American discontent stems from the pretense of caring

Reuven Brenner November 3, 2016 7:22 PM (UTC+8)
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“If we can prevent the Government from wasting the labor of the people under the pretense of caring for them, they will be happy,” Thomas Jefferson said.

The last few decades in the US showed that the “we” Jefferson referred to were not successful achieving this goal.

Lyndon Johnson wanted to care for the poor. Yet, despite increased spending from negligible amounts in the early 1960s to about US$700 billion on just select programs now (not all, according to the Congressional Research Service Report about Federal Outlays for Selected Low-Income Assistance Programs), poverty rates did not change, hovering around 15%.

Then, the government wanted to take care of schooling and universities too. We know where this care ended up: 65% of black males do not graduate 6 years after starting college, white males do not do much better at 60%, and some 50% drop out of high schools earlier (for women the respective percentages are 43 and 35 percent). Such statistics suggest that taking care of education has not produced the expected results in these areas either.

Relying on many half-baked theories, universities gave up on selection both of students and faculty, leading to this outcome. Most universities these days are in the business of printing credentials, prolonging adolescence, teaching jargon rather than educating the youth to solve problems and carry out civil discourse; with faculties leading by example and producing plenty of heavily subsidized noise.

The “pretense of caring” about education brought about a generation of frustrated, delusional youth, having high expectations, expecting certificates to bring them good jobs, even though they have no skills to solve any problems. Unskilled, frustrated, bored youth are no happy campers: Facebook and video games offer, at best, temporary distraction, at worse waste of time and shortened attention span. And, yes, boredom is also is the source of vice.

The greater care is not reflected in better health either. According to a recent study in Mathematica, “Since the 1960s, the prevalence of obesity among adults in the United States has nearly tripled. In 2015, more than one-third of American adults were obese, and another third were overweight” — and many of them among the poor.

A recent study by the Center for Disease Control found that:

In the United States, one out of every five adults has a disability …. The most common functional disability type was a mobility limitation — defined as serious difficulty walking or climbing stairs — reported by one in eight adults, followed by disability in thinking and/or memory, independent living, vision, and self-care.

Obviously there is overlap between obesity and some disabilities, as is between some disabilities and an aging population. Still, the numbers suggest that more government spending on health care did not bring about much healthier society either, among the poorer in particular (and let us neglect here addiction to drugs). Perhaps it is not such a bad thing that Obamacare is crashing, and people will experiment with new institutional arrangements to take better care of everyone’s health — and not just pretend by passing bills about new federal programs. What was tried until now failed spectacularly.

Add to all these disconcerting numbers the fact that the US has the largest fraction of its population in jail (when compared to other Western countries) — some 2.5 million — and it is hard to find any numbers suggesting that the governments’ declared greater care for the poor over the last few decades, financed from increased taxation and borrowing, brought about much improvement. How much of all the taxes raised and borrowed really went to the poor, and how much to mazes of bureaucracies distributing the money and “taking care,” and how much went astray because of fraud and corruption — I do not know.

The above numbers are also reflected in the Federal Government budget of 2015, the amounts spent on Medicaid, Medicare and other health-related spending amounting by now to 25% of the budget (about US$800 billion), safety net programs, another 10 percent (roughly 400 billion), education and research (only federal, not state, where most of this category of spending is done), about US$180 billion, and Social Security and benefits for federal retirees and veterans, 32%— about US$1.2 trillion. Overall spending was greater than revenues by US$438 billion, financed by borrowing, the latter now standing at almost US$19 trillion.

How long can these trends last?

Countries are not families. If society raises — or attracts from the rest of the world — entrepreneurial, hardworking, healthy future generations and capital — these trends can last for quite a while. But how long depends on the kindness — or stupidity (as long as other societies do not start competing for talent and capital) — of strangers.

Though they appear to be kind for the moment, the numbers suggest the kindness is not good enough to overcome the above trends. And I did not even mention the much-discussed, accumulating data about the diminishing number of start-ups, or the loss of much what I would call “routine-employment” in the US the last thirty years (a topic discussed in my previous article about free trade on these pages). Combining all the data above — and also taking into account the much-publicized evidence of subtle and less subtle political corruption — and the present deep discontent in the US is not particularly surprising.

True, this is not a precipice — in part because in the kingdom of the blind (much of the rest of the world for the moment), the one-eyed will be king, able to attract talent and capital, and also correct faster grave policy mistakes. Still, the US is now living from such borrowed capital — financial, obviously: Whether the “human” one is borrowed, meaning it would go back to their country of origin after a while in the US or stay permanently — we do not know.

For the moment the older generation in the US goes on working either by habit or necessity (after having lost much wealth in 2008), despite higher taxes and stagnant compensations. With pension values at risk, the cost of health care insurance on the rise, and interest rates at zero — many have little choice but continue to work long after official retirement age. Others are still proud of their professions — even if they are paid less well. So the once well-oiled machine is chugging along, as it gradually depreciates.

But it appears that for the fractions of the younger generations growing up being taken of — for their education, health, did not acquire the habits of the generation of the 1950s and 1960s — the above data suggests a trend. True, there is another fraction of the younger generation who learned from observing their hardworking parents and understands what is needed to restore a world that gave their parents the incentives to acquire those habits. It is not that they do not understand the value of real education, one that schools and universities once bestowed. What many people resent is that those who want to open a garage (for electric cars perhaps), a small business, or become plumbers, electricians, technicians or any number of professions that do not require college and university education, realize that they are now severely penalized.

After all, when they begin working they pay immediately taxes, whereas those going to colleges and universities are subsidized to the tune of anywhere between US$30 thousand to US$100 thousand dollars per year. As long as the few highly skilled were thus subsidized — be it in science, math, philosophy or the arts — people did not reject the subsidies. They understand the value of science. But once educational institutions abandoned selection based on academic merits, and governments ended up subsidizing all the nonsense, and subsequently hiring graduates into ever expanding bureaucracies rationalized by an increasingly incompetent “academia” (with pretensions) — they see through the veil, and the once well oiled-machine starts falling apart.

The above is a brief sketch of a good chunk of what is happening in the US in this election year, the conflict between the “establishment” — part of which has become establishment not because of talent and skill, but centralization of powers to spend in the hands of unaccountable politicians and bureaucracies. This description has nothing to do with right and left, or any “ism”: It is a perfect reflection of Orwell’s Animal Farm, where the pigs wrote a beautiful constitution to make one cry and where all animals were equal before laws. But the pigs then managed to tax all the animals except themselves — and they lived like … OK, pigs, until the farm collapsed. We are not yet at the end of this fable, but this election is about reversing the trend.

Reuven Brenner
Dr. Reuven Brenner was appointed to the McGill Faculty of Management REPAP Chair in Economics in 1991. Brenner was the recipient of a Fulbright Fellowship, was awarded the Canada Council's prestigious Killam Fellowship Award in 1991, and is member of the Royal Society. In February 2013, he was awarded a Queen Elizabeth II Diamond Jubilee Medal for his contributions to his peers, his community, and to Canada.
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