The Health Care Trilemma

Too often people throw themselves into the weeds of health care debates without stepping back to think through what the point of health care even is. Identifying effective policies requires understanding what it is people want when they consume "health care." They certainly don't just want health care. They want what they believe health care will give them. So far I can identify a few items people are looking for when consuming health care:

1) death prevention

2) improving quantity of life 

3) improving quality of life

Death prevention occurs when someone has a sudden onset of an illness that will kill them relatively quickly if not treated. Some examples are a heart attack, cancer, or the severing of an artery. If these are not treated quickly, the patient will die. Some cases are fairly easy to treat by an expert, while others involve probabilities. Some treatments may even hasten one's death if they do not work. However in situations in which it is clearly life or death people will try anything. 

One issue in death prevention is knowing when attempting to prevent death is not worth it. This is an emotional issue obviously, because most of us, all else being equal, would rather try something, even if the probability is very small, rather than just sit by and die (or watch a loved one die). The tricky part here is that the "all else being equal" is simply never the case. Often one's death can be made to be much more peaceful with palliative care, while actively (and often futilely) trying to save their life may incur more unnecessary suffering on the patient and the patient's family. 

Medicare is involved in a large percentage of death prevention (given that it essentially insures the entire American elderly population). One sinister aspect of Medicare, as noted by law professors David A. Hyman and Charles Silver in Overcharged: Why Americans Pay too Much for Health Care, is that Medicare will pay anything for the latest and greatest treatment, no matter how improbable, to try and save a life, while it will not pay out a single penny to help the patient die in a peaceful way with their family, avoiding the unnecessary pain and false hope that often results from such late stage interventions. 

Improving quantity of life occurs when someone goes to a health care professional to receive advice and potentially treatment to lower the probability of experiencing an episode requiring death prevention. Or in other words, its when we attempt to extend our life expectancy. This can come in the form of changing one's diet, or going on a prescription (say for statins) to lower the chance of incurring some sort of illness. As an example, statins lower cholesterol. People go on statins believing that lowering their cholesterol will reduce their probability of experiencing a heart attack.

This part of health care gets trickier. There is simply no limit on the things one can do to try and improve your life expectancy. Some things are obvious. An obese person will clearly gain a great deal in life expectancy if they slim down to a more normal weight. However, all possible changes in diet or in medications or lifestyle involve tradeoffs that may hurt quality of life.

Improving quality life occurs when someone goes to a health care professional to receive advice and potentially treatment to increase their quality of life. Mental health professionals are possibly the most obvious example of this, but I would argue plastic surgery can fall into this category as well, along with medications to treat chronic pain. As with improving the quantity of life, there is simply no limit on what one can do to improve your quality of life. Interestingly, some of these treatments contain a small risk of experiencing a life threatening episode (just listen to the warnings on any medication advertisement on tv). Most vividly, anti-depressants in some cases are associated with an increased probability of attempting suicide. 

The most interesting tradeoff here is between quality of life and life expectancy and the probability of experiencing a life-threatening episode. Certain policy interventions are often justified on the grounds that they will increase life expectancy. If we ban large sodas, people will drink less soda, and thereby live longer. If we ban fast-food, people will eat healthier, and thereby live longer. Lets assume these statements are true, which isn't obvious in themselves because we don't know what behavior people will substitute in (as an example, limiting oxycontin prescriptions likely drove many people to the black market, increasing deaths because people are using stronger, riskier substances). Ultimately, people have different preferences. Some may prefer to live a shorter life in return for greater happiness now. There is an unstated assumption in such policy proposals, and that is that people making such choices would be just as happy in a world in which their choices were constrained. This is a large claim, and not at all obviously true (or false). 

The other interesting tradeoff isn't quite as obvious. Its between all three, and it involves cost. Any intervention into any of these three involves costs and benefits. Some interventions may even pay for themselves (in a sense). As an example, vaccinations dramatically reduce the probability of premature deaths from various conditions such as Hepatitis, Polio, Tetanus, etc. These cost relatively little, and the saved lives can later contribute to the economy, and therefore are a huge net positive from a cost-benefit standpoint. One can argue of course that they diminish quality of life for the children, but to me anyway, thats fairly unconvincing given the massively reduced risk of premature death or life-long disability (such as in the case of polio). 

Other interventions may extend life expectancy, such as incentivizing the obese to eat healthier, and may even reduce their expenses in the short run. However in the long run these people may actually cost more exactly because they did not die prematurely. From a coldhearted public accounting standpoint, the ideal time for someone to die is just when they retire.

So when individuals are deciding to consumer health care, they are really deciding to consume services that may prevent death, reduce the probability of experiencing a life-threatening episode, or increase their quality of life. Lumping everything into one basket called "health care" can be misleading, and its important to understand the different tradeoffs involved in these different decisions, whether as an individual consumer, or as a policy analyst making recommendations as to what public health care expenditures should be spent on.

Divided

Its no secret that America is divided.  Americans can't agree on facts, on what our problems are, on what the issues we face, on what our values should be.  We are a nation without a unifying idea.  Americans hold to liberty, but our definitions of liberty vary substantially, and what we believe liberty looks like, varies substantially.  Some want to be free from collectivist coercion, while others wish to be free from individualist responsibility.  What makes America America?  What unites the States?  Perhaps we should look at history as a guide.

America has always been a story of conflict.  A story of conflict between different peoples.  The first white people to come to America came for two very different reasons: religious liberty, and economic opportunity.  Persecuted religious groups settled in Massachusetts, Pennsylvania, Connecticut, and several other states.  Economic opportunists settled in Virginia, New York, and other states as well.  Jamestown was founded to exploit the cash crop, Tobacco.  Pilgrims famously settled in Massachusetts and had the first thanksgiving with the Wampanoags.

Conflict resulted between the settlers and the natives.  There were periods of peace, but slowly Europeans pushed the native peoples west.  Sometimes the settlers had the natives sign agreements that sold their land, but since the natives did not have the same view of land as property that the Europeans did, conflict ensued over this deep and profound misunderstanding.  Other reasons led to conflict as well, such as tribalistic prejudice between different people groups.  The belief that those not part of your group don't deserve the same treatment as those within.

So whats fascinating about this early period of settlement is that its a mixed story.  Its a conflicting story.  Its hard to reconcile the motives of those that simply wanted better lives for themselves, and wanted to be free to live as they chose, with what they did to the people they encountered.  This is what draws me to history.  Its this conflicting dynamic that forces us to see ourselves for who we truly are, a complex mess that have good and bad intentions, that take actions that result in good and bad outcomes.  We cannot foresee the outcomes because we cannot see the future.  We can only guess, and try our best.  I believe history, when studied properly, serves as a mirror that allows us to better understand ourselves.  At its worst, history serves as propaganda for an agenda.  Anyways, getting off my history soapbox and getting back on my America soapbox.

Slavery soon entered the picture as well.  Since the demand for cash crops like tobacco was so high, and the supply of labor was so low, farmers in Virginia and elsewhere began relying on slave labor.  Before long, it was entrenched institutionally into the very fabric of several states, while other states made it illegal.  This would become another source of conflict, that eventually broke out into the civil war.

Our nation was born out of conflict between Americans and their British overlords.  The British wished to restrict Americas trade and wanted Americans to only purchase goods from Britain.  Adding insult to injury, the goods Americans were forced to buy would be taxed.  Since Americans had no representation in the British government, this led to the cry, "No taxation without representation!"  War broke out, and America won her independence.

America is a complex nation, with a complex past.  Its a nation founded on lofty ideals, that its failed to uphold time and time again.  The difference between America and other nations, ultimately, is that America rooted its identity in the ideal of liberty and justice for all.  So while other nations have sinned, they don't suffer an identity crisis every time they do, because America claims to be for ideals that it violates regularly, which isn't surprising, given how lofty they are by historical standards.

This brings us to today.  We have several different narratives of our history, depending on ones angle/point of view.  We have different emphasis on the ideals America espouses.  Some emphasize justice more, others emphasize equal rights, others emphasize freedom, while others, unfortunately, emphasize a raw tribalistic assertion of power.  Often this raw desire for power over others, is cloaked in supposedly good intentions, such as "manifest destiny," or the twisted paternalism many slaveholders utilized to defend their institution.  We must be wary of narratives that divide, because often the point of such narratives is to dehumanize a certain group.  Once that group is dehumanized, actions that would be unthinkable to commit to members of our tribe, become justified.

I fear today that many ideals are giving way to raw tribalism.  Its easy to see that many people's animosity is no longer directed at opposing ideals, but at opposing people.  Its been shown that people have been self sorting themselves geographically into tribes that agree with them.  Its also been shown that overall geographical mobility has been declining, further contributing to the isolation of people groups from each other.  It often seems given our history that conflict is inevitable.

We must ask ourselves how we wish to resolve conflict.  Theoretically, our constitutional representative government is supposed to resolve these conflicts.  It seems however, to be doing the opposite.  It seems that our government, due to structural faults imbedded in its history, is actually a driver of partisan anger.  Representatives draw their own districts, guaranteeing concentrations of likeminded voters in districts.  It seems nothing can get done nowadays without one party rule with super majorities.  The system was built to force compromise, but what if no one is willing to compromise?  Then problems will just simmer and get worse and worse, and nothing will be done about them.

Its even worse than this because more and more is dependent on rule making by executive agencies such as the Environmental Protection Agency, which are under the purview of the President, and on executive orders.  This combination, along with the stultified incompetence of Congress, means that our system is increasingly becoming one of, "who gets the bully pulpit for the next 4 years?"  This is a dangerous system, one in which its possible to see dramatic shifts in policy between administrations, without a concurrent change in the actual law.

This means the system is not withstanding the pressure of our current cultural hyper partisanship.  Its not working as intended by the founders.  The founders intended the checks and balances to lead to compromise, but instead it has led to responsibility being pushed to the office with the least to lose (due to term limits), the Presidency.  Our Congress has increasingly become irrelevant, and the Presidency has become too relevant.  Its not good when one election for one person can change the entire direction of regulating agencies and foreign policy, meanwhile only requiring a simple majority of Electoral votes.

If you do not yet understand why this shift is bad, let me lay it out for you clearly.  Its because this outsourcing of responsibility by Congress leads to a decreased need for compromise.  This means the tribalist impulses will receive more fuel than ever before.  Even worse, this tribalist impulse, when divorced from idealism, leads to a desire for a strongman, someone who can push through their agenda.  This puts even more pressure on the President to usurp authority.  There is a spiraling self reinforcing dynamic to this.

Its frustrating even for me, because there are some things I think desperately need reform.  Yet I don't have perfect knowledge, and neither does anyone else.  Its arrogant to presume any of us do, and if you agree with this, then you should also be humble about your own beliefs, and the inherent desire to impose them on others.  Its important to be open to listen to others, and to constantly search for truth and compromise, because ultimately, even if we don't end up agreeing, both of our belief systems are enriched by better understanding the views of others.  Listening is a rare thing these days, but given our history, we should begin to, otherwise we may repeat parts of our history that we disdain.

Why I Don't Agree with Anarcho-Capitalists

Today I am going to discuss the Anarcho-Capitalist claim that legal and defense services can be provided without a state.  This is obviously a complicated issue.  Many disputes fall under the giant category of "legal services."  This ambiguity allows "gotcha" examples from both sides.  I will try to address the issue fairly, but will admit from the beginning that I am biased against the Anarcho-Capitalist position, simply because there are few real world examples of such a system working.

First, I will acknowledge that many legal services can be provided privately.  If two parties agree to a divorce settlement, then no intermediary is necessary.  Both may agree as well to have the dispute settled in front of a judge.  The judge would charge a fee for his service, and both sides would secure legal representation for themselves to argue their case.  The judge would then render a verdict.

This much can be provided by a private system.  The issue I have, is enforcement.  Lets say both members signed a contract to agree to the settlement made by the judge.  The losing party may still agree to the settlement, or the losing party may refuse to cooperate.  Lets assume the contract both signed, also provides provisions for enforcement.  So the judge secures enforcers to force the losing party to cooperate.  The problem immediately becomes obvious.  The losing party can then secure security forces to defend him/herself from the enforcing party.  What happens next?  That is the question.

Here in lies the obvious issue with the private provision of legal services in a society with no government.  A monopoly on violence is necessary for this reason.  If there isn't, then people can easily obstruct justice by hiring their own defense force.  I suppose its possible in this case, that the enforcing party could purchase insurance in case such a situation arrises.  Then the insurance would kick in, and the insurance company would provide more armed enforcers to enforce the judges verdict.  However, the problem still does not go away if the losing party signed with a different insurance company.  Then they could utilize their insurance to arm up as well.  An armed standoff would occur.

Its possible the insurance companies could form an agreement to solve the dispute.  Its possible they would form an agreement to go with the decision of the judge.  But then there is still another issue.  What if there is a wealth disparity between the two parties?  What if the losing party can afford to hire his/her own private militia?  The problems become onerous quite quickly.  The points where this problem can escalate into violence are many.  All it takes is one of these bad scenarios to happen out of many.

This is where people would compare the private system to a public one, and say that even though a private one isn't perfect, a public one is worse.  I am not so sure.  I am not so sure because it depends on the form of the public system.  If there are sufficient checks on public power given division of powers, elections, and a constitution, and a tradition of the rule of law, then I believe a public system is actually better.  Yes, I said it, a public system, at times, can be better than a private one.  Its rare, but without a monopoly on violence provided by a government, people won't just compete in economic terms, but in violent terms as well.  A monopoly on violence is necessary so individuals in societies don't waste their energy and resources in an arms race with fellow citizens, but instead spend them on productive endeavors.

If private provision of legal services and defense was possible, it would have happened by now.  Let me be clear, plenty of legal services can be provided privately, but their enforcement needs to be, ultimately, handled publicly.  This is not to say there can be no role for private forces utilized for enforcement and defense, but they will inevitably play a limited role, because without a monopoly on violence, there will be a competition for violence, which is ultimately a zero sum game.  Also unlike competition in other markets, a competition in the violence market can too easily turn into a competition of might, rather than a competition in quality and price, which would become violent.

Libertarian critique

Today I am going to call out a discrepancy in how libertarians approach issues.  Libertarians are not going to like this because libertarians like to pretend that they are color blind.  Libertarians like to pretend that their personal backgrounds do not affect their beliefs.  Today I am here to show, that they very much do.  Also before going forward, please take not that this discussion is somewhat "inside baseball", for lack of a better term.

Before I begin, let me explain that I am very sympathetic to libertarian beliefs.  I do believe that individual rights and private property are important.  I do believe that we must guard against government tyranny.  I believe that it shouldn't be governments job to try and create an utopia on earth, and that if it tried, it will find quickly it created a dystopian mess.  I make the following objection I'm about to raise, because I care about the movement, not because I wish to destroy it.

My objection is as follows.  Ideological consistency is held to most of the time, except, in the issue of immigration.  There is a schism here, between open and closed borders libertarians.  Open borders supporters believe that individual rights require libertarians to always support policies that open the U.S. border to immigrants.  Closed border supporters believe that we cannot afford to allow open borders as long as there is a welfare state.  If there is a welfare state, then people will come to the U.S. to mooch off its welfare benefits.  In addition, many argue that allowing unrestricted immigration will inevitably lead to a change in the culture that is less supportive of liberty.

Its interesting that this is one of the few areas that libertarians allow practical considerations to trump ideological purity.  Every other issue, to the libertarian, is straight forward.  Whatever increases individual liberty is best.  As an example, reducing taxes is always good because taxation is theft.  This is interesting, because it ignores that reductions in taxes are often coupled by increased in money printing and/or financial repression by the Federal Reserve, which is simply just another form of theft, in the libertarian worldview.  Yet in this issue, libertarians conveniently ignore the complexity of the issue.  Same goes with healthcare policy.  Libertarians argue against the mandate, yet don't bother to address the massive subsidies the Federal government already gives to hospitals to cover uninsured patients.  If you take away the mandate, more people will be uninsured, which will then go to hospitals and rack up bills that taxpayers later wind up paying.  Funnily enough, the complexity here goes unnoticed as well.  Same goes with education reform.  Most libertarians are against a voucher system, even if its the best option limited government folks can attain, because it doesn't go far enough.  So they rather have the current system than accept a second best solution.

Yet this logic, strangely, does not follow for many libertarians when it comes to border policy.  Here, libertarians often argue that other things must be considered besides individual rights.  Individual rights, in this one issue, are seen as one of many other factors.  More consequentialist arguments are laid out, suggesting that allowing immigration, ultimately, will reduce liberty.  One has to ask why this one issue is allowed a pass to ideological consistency.

Honestly, I believe the reason for this tolerance of support for closed borders lies with some libertarians unholy alliance with the alt-right.  I believe some libertarians are fond of the alt-right due to its politically incorrect stand against the establishment, and I believe some libertarians believe that its easier tactically to convert alt-right nationalist populists into libertarians that it is to convert progressives.  Its obvious when one sees many libertarians love of UKIP leader Nigel Farage, who is not a libertarian, that many libertarians have sympathies for nationalist populism.

Since the hottest movement on the right lately has been national populism, and since libertarians have had difficulty attracting a wider audience with their message, many have decided to latch onto national populism in order to increase their market share.  The biggest issues amongst national populists is immigration and skepticism of international institutions, so many libertarians have fully embraced these.  It may be coincidence, but I doubt it.  I think its more likely that libertarians are doing this as a tactical maneuver, and because frankly, many libertarians revel in contrarianism, so if a movement is despised by the establishment, libertarians rush to defend them.

I must admit, its hard to escape the ethnic and racial component in this story.  Especially because the facts seem to suggest the opposite of what libertarians claim.  The facts show that more homogeneous societies are highly correlated with large welfare states.  So if libertarians concern is that allowing immigrants will increase the welfare state, facts don't seem to back up their theory.

In addition, theres an implicit assumption that "people not like us" do not value liberty like Americans.  That may, or may not, be true.  Sure, lately most minorities have been voting overwhelmingly democrat, but the reason for that is obvious.  The Republican party does a very bad job listening to minorities.  Republicans used to do better.  George W. Bush received between 40 to 44% of the hispanic vote in 2004.  Reagan received 37% in 1984.  Meanwhile, Romney only received 27%.  So when people complain about how Mexican immigrants are going to make our country socialist, they are basing it all off of the Romney election.  But its not nearly that obvious, because George W. Bush did much better.  To be frank, Republicans have become more hardline on immigration, and their rhetoric against immigrants has become harsher.  As a result, not surprisingly, more hispanics were driven away from the Republican party.

Lets be honest, most Republicans are not for small government, and neither are most Democrats, but immigrants know from their own experience that America got something right, that their countries at home did not.  Maybe the immigrants are not for small government, but you are deceiving yourself if you believe most white rural Republicans are for small government either.  Just look at the current election.  Look at what made Trump win.  Look at his rhetoric.  He had the weakest position on tax cuts out of ALL the republican candidates.  His whole platform was based off of punishing companies for producing things overseas, and shutting down our borders to immigrants.  His policy, essentially, was one of closed borders, not liberty.  What other evidence do you need to see that Republicans are just as invested in protecting their own interests as are Democrats?  What other evidence do you need to see that Republican rhetoric about liberty is a farce?  How many executive orders, cheered on by Republicans, and missile strikes, will it take before supposed libertarians acknowledge that the real roadblocks to liberty are their fellow Americans? Not a mythic foreign boogieman called the immigrant.

A Conservative Critique of Pro Investment Tax Policies

Its become Conservative and Libertarian dogma in policy circles that investment should never be taxed.  I remember vividly a conversation with a libertarian on Facebook.  He argued that the best tax policy would be a consumption tax (for those of you that don't know, a consumption tax is a sales tax that only applies to "consumption" goods.  I argued that a sales tax should not just be levied on consumption goods, but on all transactions.  I knew instantly what his argument would be.  He argued that we shouldn't tax investment because it will discourage economic growth (as is typical of libertarians, they totally disregard the role of consumption in economic growth).

I have several problems with this argument.  My first objection is practical.  The level of the consumption tax, to compensate for the reduction in all other taxes to zero, would be astronomical.  Here is an example.  My home state of Texas relies heavily on property taxes to fund the government, and in particular to fund our public schools. The current sales tax rate in Texas, at the state level, is 6.25%.  If the property tax was eliminated in texas, and if the sales tax remained in its current form (which is basically a consumption tax), then the sales tax would have to be increased to at least 20%, probably higher.  And thats just to fund the needs of Texas.  Now imagine if the Federal government was to replace all its taxes with a consumption tax, you get the idea.

My fellow libertarian minded friends may object at this point that this would be coupled with a shrinking in government, and it will force those that receive government benefits to see how much their benefits actually cost, which will inevitably lead to the masses crying to shrink government.  I do wish for government to shrink, but I find it incredibly unrealistic to believe that the majority of voters would go along with this.  Most likely, what would actually happen, is that other taxes will quickly be reinstated.

We are where we are, and I find utilizing an incredibly regressive means of taxation such as a consumption tax to be unjust.  Please bear with me fellow libertarian minded folks, as I explain.  The fact remains that many contracts exist because they are enforceable.  If I lend money to you, I know I can demand repayment because I have backing from the government.  The government enforces the contract.  Governments enforce contracts when they punish people for theft.  They enforce contracts when they punish someone for fraud, or not adhering to a contract, etc.  I know some more idealistic libertarians will argue that this role of the government is unnecessary, but if it isn't, I would like historical examples, not just theoretical arguments.

Transactions between a buyer and a seller are a contract.  The contract may be simple.  I pay you to make me a cheeseburger.  Or it may be complex.  I obtain a loan from you with the obligation to repay some time in the future.  Either way, there is a 3rd party that is in charge of enforcing that contract.  That 3rd party is, like it or not, the government.  One may conceive of alternative, perhaps better, mechanisms of enforcement, but in our current society, the government is responsible.  Thus it makes sense that there should be a fee paid for enforcement.  This fee would be my recommended transactions tax.  Since it is proportional to the size of the transaction, it serves as an automatic mechanism to insure that the government allocates enforcement mechanisms proportionally.

If we just had just a consumption tax instead, then people that engaged in investment would free ride off of those that paid fees for consumption transactions.  They would not have to pay for the enforcement mechanisms that they rely on for their contracts.  In addition, this could be bad for them, because ultimately, if government does not derive revenue from those contracts, it may have reduced incentive to effectively monitor them.

Now I will reply to the argument that my tax scheme will reduce economic growth.  First of all, its been shown that tax wedges that favor some transactions over others create distortions in the economy.  Austrians Economists don't like distortions, so why should they favor this one?  It also creates incentives to have things reclassified to expand the classification of "investment."  This will in turn give incentives to lobby to make for things exempt from the consumption tax.

In addition, utilizing economic theory in such a way to enact tax policy presupposes that we have perfect knowledge of how economies work.  It presupposes that the government can effectively decipher what is investment versus what is consumption.  This is actually a difficult task, because in reality goods fall in a spectrum between perfect consumption and perfect investment.  Consumption and Investment are just arbitrary terms we use and stastiticians use to label economic activity.  An arbitrary binary classification scheme has been utilized to in a way it never should be, because reality is far more complicated.  It saddens me that many that call themselves Austrians (in the economic sense) have fallen for this oversimplication.

While I am sympathetic to conservative and libertarian efforts to reduce taxes.  The debate should recognize the complexity of the issue.  The issues at stake are not just Economic, but also rooted in Political philosophy.  What the proper role of government?  If one believes its role is to protect property rights, then one needs to think what is the best way of funding its obligation.  It makes no sense to argue that government's role is to protect property rights, and argue it should be funded with user fees, and then insist that a massive quantity of contracts should be exempt from this fee.

I am more optimistic that this argument will make sense amongst conservatives, because unfortunately, from my experience, libertarians tend to be as dogmatic as marxists, and like to pretend they are ideologically consistent, while often being very far from it, and too often serve as apologists for the rich and powerful.  I know many libertarians that are not this way, but I fear they are a minority.  Hopefully this argument I have made will instill in the conservative and libertarian movements, renewed vigor for approaching issues via a more holistic lens. more in the spirit of William F. Buckley, and less in the spirit of Murray Rothbard.

LBJ's Legacy, and Why We Can't Repeat It

I went to the LBJ museum recently.  Its on UT Austin's campus.  The first thing you notice is the obelisk like monument deifying LBJ.  You look up to see the whole thing, while the hot simmering Texan sun glares down on you from above.  First thing I thought was, "Everythings bigger in Texas, including our museums."

It took a good 4 hours to walk through the whole museum, most of which was about Lyndon Baines Johnson (LBJ for short).  The most captivating part of the whole experience was watching the short film about him.  The film was filled with emotional music and imagery, walking you through a nolstagic montage of a Texas legend.  You couldn't help walking away believing LBJ was a great man.

Large portions of this graph are the legacy of LBJ, most notably
the portion titled "Medicare & Health".

The craziest thing about LBJ is that most of the modern U.S. government is, essentially, a legacy of his Presidency.  Seeing the sheer number of programs that were initiated by LBJ, that continue to this day, was mind boggling.  He created HUD (U.S. Department of Housing and Development), passed the 1965 Immigration Act (which is the foundation for our current immigration policy), created Medicare and Medicaid, and much much more.

If one studies the rest of history since then, one is struck by how little has been accomplished since, relatively speaking.  LBJ had a once in a century opportunity to remake American society in his image, and he seized upon it.  It hasn't been just been our country either.  Most western countries have suffered the same fate.  France has a term for their nolstagic period called the "Les Trente Glorineuses", which took place between 1945 and 1975.  The story in much of the Western developed World is the same.  Its one of swift economic, social, and political changes, then seemingly out of nowhere, a steady calcification of the existing order.

Economic growth has declined, population growth has declined, and political change is virtually non existent.  It seems the decisions made by one generation have slowly unravelled, and we live with their legacy.  Meanwhile, the room for effective political discourse and effective political change have virtually disappeared.  One may ask, why is this?  Why is it that LBJ was so effective in passing countless laws, and that overall his agenda was popular across the nation?  

I do believe there is an answer to this.  I do believe there is an answer to the discontent we feel with the President and with the political class, but sadly, I don't believe people will like the answer.  The answer, in my humble opinion, is that the period after WW2 was an extremely unusual period.  I believe we have this fond ideal rooted in nolstagia of the ability of Presidents and Congress to affect meaningful change, that simply doesn't square with reality.  I believe we keep expecting LBJs to arrive and shake things up in a way that was possible then, but frankly, isn't possible now.  

The U.S. is closer to the bottom, and is also closer to the
bottom in terms of revenue. (chart obtained from OECD website)

Your next question will then be, "Well, why isn't it possible now?"  Its not possible now because  Western governments have no room to grow.  The U.S. is a fortunate exception to this, which at least has some room.  Another problematic point is that increasing the government's role in the economy will require more revenue.  Those are surmountable issues, especially for the U.S.  However there is a lingering one that flips the discussion on its head, U.S. government debt.  

Already, 6% of U.S. Federal spending, (thats not including state governments) is spent on paying interest on the debt.  That may seem manageable, and it is, as long as interest rates do not go up.  The problem is, interest rates most likely will.  The reason being, that the current interest rates the Federal government is paying are low by historical standards.  Part of the reason interest rates are low, besides a less than robust economy, is financial repression by the Federal Reserve.  

The Federal Reserve is in charge of managing the U.S. money supply.  Its officially independent of influence by the Federal Government, but historically speaking, this seems unlikely.  Part of its policy has been to keep interest rates low, which supposedly will stimulate the economy because it will be cheaper to borrow money.  However here is the interesting part, the Federal Reserve has been, since the Financial crisis, paying interest on deposits kept at the Federal Reserve by member banks.  This serves as a disincentive for member banks to lend out the money they have been given by the Fed, because why lend it out, when one can earn risk free interest at the Fed?  One may scratch your head at this policy if the point is to provide cheap credit to borrowers, but thats the point.  I don't believe thats their main goal.  I believe the main goal is to engage in financial repression to keep interest rates low so the Federal government can borrow money at historically low rates.  

The ultimate question is if this policy is sustainable.  If it is, then perhaps the U.S. government can engage in another Johnsonesqe campaign of massive growth in government spending.  However even then its questionable, because entitlement programs for the elderly are bound to naturally grow far larger in the future as the elderly live longer and become a larger percentage of the population.  Other countries have no room to grow government because of this.  The U.S. has slightly more room, since our population is younger, but not much more.  It could be dangerous to expand government when our current programs may require massive tax increases already.

That was a lot of technical jargon, so let me boil it down.  Back in the 50's and 60's, we had a once in a lifetime get out of jail free ticket, to borrow some monopoly jargon.  Our government debt was low relative to GDP, our economy was growing rapidly, and our population was young and dynamic.  This simply is no longer the country we live in today.  Our population is not old yet, but its fair to say its middle aged.  Our debt to GDP ratio is high, and its high in an era of peacetime, which is unprecedented in U.S. history.  Government is already large, and taxes are already a large proportion of the economy.  This means that the future debates will no longer be about whether to expand government, but on how to allocate current government spending.  This is why politics is so much more bitter than it was.  Back in the day, one could simply create a government program.  Now, to create a government program, at least in the long run, due to demographic trends, it will require another program is cut.  Hence the dilemma we are in today.  There are no more get out of jail free cards.  Now we have no choice but to serve our sentence. 

Institutions, Risk, and Life Lessons

Its funny how everything worthwhile in life requires risk.  We risk our reputation when we decide to befriend someone.  We risk failure when we go to school, start a job, or even start a business.  We risk being wrong when we commit to an opinion, worldview, or political philosophy.  We really can't achieve anything worthwhile without risk.  Yet admittedly its often easier to just sit there and watch life pass us by.  Its often easier to live in misery than to actually live a full life.  Thus no surprise, thats exactly what many do, including myself most of the time.

Its funny how we have many institutions in society that are there for the very purpose of forcing us out of our comfort zones, yet I fear we have forgotten how important these institutions are, whether they be sports, extracurricular activities, clubs, etc.  We need these things and much more to push us out of our comfort zone because if it was up to us we usually choose the easy way out.  Thus the more I think about it, the more I realize a culture that goes overboard on the value of self ownership can lead to disaster.  If parents do not actively try to push their students to try new things, or if the school they go to growing up doesn't push it either, then its likely those students will grow up and be permanently handicapped in handling adverse situations and taking risks.

I find it revealing that its my generation that has become obsessed with micro-aggressions and not offending each other.  Its interesting that my generation is the one that believes we must be warned before anything potentially offensive has been said to us.  Its my generation that has originated the concept that actions must be taken preemptively to ensure we don't feel uncomfortable.  I can't help but think this stems from an upbringing of never being pushed out of our comfort zones.  I believe the soft skills of conflict resolution and emotional maturity and a healthy attitude toward risk have been handicapped by an upbringing which did not appreciate the importance of these.  Everybody had to win "honorable mention" and everyone had to be told they were special because it might hurt their feelings if they weren't.

I don't at all think all millennial are this way, and I know I am painting very broad strokes when I talk about "my generation," but the trend still greatly disturbs me.  The fact is the benefits of going out of your comfort zone are immense.  One, you learn pretty quickly that you are not as awesome as you think you are.  However, even more important, you realize that failure in different situations isn't a big deal.  You learn that getting upset and hurt are parts of life that are unavoidable, and the harder you try to avoid them, the easier it is to get upset or hurt.  These are not easy things to teach, they pretty much have to be learned through experience.

I think society needs to revalue activities that teach our youth to be okay with failure and okay with being uncomfortable.  There is a lot at stake from ignoring the importance of these lessons.  I hope my generation can turn things around for the next generation.  We are all capable of so much more than we realize, and the last thing I want is for someone to neglect their talents and passions because they are afraid of something as senseless as rejection or failure.