Tuesday, November 16, 2010

Slate vs. the Welfare State

The video is from September but it relates to Anne Applebaum's recent article:

"Europeans Are Finally Slashing Their Cushy Government Programs. Will Americans Do the Same?"

As is often the case with Slate, the article has 2 titles. It's also called:

"Continental Divide: Europeans are starting to realize that their governments are too big. Will Americans catch on next?"

Anne Applebaum discusses various austerity and privatization efforts afoot in some European countries.
It's saying too much to call it a pattern, and it may well not be a permanent change: I'm sure there are plenty of European politicians who won't survive their next encounter with the voters. But there is something in the air. It almost seems as if at least a few Europeans have actually drawn some lessons from the recent recession and accompanying turbulence in the bond markets. They have realized, or are about to realize, that their state sectors are too big. They are about to discover that their public spending, which seemed justified in good economic times, has to be cut. The middle class knows in its heart of hearts that its subsidies, whether for mortgages, university tuition, or even health care, can't last. Some voters even know that their pay-as-you go pension systems aren't sustainable in the long term, either.

I've described this mood swing before, but two American economists, Douglas Besharov and Douglas Call, recently substantiated it in the Wilson Quarterly. They write that most developed countries in Europe and Asia—not some, most—are moving, "however hesitantly," toward market-based government pension and health care systems, at least for the middle class. Most now fund future pensions with investment funds and stock holdings, either instead of or in addition to pay-as-you-go plans. Even countries historically suspicious of the free market—such as Italy, Sweden, and Poland—now use such schemes.

At one point she mentions last week's riots in London, but dismisses them as insignificant and suggests the current UK government is popular at home, and suggests by extension, so are the austerity measures. I don't know how to evaluate this. [Applebaum provides this link]

But I'm suspicious, partly because I remember the last time I discussed Applebaum,in 2009, per a condescending article she wrote that summer, practically channeling Kipling regarding the Afghan election. At any rate, the current item is heavy on insinuation and it's not really clear that the austerity measures are in fact popular with the European public, although she suggests this. (I somehow doubt it. It sounds like the IMF/Global banking thugs who pushed the US bailout program through in 2008 is working their voodoo in the EU.)

The austerity programs are definitely favored by Applebaum, who also throws in a dig at the US Post office and Obamacare. Actually it doesn't sound like she understands the healthcare reform law, unless that is by design. Likewise she doesn't understand why US healthcare costs are so much higher than in other Western countries. She does admit they're higher, but suggests it's because US spending on healthcare is somehow shielded from market forces(!?) because most Americans don't pay for their healthcare directly-- as opposed to, say, because of the added costs incurred by insurance companies' overhead and profit margins, or the lack of cost controls on drugs compared to the more restrictive laws in other industrialized countries.

I think it is particularly ironic that currently Slate is also running a piece entitled "How to sell horrible counterintuitive column ideas and look smart doing it". Maybe I should used that title, leaving out the word "column".

Anyway, here are two items from the comments regarding Applebaum's current article:

Joe Miller: Deeply misleading on health care costs. While Americans pay only 13% DIRECTLY, they pay through the nose INDIRECTLY. The per capita cost of health care in the U.S. is about $7000, as compared to an average of around $3500 in the rest of the OECD. That means about $1,000,000,000,000 a year is wasted/stolen/skimmed off the top by the appallingly bad U.S. system, which does NOT provide universal coverage. It isn't brutally expensive because of "lack of market mechanisms". It's brutally expensive because certain players in the health care "game", such as Florida's newly elected criminal governor, Rick Scott, have rigged it to be.

The Post Office, BTW, is a govt.-supervised but not wholly owned corporation. Part of the reason it runs a deficit is that it has to put up billions every year in advance for future pension payments. Privatize it, and watch what happens to postal service to rural and generally less-populated areas.

Michael Streiffert:
Employer provided health insurance is part of the overall compensation package workers receive for their labor. Will the author next argue that I don't pay my rent because I use my employer provided wages to do so? I earn my health insurance just like I earn my wages and my retirement. I don't pay only 13 percent of my health insurance coverage, I pay 100 percent. Just as the money I use to buy my car insurance ultimately comes from my employer through wages, the money that pays for my health insurance is the same thing.

Other than that, this is a silly article. "Europeans are starting to realize that their governments are too big." is followed by "It's saying too much to call it a pattern..." It's saying too much to call it a pattern and that's why the title of the article calls is a pattern. Okay. Sure.

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