Peter Smith

Raw life, caricature, and delusion


Saw a BBC documentary the other day with Louis Theroux reporting on a completely dysfunctional black neighbourhood in Philadelphia.


Neighbourhood is an inappropriate term; wasteland or war zone maybe? Multiply that many times over and you get an enervating problem that would sap the strength of any nation.

Cut to any number of conversations in Australia. There is the usual incredulity, apropos Obamacare, that rich America is not up with the developed world in offering cradle to the grave medical care for all. It is part of a view which sees America as a rough and tumble place where the sick die in the streets for the want of (capriciously if not callously denied) government help.

Cut to President Obama saying that everyone has the right to affordable health care.

How you might ask are these three commentaries connected. They offer three perspectives on life. The first is real life, albeit in its rawest form. The second is life through the prism of those short on facts, long on caricature. The third is life through the prism of a utopian socialist; essentially delusional.

The United States has a huge demographic problem combined with, and progressively worsened by, structural economic problems as its manufacturing base is devastated by competition from China and elsewhere. Nevertheless, government (federal, state and local) spend more per capita on health care than does every other country but Norway (and apparently, as if it matters, Monaco and Luxemburg).

When you think about it, spending more per capita than the European nanny states, the UK and Canada is no mean feat. No hospital can by law turn people away, including many millions of Hispanic illegal immigrants, in need of emergency attention. Unpaid bills accounts for a significant part of their costs. Medicare provides support for all citizens over the age of 65. Medicaid provides means-tested support for particular sections of the population.

Most state and local governments are deeply mired in debt; approaching $3 trillion in total. The federal government borrows 40 cents of every dollar it spends and has debt approaching $16 trillion. Close to 60 per cent of federal outlays are spent on entitlements: pensions, Medicare, Medicaid and other welfare. The US is a welfare state even if it is not quite yet Greece.

There are millions of Americans (estimated at say 30 million) who fall between being eligible for Medicaid and being able to afford health insurance. Charity fills some of the gap but this is a problem. Some minor things could be done like allowing insurance companies to operate nationwide and by reducing medical litigation costs. But let’s not pretend that a bankrupt state, with the best will in the world, can fix it. It can’t; unless it finds savings by cutting other entitlements. Obamacare will add billions to government costs and debt, with no offsets, and without adding any capacity to the health care system – hospitals, doctors, nurses, and medical equipment; not to mention organ donations. It is an expensive hoax.

Politicians can talk about the right to affordable health care. What they mean is that people who can’t personally afford such care have the right to expect others to pay for it. Perhaps in a civilised society they do up to a point. But what character of right is it when there are just not enough resources to go around? How does it play out when those in the cart increasingly outnumber those pushing it? Seventy per cent of eligible voters in the US pay either no federal income tax or only a marginal amount.

People who can’t personally afford things need others to pay for them. The level of government debt at all levels in the United States is a fair indicator that the wherewithal of these other people is now exhausted, as it is in Europe and as it will be here soon.

Visit Peter Smith’s website badeconomics.com.au 

Peter Smith is the author of Bad Economics (Connor Court). You can purchase copies (post free) here…


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