The Socialization Of America Is Economically Impossible
July 3, 2012 by Brandon Smith
I understand the dream of the common socialist. I was, after all, once a Democrat. I understand the disparity created in our society by corporatism (not capitalism, though some foolish socialists see them as exactly the same). I understand the drive and the desire to help other human beings, especially those in dire need, and the tendency to see government as the ultimate solution to all our problems.
Let’s be honest: Government is just a tool used by one group or another to implement a particular methodology or set of principles. Unfortunately, what most socialists today don’t seem to understand is that no matter what strategies they devise, they will never have control. And those they wish to help will be led to suffer, because the establishment does not care about them — or you. The establishment does not think of what it can give; it thinks about what it can take. Socialism, in the minds of the elites, is just a con game that allows them to curry the favor of the serfs.
Other powers are at work in this world, powers that have the ability to play both sides of the political spectrum. The monied elite have been wielding the false left/right paradigm for centuries, and to great effect. Whether socialism or corporatism prevails, the elite are the final victors, and the game continues onward.
Knowing this fact, I find that my reactions to the entire Obamacare debate are rather muddled. Really, I see the whole event as a kind of circus, a mirage, a distraction. Perhaps it is because I am first and foremost an economic analyst. When looking at Obamacare and socialization in general, I see no tangibility. I see no threat beyond what we as Americans already face. Let me explain.
Socialism Is Failure
A country that feels the need to socialize has, in my view, already failed culturally. It is an open admission by the public that it is unwilling or unable to take responsibility for its own prosperity. If a county cannot function in a healthy economic manner without its government creating an artificial and precarious balance using fiat stimulus and overt taxation, then the people of that country are not remotely independent and self-sufficient. That is to say, only a Nation filled with pathetic, overgrown children would actually need government to enforce mandatory charity: welfare, healthcare, etc. A truly healthy society supported by strong and self-sustainable individuals would not beg to be parented by government. If a country is so unbalanced as to stoop to socialism, then its ailments already extend far beyond anything government (even good government) could ever hope to cure.
Obamacare, its tentative application and those who blindly support its introduction in the United States, are an example of a weak people groveling for handouts they do not work for nor deserve. Socialism is defeat. It is a waving of the white flag by a society and the trading of that culture’s liberty for the illusion of fiscal security. It is the act of an adolescent and naïve populace groveling for an allowance from their “motherland.”
If one wants to consider what a socialized America would actually be like, why not examine the track record of the EU, a group of nations that have dabbled extensively in the principles of collective centralization and various levels of socialism, including the extremes of communism and fascism (and yes, folks, both are derived from a socialist/collectivist foundation, despite what pseudo-intellectuals and propagandized academics will try to tell you).
What success have they accomplished in the course of their utopian endeavors?
Well, more than half of the states of the European Union have already reached debt-to-GDP (gross domestic product) ratios well beyond the limit required to retain membership.
Several countries — including the U.K., France, Spain, Italy, Portugal and Greece — are in the midst of severe debt crises. The euro is on the verge of disintegration. And it’s likely the EU charter will be re-examined and changed. The central bankers will blame European countries and their “insistence” on maintaining sovereign control over their finances for the failure of the EU. But, ultimately, sovereignty is not what strangles the EU. Instead, the ridiculous supranational status that is entirely misapplied has created a state of interdependency that has weakened every member nation to the point of disaster.
It should be painfully clear to anyone considering socialism as a viable option for America that this kind of system requires fiscal discipline and a vast amount of savings. Notice I say “savings” and not “money.” Money is a carnival ride — an illusion of wealth that can be printed from thin air. Savings is an actual concrete storage of real capital, an ongoing surplus of manufacturing and production capability resulting in the stockpiling of working credit and ample employment. Most of the countries of the EU do not have such savings and never did. In fact, most European countries have operated for decades on a loss. They have never been able to live with the direct and indirect investments of outside players. Because of this, EU countries are utterly unable to keep up with the grand concepts of socialism, and have buried themselves under the crushing debts generated by entitlement programs.
The United States is no different.
Forget Universal Healthcare, The U.S. Is Bust
There has been a pervasive delusion among pro-socialism movements in the United States that we are the “richest country in the world.” They claim it is “absurd” that the establishment system does not pay for our healthcare with such riches at its disposal. They consistently rant about Canadian healthcare and its record of universal treatment. The problem is they ignore the details.
Canada, a country of about 34 million people, has a national debt of about $1.1 trillion. The United States, a country of about 313 million people, has a national debt of about $15 trillion. The two countries are entirely different. To clamor for a Canadian-style healthcare program for a country with completely opposite economic parameters is idiocy, lunacy or both.
Officially, our economy has already broken the 100 percent debt-to-GDP threshold. Unofficially, but more accurately, the U.S. national debt exceeds $120 trillion.
This number accounts not only for public debt, but “intragovernmental” debt and “implicit” debt, meaning the debt obligations the government has committed to for the near future.
I would also like to quickly note that mainstream economists were predicting in 2011 that the United States would reach 101 percent of GDP by 2021. Just one year later, we have already crossed the 101 percent marker.
Add to this the projected costs of Obamacare ($17 trillion in estimated long-term unfunded obligations), and what you get is a broke country.
The only factor which has stayed the tide of a full-blown macro-implosion of the United States is the world reserve status of our currency. The dollar is all we have left. Period. But don’t count on that for much longer either. With multiple nations, including China and Japan (our largest foreign debt holders), quietly forming bilateral trade agreements that cut out the use of the greenback, it will not be long before its world reserve status disappears as well. When that happens, we are on our own. The private Federal Reserve can print all it wants; but if other countries no longer need dollars to facilitate cross border trade, then what we will get is hyperinflation, or stagflation. Obamacare only expedites this process by generating even more liabilities we cannot cover, thereby giving the central bank even more excuse to churn out dollars with wild abandon.
To put it plainly, all those people who believe America is the “richest country in the world” are living in la-la land. We are broke. Bust. In the red. In the hole. Insolvent. And we can’t all move back in with our parents like so many Obamacare proponents I have met.
Go Ahead, Try To Enforce Obamacare
We have no money. Therefore, the debate over universal socialized medicine is ultimately pointless. It is mathematically and economically impossible to implement. What the Supreme Court says on the subject of socialization certainly matters in terms of principle, and they have failed Americans spectacularly in every respect. But, in terms of finance, the Supreme Court’s shocking decision means nothing.
One of Ron Paul’s primary arguments against the ongoing wars in the Mideast is that whether one agrees with these conflicts is irrelevant. The United States does not have the means to fund them. Eventually, we will break the bank and the dollar to maintain our presence in the region, and thus, the wars will end one way or another. The same philosophy goes for Obamacare and every other socializing program presented in America.
They will say that taxation will cover the costs, but how do you raise taxes on a populace that is growing more destitute every year? How do you take money from people if they do not have it? This tactic doesn’t seem to be working very well for Europe. Also, keep in mind that as population and inflation grow exponentially, so will costs. The taxation will have to expand as fast or faster than the expenditures. This is why so many opponents of Obamacare voice concerns over population reduction programs and rejected care; they are an inevitable end result. When you institutionalize health and life under the auspices of bureaucracy, you must also invariably institutionalize death. Population and life suddenly become a numbers issue to the state, rather than a moral issue.
They will say that the penalties to those who refuse to participate will cover the costs of the rest. Again, how to you take money from people who do not have it? What if millions of people simply refuse to participate and refuse to pay penalties?
They will say “tax the corporations,” and we could. But, as the derivatives crisis has proven, most major corporations in the United States are on the government take just to survive. We cannot have corporate bailouts and increased corporate taxation at the same time. The bailouts would have to end, the companies would collapse and we would be right back where we started. Just like our government, most corporations also operate on false wealth. They will not be paying for Obamacare anytime soon.
They will say that it is all for the greater good, but since when has the establishment been qualified to define what the “greater good” is? Is Obamacare really a matter of conscience? Or is it a farce flaunted about as if it is a matter of conscience?
They will say that people must be forced to do what is right for the group. I say such hubris has always led to catastrophe. Usually, the select beneficiaries of tyrannical cultures call for the might of the central government to be wrought upon the rest of the citizenry — not to do right by conscience, but to satiate their desire for control. Men love government as long as it is imposing their particular worldview, and as long as the tables never turn.
They will say that current medical practices and costs are terrible and something must be done. I agree. However, Obamacare is not the answer.
Principles and existentialist debates aside, the primary question remains: Where is a realistic plan to pay for this monstrosity of a program? I have yet to see a single grounded solution to the quandary. How does one pay for something he will never be able to afford? If there are no means, there will be no Obamacare.
–Brandon Smith
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