Comment:
Oh yes, good ole Capitalism. Let's keep the rich, rich, and lets keep the poor, poor. The reality is America values it's middle class, and our middle class is disappearing rapidly.
The Republicans and Democrats do nothing but bicker at one another. We can't accomplish anything because they are holding us back. Etc. Etc. Same ole story, different day. Mark my words, the U.S. is heading for some radical changes over the next 20 years…. You just wait and see ;) I'll be sure to reach and say, told you so.
Response:
As for big changes, you are clearly understating it.
The young are being taxed and forced to provide lavish benefits to public union employees (see tax rates on property in NY, sales tax rates, etc.). As a recent article said about NYC, there is no money to pay for road and infrastructure improvements because its all going to public employee pensions. It's the old saying about pigs getting fat and hogs ready to slaughter.
Rhode Island has led the way in reducing existing union pension benefits to current retirees. It is happening here in Portugal and especially Greece. The 1970's showed that printing money can't overcome the impediments of bad fiscal and regulatory policy.
As for change, it would seem likely that someone will be able to capture the youth vote to realize too much of their earnings and the funds to create job opportunities for them is going to non-producers.
As for healthcare costs, the money has to come from somewhere and the government needs to use all means at its disposal to try and keep the free and subsidized care system going. There is a huge sense of 'entitlement' among people in developed countries that didn't exist when I was growing up. (It's interesting that this sense of entitlement isn't there among young people I've met in Eastern Europe because they saw what it led to under Communism!)
So doctors who might only get reimbursed $40 under Medicare or Medicaid (paid for by government) charge private patients $80 or $120 to make up for it (the lower number being a negotiated rate with private insurance carriers; the higher price being the rate paid individually without insurance). There are also taxes on private policies which are used to subsidize public health care expenditures.
If you think about the 17% of GDP for healthcare, you have to recognize that as more and more resources are allocated to healthcare, more 'marginal producers' (read: higher cost, less productive, etc.) have to be brought in.
Also, when you think of healthcare demand, I gave you the California co-pay example. When it's free (or for the elderly close-to-free), more is used.
There is also a huge use of prescriptions in the US that has gone so far as to pollute the water supply in many areas with residual chemicals released in wastewater discharges.
If you get a chance, you might enjoy reading "Plagues and Peoples" by McNeil. (cheap as a used book).
Plagues and Peoples by William Hardy McNeill - Reviews ...
www.goodreads.com/book/show/46725.Plagues_and_Peoples
Rating: 3.8 - 618 votes
27 Oct 2010 – Plagues and Peoples has 618 ratings and 58 reviews. Naxa said: A groundbreaking work in epidemiological history. McNeil attempts to do two ...A lot is being written about the US deficit spending problem and there is a lot of effort - especially be Obama and the Democrats (but I'm not letting the Republicans off the hook here either) - to make people think this problem can be solved by taxes on the rich (let the Bush tax cuts expire, etc.). Too high taxes was a problem in the 1970s that the Reagan tax cuts corrected.
Half of Americas kids don't graduate from high school. They want a middle class lifestyle but the government says they should have it whether they work or not.
Someone said the other day that if the US had grown on trend (i.e. with better tax and regulatory policies and less bashing of business and the banks) under Obama (last 3 years), GDP in the US would be 12% higher! So, should we wonder what happened to some nice middle class jobs and the ability to employ a larger percentage of the workforce, this lost 12% is part of the answer.
Anyway, my old saying is that if I was a Jew in Germany in the 1930's, I would hope to have been able to know to leave. As such, I try and pay attention to things. I admit to spending more time on the big picture than the small though - so, who's perfect? I'm not saying I am.
History has lots of lessons for us; and, I don't know if you've ever had a course in econometric analysis and linear regression, but it's not just garbage-in-and-garbage-out, it's also about how you organize and select R-factor correlations.
In this sense, Art Laffer economist types do it one way (i.e. people like to keep their money and don't like high taxes and oppressive regulations) and Democratic Obama types do it in a totally different way (i.e. investment comes from demand and what bureaucrats decide is best; individuals that make to much shouldn't be allowed to keep it; government knows best - individuals don't; business is inherently evil and the benefactors of the poor who create nothing and take what they need from others are the worthy and should be in charge; etc.).
When you'd run the econometric projections, I suggest you'd get different results. The Democratic R-factors lead to Greece-like results.
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