Wagner's Sad Law
While sipping my morning coffee early Monday, I watched an interview of former Clinton Treasury Secretary and Harvard President Emeritus Larry Summers on CNBC’s Squawk Box. He expounded on an op-ed piece he had written for the Washington Post that claimed that thousands would die each year because of the GOP’s tax bill that had passed the Senate over the weekend. It seemed very sad that Mr. Summers might be correct in his assumption. But my reason for being so sad was for a very different reason than that which provoked Mr. Summers’ op-ed.
Mr. Summers explained to hosts Becky Quick, Joe Kernan and Ken Langone, "I think this bill is very dangerous. When people lose health insurance, they're less likely to get preventive care, they're more likely to defer health care they need, and ultimately they're more likely to die."
What Mr. Summers omitted to say was that when people lose health insurance that they don’t pay for, they’re less likely to do all those healthful things necessary to extend their lives. If you gave them, cash and suggested that they use it to purchase health insurance they are more likely to buy a flat panel TV and a case of beer to watch the Super Bowl. So it must be, by Mr. Summers' way of thinking, the government’s job to provide health insurance (or force companies to provide it)
Mr. Summers is a believer in big government. New York Times columnist David Leonhardt pointed out that in a September speech in Washington Mr. Summers had updated Wagner’s Law by stating that the United States was destined to ever bigger government due to; 1) an aging population of retirees, 2) the need to reduce income inequality, 3) the increased need for labor intensive services in education and healthcare, and 4) increased defense spending because we live in a dangerous world (well he’s right about number 4 thanks to President Obama).
Wagner’s Law, for you benighted folks who believe in free enterprise, is the theory of an obscure German economist named Adolph Wagner (1835-1917) who stated that public expenditure (as a percent of GDP) grows as national wealth increases (don’t feel bad, I had not heard of it either). Wagner was a proponent of state socialism, which would be the result of ever increasing state expenditures (an outcome that I would agree would be inevitable).
But ever increasing state expenditure is more like sickness than an economic truism (and socialism a form of economic death). The fever we get with the flu is a symptom that tells us our body is in need of healing. The ever increasing state expenditure makes the population ever more dependent on government for basic services. This is a sickness in our society and we need to reevaluate causes in order to develop cures.
More than fifty years after President Johnson announced the War on Poverty there are as many poor as in 1964. But poverty is relative. The poor today have much more material wealth than the poor of 1964 (as well as the poor of other countries). But more than relative material poverty, the poor today have a poverty of self-esteem. Prior to the welfare state, poor people had to work to survive. The working poor may have had to struggle to make ends meet but did so with a sense of pride. Many of our middle-class arose from the working poor. They did so through hard work, the savings of their parents and education to better themselves.
The poor today are fraught with a sense of hopelessness. Progressives will tell us that the poor have a sense of hopelessness because the system is rigged against them. And they are right. The social welfare system in the United States is designed to keep the poor in a state of hopelessness and low self-esteem that makes them ever more dependent on the state for the material necessities of life. But the state cannot give them pride in their own accomplishments or the self-esteem from doing a job well.
Mr. Summers also noted on Squawk Box that while the average longevity of Americans is increasing the longevity of the wealthy is increasing much faster than that of the poor. But a review of the principal causes of why this is occurring does not include poverty or the lack of health care. The New York Times noted that the wealthy have largely given up smoking while the poor continue the habit and that this fact alone may explain as much as a third of the disparity in longevity. Add in drug addiction and homicide rates among the poor and even more of the disparity is explained.
Another unintended consequence of the social welfare system has been the increase in single parent families. A fatherless (or motherless) household must exert enormous effort to not fall into a well of despair. Single parent families are much more likely to be on welfare and receive food stamps. The health consequences for children in single parent families, while not pre-ordained, are dire.
Even the New York Times notes, “Limited access to health care accounts for surprisingly few premature deaths in America, researchers have found. So it is an open question whether President Obama’s health care law — which has sharply reduced the number of Americans without health insurance since 2014 — will help ease the disparity (thus refuting Mr. Summers' original contention - by the New York Times no less).”
Yet still progressives (Mr. Summers numbered among them) insist that more government involvement is necessary to fix a situation that, if not caused by government interference, at the very least has not been helped by government involvement. So it is very sad that millions of Americans are so depressed in spirit by the government’s oppressive and smothering control over their lives that they care little about the consequences of their actions even if it shortens their lives - the same fate that befell the Soviet proletariat. That is sad.