We Should Be Compassionate But Can We Afford It?

Personally, I think the Americans are 40-50 years too late introducing this bizarre bill. Back then, North America's economy was healthy and strong enough to sustain a welfare entitlement project.

Today?

Now we're hanging on for dear life. How much more can you suck out of people?
I'm not so sure it was fiscally wise. But for many, it was still worth it from a social perspective.

When we worked at FPC, my cousin and I collected a lot of data and information about Canada's public health system. So much so we considered putting it all in a book. I often wondered if there was a website that culled all the "bad" side of public health (because we all know the good side of it). Lo and behold, SE posted this site: The Problems with Socialized Medicine.

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I know some people say we shouldn't obsess over the cost of things when we are doing a public good. As I mentioned earlier, I argue that we aren't vigilant enough with our money. How North Americans treat their savings, is pretty much indicative of how our governments utilize our tax dollars. If we show no restraint or discipline, why should they?

Nonetheless, it's still a tough thing; cost versus compassion.

I've always wrestled with this. The best way I could show my support for my fellow man is to give to a local charity or cause or homeless shelter from my pocket. I plan to do so once I get myself back on my feet. However, the incentive is less for me because there is less in my pocket since the government takes from me to do exactly that: Care for the less fortunate. Quite frankly, I think it does a terrible job at it - heartfelt intentions notwithstanding. Grouping everyone into one communitarian tent is not the answer. We're better off appealing to each individual to do their part.

This economist from Harvard put it very well and reflects my outlook:

Well, it appears certain that the healthcare reform bill will become law. One thing I have been struck by in watching this debate is how strident it has been, among both proponents and opponents of the legislation. As a weak-willed eclectic, I can see arguments on both sides. Life is full of tradeoffs, and so most issues strike me as involving shades of grey rather than being black and white. As a result, I find it hard to envision the people I disagree with as demons.

Arthur Okun said the big tradeoff in economics is between equality and efficiency. The health reform bill offers more equality (expanded insurance, more redistribution) and less efficiency (higher marginal tax rates). Whether you think this is a good or bad choice to make, it should not be hard to see the other point of view.

I like to think of the big tradeoff as being between community and liberty. From this perspective, the health reform bill offers more community (all Americans get health insurance, regulated by a centralized authority) and less liberty (insurance mandates, higher taxes). Once again, regardless of whether you are more communitarian or libertarian, a reasonable person should be able to understand the opposite vantagepoint.

In the end, while I understood the arguments in favor of the bill, I could not support it. In part, that is because I am generally more of a libertarian than a communitarian. In addition, I could not help but fear that the legislation will add to the fiscal burden we are leaving to future generations. Some economists (such as my Harvard colleague David Cutler) think there are great cost savings in the bill. I hope he is right, but I am skeptical. Some people say the Congressional Budget Office gave the legislation a clean bill of health regarding its fiscal impact. I believe that is completely wrong, for several reasons (click here, here, and here). My judgment is that this health bill adds significantly to our long-term fiscal problems.

The Obama administration's political philosophy is more egalitarian and more communitarian than mine. Their spending programs require much higher taxes than we have now and, indeed, much higher taxes than they have had the temerity to propose. Here is the question I have been wondering about: How long can the President wait before he comes clean with the American people and explains how high taxes needs to rise to pay for his vision of government?