who originally HAD health care insurance through their work but later lost it). Being unexpectedly unemployed bring many financial hardships to working class people and very few of them can afford the higher rates they are forced to pay to keep insurance after being removed from a group plan where they work. Therefore, they are soon without insurance and the bills instantaneously get higher without insurance. If any of you have been to a hospital recently you know that the bill you get is usually two to three times higher than what the hospital eventually accepts from the insurance company as payment. However, if you don’t have insurance you also don’t have the power to barter with the hospital to get this same reduction. The truth is that the hospital recognizes that people cannot afford to pay the high costs associated with a long treatment and they fully expect to take a loss on the costs so they are not willing to barter. They would much rather take a loss and write it off on their taxes while collecting what they can through government sponsored Medicaid. It is just good business sense for them and they too are part of the capitalist system wherein profit is the final motive. The end result is bankruptcy for the individual who is unlucky enough to need the care. Even worse, if this person is lucky enough to survive the disease, the treatment, and the bankruptcy they are now faced with the certainty of not being able to attain private health insurance for this condition for the rest of their lives. This leads to the surprising conclusion (and one that most working class people aren’t aware of until it is too late) that having private health care insurance through your work is a lot like playing Russian roulette; everything is fine until you hit on the chamber with the bullet in it.
Let’s talk about the uninsured for just a moment. Some 15% of the population in this country is currently uninsured. While a good percentage of these people are younger workers who are not working in industries that offer employer health care programs the fact remains that all of these people are at risk of accident or catastrophic disease that would quite literally bankrupt them if it were to occur. Russian roulette is equally deadly whether you are aware you are playing it or not. If an uninsured person does need routine medical care, no matter how innocuous, the large majority of them show up at emergency rooms where health care costs are the most expensive because most emergency rooms are required to provide the care they need. Because there is often no other choice these people get the most expensive care possible; often for problems that could easily be taken care of much more efficiently at a clinic by a nurse practitioner were lobbyist from the AMA not actively making sure this is not legal. Between the government’s reluctance to help set up such alternative programs and the AMA’s insistence on protecting their memberships ability to make exorbitant amounts of money we have another situation wherein the worst solution is the only possible one for people without insurance.
Tort reform is another solution that is often tossed about as something that will cure the problems we currently have with health care costs. The theory is that by protecting doctors from high lawsuit settlements we can thereby bring down the costs of malpractice insurance which will be reflected in lower overall costs for the consumer. Even though there have been several instances in the last few years where such plans have been tried out, the results are not encouraging as costs have simply not come down appreciably from such efforts. If we had a nationalized health care system where everyone was guaranteed health care coverage this whole argument would disappear because the whole system of high settlements is based upon the recognition that health care costs are so high. This isn’t a chicken or egg argument, it is more like a cow and calf argument in that it is quite evident which one came first in this situation; the high health care costs. If you pursue a lawsuit against a doctor for malpractice the vast majority of the settlement set aside it is to cover the costs of future medical expenses. If you had nationalized health care insurance that will cover these costs already; there is little reason to collect a high settlement outside of pain and suffering incurred due to the doctor’s negligence. Without the high settlement possibilities the very volume of such lawsuits will steadily diminish as lawyers are capitalists too.
There is yet another aspect to this marriage of employment and private health insurance that we as consumers are now being forced to deal with. In an economic downturn such as we just experienced in this country unemployment is one of the first symptoms. With unemployment comes loss of employment based insurance for the workers who lose their job; involuntary Russian roulette for both the worker and his immediate family. Therefore, the Medicaid costs in the states where they live grow as well as these people are still going to inevitably have the normal every day health care needs even if they are lucky enough to avoid catastrophic disease or accident. The states are forced to come up with money to make up this difference at the same time they are suffering loss of revenue associated with the recession; both from payroll taxes and from dwindling sales tax revenues. The net result is higher deficits for the state at the same time they need more revenue; in effect a double blow to the economy. We are currently seeing this played out all across the country as states struggle to balance their budgets with rising costs and dropping revenue. The Kaiser Family Foundation released a study in 2008 that suggested a 1% increase in unemployment equates to roughly 1 million extra people without health care insurance in this country which winds up costing some 3.4 billion dollars in extra health care costs. This is a direct result of the fact that our current system of private health care insurance is largely weighted towards employment benefit packages and simply would not occur with a nationalized health care system.
Aside from same tired old mass hysteria argument that the right always trots out about the country being overrun by socialists who want to turn us into a communist state, the main fear surrounding a nationalized health care system is that it would be too expensive for us to afford. Unfortunately, as we have seen and continue to see on a yearly basis, health care costs are the real issue and we have to be able to control these costs to deal with health care issues. The average administrative cost of private health care servicea in this country is about 12% of total costs. Add to that a 3-6% profit margin for the company and we now have an additional 15% levied on top of our health care costs with the present system that is quite unavoidable. I would start out by saying that adding 15% to the costs right off the bat by having private health insurance belongs in the tally of problems rather in the tally of solutions. In any case, as a worker who has employment provided insurance my costs have steadily risen over the last ten years as costs have increased. The national average for such coverage has risen 78% since 2001 while employee compensation has risen just 19% during the same time period. Plainly, rising health care costs are the source of the problem and we have to make strides toward solving this problem. However, I now pay some $350 a month in payroll deductions for my health care insurance with the promise that it will only grow more in the future while the problem itself continues to spin out of control due to all the reasons I have listed above. A lot of these issues would be solved by integrating a national health care system and if we took what we are all paying into private health insurance plans that add to the problem and put that money into taxes that would help alleviate the problem I think it would be a step in the right direction.
The unvarnished truth about our system’s private health insurance is that the only way it is profitable to sell and administer is if there are enough healthy people paying premiums to offset the costs of those who need care. Insurance executives recognized this fact from the very beginning which is why they were so anxious to tie insurance to employment in the beginning. In our system the private health care insurance companies get to reap the benefits of insuring the healthiest Americans while skipping out completely on paying for health care for the unhealthiest. When people in this country retire or are unemployed the government picks up the tab for their health care which is exactly why Medicare and Medicaid programs are so expensive; they are forced to deal with the unprofitable refuse that private health insurers have tossed overboard after they have milked them for all the money they can get. If we had a comprehensive health care system like the rest of the civilized world we would be able to offset the high health care costs for the elderly with the premiums in the form of taxes paid in by the healthiest citizens; the young working class people. Is this a socialist idea? Of course it is but so are Social Security, Medicare, and Medicaid. These programs were put in effect originally because we were faced with the choice in this country of providing steadily rising health care costs for retiring citizens with little or no savings or letting them die. Capitalism had no solution for the problem so we adapted a socialist idea to solve the problem.
Over the course of the last 30 years we have proven that the combination of rising health care costs and an aging population have contributed to another situation that Capitalism has no solution for so maybe it is time we started to admit that what we need is another socialist solution. I shouldn’t say Capitalism doesn’t have a solution as the unseen hand of the free market always has a solution. The only problem is that this solution is the same as all others in the free market. If you can’t afford health care do without. To paraphrase our esteemed Speaker in the House of Representatives when told that the Republican spending cuts proposed recently would cost 800,000 jobs in an economy already in recession, “So be it.”
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