What is this health care bill? Is it a new way of making the future better? Or is it an old solution to an old problem? The feds first considered a takeover of the health care industry during the Roosevelt administration. They’ve been working, planning, plotting their way towards the same objective ever since – for 80 years.
And what they’ve finally gotten is yesterday’s bad solution to yesterday’s problem.
The nation state was invented by the French at the beginning of the 19th century. By the middle of the 19th century, Otto von Bismarck added the refinements that we know today as the modern welfare state.
And now…as every welfare state in the world faces decline and bankruptcy…America has completed its collection of welfare state essentials – with a national health care system.
Why are the old welfare states going broke? Because the payoffs to the past have become too great. There are too many old people who expect pensions and health care. There are too many old industries that, like patients in a mental hospital, need to be cared for. There are too many bailouts…too many subsidies…too many protections…too many safety nets.
Every society is a pact between the future and the past. A new society looks to the future. An old one looks back at the past. As a successful economy matures it owes more and more for things that have already happened. China builds new high-speed railways, for example, while in the US we’re still paying Amtrak’s losses of the last 40 years.
Over time, more and more special interests, anglers, parasites, leeches and lobbyists get a grip on a financial system. They find ways to take advantage of it…to exploit the system for their own ends. Trade unions, business groups, the rich, the poor, the middle classes – everybody wants a benefit.
The health care act is not a bold new initiative that will lead the country forward into a new era. It is 2,400 pages of payoffs to old interests – payoffs to senators and congressmen for supporting the bill, payoffs to the pharmaceutical industry, payoffs to organized labor and insurance companies…payoffs to groups that were set up many years ago.
The benefits go to the past; the costs go to the future. Even if the economy were running at normal speeds, the deficits of the world’s leading welfare states would still be increasing. Only 10% of current deficits are related to “stimulus” efforts. The rest is payoffs… To organized interests representing the past.
In the US, Federal debt is expected to reach 140% of GDP by 2014. In the G7 countries as a whole, debt-to-GDP will go over 100% just two years from now.
The welfare state model is no longer the model for the future. It’s a model for the past…that will soon be defunct.
for The Daily Reckoning Australia