A Fling with the Welfare State
From the best of intentions to bankruptcy and recriminations
Jul 25, 2011, Vol. 16, No. 42 • By NOEMIE EMERY
The intentions of Democrats are only the best. They want all of the old to have lavish retirements, all of the young to have scholarships, verse-penning cowboys to have festivals funded by government, and everyone to have access to all the best health care, at no cost to himself. In the face of a huge wave of debt swamping all western nations, this is the core of their argument: They want a fair society, and their critics do not; they want to help, and their opponents like to see people suffer; they want a world filled with love and caring, and their opponents want one of callous indifference, in which the helpless must fend for themselves. (“We must reject both extremes, those who say we shouldn’t help the old and the sick and those who say that we should,” quips the New Yorker’s Hendrik Hertzberg.) But in fact, everyone thinks that we “should” do this; the problem, in the face of the debt crisis, is finding a way that we can. It is about the “can” part that the left is now in denial: daintily picking its way through canaries six deep on the floor of the coal mine, and conflating a “good” with a “right.”
Ever since Franklin D. Roosevelt linked “freedom from want” to “freedom of speech” and “freedom of worship,” the left has been talking of everything that it thinks would be nice to have in terms of an utter and absolute right: a right to a job and a right to an income, a right to retire in comfort in Florida, a right to the most advanced health care without paying much for it, and a right to have your children taken care of while you work all day at your job. The problem is that these are all goods and services, though of varying importance, and goods and rights are not the same things. People tend to concur upon rights (except for the speech rights of those who oppose them), and they do not depend upon others to supply and pay for their rights. With goods, there is always a political argument: about the value of the good, who is to get it and who is to pay. And all this comes down to the question of “fairness,” about which there is no end of disputation and grief.
And on nothing does the rights/goods division loom larger than on the issue of health care. Rights come from nature, and cost no one money, but good health in nature is rare. It is only thanks to human ingenuity over centuries and billions of dollars of effort that we have been able to conquer illnesses not long ago fatal, rebuild bodies broken in war or by accidents, postpone or ameliorate the problems of aging, and bring people back from the dead. The roll call of miracles that surrounds us today—the vaccines and the pills that have vanquished infections, the devices that let amputees run marathons, the organ transplants and the open heart surgeries, the techniques that replace hips, knees, and heart valves, not to mention the treatments that make so many public men cancer survivors, that saved Bob Dole years ago, are saving Dick Cheney, and once kept John Kennedy able to function—all of these are the result of the time, sweat, and strain of doctors and nurses, technicians and scientists, inventors and makers of drugs and devices, administrators of hospitals and large corporations, whose time is expensive, and who need to be paid.
Paid by whom, one may ask? Not by the patient alone, as the cost of a serious illness or accident overwhelms the resources of all but a few. They are paid by the state, or a private insurer, which in turn are funded by citizens, through taxes, or premiums paid.
But when costly new drugs and treatments appear on the scene (and are demanded by patients) they are paid for by hikes in the taxes and premiums, which reduce the money people have to spend elsewhere. This is true for governments, too. They either end up rationing care, cutting back other programs, or simply printing money. The people who insisted that goods had to be treated as rights, (which is to say, as universal and limitless), refused to seek cuts, and went on printing money. Even as the whole western world seemed to run out of money, the Obama administration decided it was high time for a massive expansion of government benefits. Then, in early May 2010, just after the American left passed its huge and hugely unpopular health care reform bill, the republic of Greece hit a wall.
From that day on, the world and the country would be given a series of lessons in the dangers inherent in treating a good as a right. The European Union extended a bailout to Greece in exchange for a series of deep cuts. The country was to reduce its deficit from 13.6 percent of its gross national product to less than 1 percent in 2015, by way of “reduced wage costs in the public sector . . . and lower defense and health care spending.” Other countries in Europe began preemptive measures to deal with their own budget problems. In Britain, David Cameron planned cuts of $130 billion over a five-year period, cutting welfare and causing riots by raising fees in universities. In France, Nicolas Sarkozy raised the retirement age from 60 to 62, and limited pensions. In Spain, Socialist José Luis Zapatero did much the same thing. “An elaborate cocoon of benefits faces disassembly,” the Washington Post reported on May 15, 2010. “We can’t finance our social model any more,” the European Council president said. “Workers have been forced to accept salary freezes, decreased hours, postponed retirements and health care reductions,” Edward Cody wrote in the Post on April 25, 2011. “From blanket health insurance to long vacations and early retirement, the cozy social benefits that have been a way of life [in Europe] appear be luxuries the continent can no longer afford.”
In the United States, the states patterned most on the Old Europe model—those with high taxes, high spending, and strong public unions—suffered the same plight as Europe, while those with free-market models did not. “The eight states with no state income tax grew 18 percent in the past decade,” Michael Barone tells us. “The other states grew just 8 percent.” The 22 states with right-to-work laws grew 15 percent in the past decade, the 28 others grew 6 percent. The 16 states that don’t require collective bargaining with state employees grew 15 percent, the others grew 7 percent. The most rapid growth—21 percent—was in the Rocky Mountain states and Texas, which have low taxes, weak unions, and light regulation.
Among the states with high taxes, strong unions, and heavy public employee pension burdens are those in the Rust Belt around the Great Lakes. As Matt Continetti writes in the Washington Post, “Five of the eight states that border the Great Lakes now have Republican governors working to limit union power,” while one Democrat, New York’s Andrew Cuomo, son of a much revered liberal icon, has been praised by New Jersey’s Chris Christie as his cost-cutting twin. And to everyone’s shock, the Democratic legislature in Massachusetts has voted to rein in unions, too.
“For decades, the Great Lakes states have subscribed to a high-tax, high-spend, closed-shop political model,” explains Continetti. “That hasn’t worked out.” That didn’t work out in Europe (whose welfare states the American left has always looked up to); that didn’t work out in American states such as California and Michigan; that didn’t work out in Detroit, which is becoming a wasteland in spite of massive infusions of government money, and that didn’t work out for General Motors, which turned in time into a retirement plan with a car company attached to it, which priced itself out of the general market while foreign car companies built factories in right-to-work states in the South, employed hundreds of thousands of people, and took its share of the market away. It probably won’t work out in Illinois, either, where the Democratic governor passed a massive tax increase, and the Republican governors of neighboring states invited Illinois businessmen to relocate there.
Was it wrong for the liberals to try to create an entitlement paradise when World War II ended? No, the war’s end seemed a good time to start over; the link between the rights that they fought for and the “right” to a middle-class standard of living seemed rather more plausible then, and they had no way of knowing it might one day prove too expensive. When Roosevelt signed Social Security into law, it was meant to start coverage at age 65 at a time when 58 was the average life span of male Americans. (Roosevelt himself died at 63 ten years later.) When President Johnson signed Medicare, life spans were still well below today’s standards, and most major medical breakthroughs were still in the future. (Johnson also would die in his 60s.) Neither imagined a world in which people routinely lived into their 80s and 90s, with knee replacements and heart transplants and home dialysis machines. Roosevelt opposed public employee unions, whose pension demands and early retirements are now driving some of our states and cities into bankruptcy. It’s easier to think of goods as rights when the costs are low, and they therefore take little from others. It’s when the costs rise—as in medical treatments—that the political trade-offs rise, too.
And of course, their intentions were laudable. But so are those of most people, within the bounds of what they think is realistic, is feasible, and is likely to work out in real life. Two times in recent memory Americans have tried to “fix” health care, and each time the script is the same. They start out, according to pollsters, by trying to think it’s a right. They think it unfair that income can alter the access to treatments. They bleed for poor people whose children are sick. They know they are one diagnosis or car crash away from financial as well as from medical challenges. They want everyone to be covered, no one turned down due to pre-existing conditions, want no limits on payments for medical treatments. Encouraged, Democrats draw up their bills, proudly present them, and wait for the thanks of the rapturous public. Then the fine print is revealed, and people are shocked at the expense and conditions. It’s then that their attitudes change.
What the fine print reveals beyond disputation is that health care is a good, not a right; that goods involve trade-offs, and that the trade-offs are high: higher costs and less choice for those covered already, rationing inflicted by government bureaucrats, interference by bureaucrats in medical doings, doctors threatening to leave the profession, less incentive (and money) to develop new treatments and drugs. They still want what they wanted before, but not at the cost of the harm it will wreak on the system in general. They vote their concerns, and 1994 and 2010 turned out very badly for Democrats. Stunned, Democrats fall back on their noble intentions, and say their opponents are mean.
They aren’t mean, of course, merely weighing their options, and finding that the costs to be paid by all of the people outweigh the gains made by the few. It would be mean indeed if standards declined, hospitals closed, cancer patients had to wait months for surgery, or if life-saving treatments stopped being developed. It would be mean indeed if the burdens of welfare brought down the economy. And nothing would be meaner than if Medicare remained unreformed and ran out of money, or if Social Security also ran out of money, because trimming benefits, raising the age of retirement, or imposing a means test is “mean.”
It was not wrong to have a fling with the welfare state sixty-five years ago, when it was a noble experiment that had not yet been attempted. It is wrong to ignore the evidence that in some ways it is failing, that the model set up has become unsustainable, and that renovations are needed if its critical functions are to survive. Goods are not rights. Pensions and access to health care remain social goods that a decent society will try to provide to its -people. But goods are not rights, and the old model, which claimed that they are, is broken. We need a new one, which provides sustainable ways to convey social goods to those who most need them. Good intentions are fine, but without means they are useless. They are the things with which the road to Gehenna is paved.
Noemie Emery is a contributing editor to The Weekly Standard and a columnist for the Washington Examiner.
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