Thoughts on Income Inequality - Part I

Ever since I wrote this post on President Obama’s increasingly strident language about the unfairness of reported increases in US income inequality, the issue has only become more prevalent in our Oped pages, political blogs and journals. The fervor of this newfound fascination is perhaps not surprising given the popular backlash against mind-numbing Wall Street compensation during these times of high unemployment and stagnating wages.

I have earnestly sopped up much of the recent writing and some of the scholarship on the issue, even wading into the pages Mother Jones (here is a good example). And while many of these authors bring up reasonable and concerning points, I find that they all suffer from the same fatal flaw of logic: they assume that the simple act of decreasing income inequality will, by itself, help the neediest among us. I do not necessarily subscribe to this view, and will outline common flaws in the typical analysis below.

First, let me make a stipulation: in any given society, there is a meaningful correlation between freedom and wealth. If you disagree with this stipulation, then you can stop reading right now – you will disagree with my conclusions. However, in order to disagree with it, you’d have to disagree with quite a lot of scholarship and some very simple, but quite compelling analysis. For instance, the chart at right from economist Scott Sumner is a linear correlation between the Heritage Freedom Index and GDP per capita for all the countries of the world with GDP per capita greater than $23,000. The picture is quite demonstrative: it suggests that the more economically free a country, the higher its GDP per capita.


Now, I’ll acknowledge that there are numerous problems with such an analysis. Historical circumstance, lack of natural resources and other considerations may depress a certain country’s GDP per capita in ways that would not be captured by a Freedom Index. Conversely, countries like Norway, with its vast oil wealth, and Switzerland, as the banker to much of the world, skew the analysis in another direction. Therefore, I only introduce this chart as reasonably compelling evidence that, on average, within certain boundaries, the more free a country, the more chance it will have larger GDP per capita. Finally, I hope it goes without saying that although economic freedom may be a necessary precondition for wealth, it certainly is not sufficient.

Next let me stipulate that the tools and policies which a country like the United States might employ to reduce income inequality would, in all cases, serve to reduce economic freedom. The most common solutions to the income inequality dilemma are increasingly progressive taxation schemes, transfer payments such as food stamps and unemployment insurance, and, in some cases, increased regulation to reign in the worst perceived cases of wealth generation (think of the call for regulation of compensation during the financial crisis and the more recent calls for hedge fund taxation reform and registration). Each of these things might be effective in reducing income inequality, but they would undoubtedly also place a country lower on the Economic Freedom Index. When someone finds a way around this, please let me know – we’ve solved the problem!

One implication of my initial stipulation is that there is an unintended consequence of the adoption of these policies: the whole pot gets smaller. If freedom means wealth, and reducing income inequality requires reducing freedom, then reducing inequality requires reducing wealth. Liberals, including many economists, tend to ignore this point in their editorializing; sometimes it’s simply due to ignorance, sometimes I’m convinced it’s disingenuousness.

Now, these policies may be implemented with endless variety, each having a different effect on GDP. In economic terms, the negative multipliers of various policies are different, and economists could fine tune a set of recommended policies to minimize the effect on the country’s ability to provide for itself. Unfortunately, I suspect that the Policies which might have the greatest effect on income inequality might also be the ones which depress GDP the most.

But let’s revisit my initial thesis: that liberals’ distaste for income inequality, qua income inequality, is misguided. Let’s look at the current income distribution in the United States. In its various reports on gross income, the Commerce Department divides Americans into quintiles. The chart to the right shows the mean gross income for households in each quintile, with the poorest 20% of households bringing home $11,000 per annum and the richest 20% bringing home $169,000. Indeed, the rich have a lot more income than the poor.


Two comments are in order before we proceed. First, by organizing the analysis by quintiles, I am really talking about the vast majority of Americans. Conversely, when one sees statistics about income inequality bandied about in the liberal press, the conversation usually compares the top five percent, the top one percent, or sometimes even the top one-tenth of one percent of earners to the rest of America. While the numbers might look incredibly compelling when viewed this way, the numbers of the truly, truly wealthy are so small that it is of little use to economists or legislators in crafting policy. There are not enough billionaires to make a real difference on the deficit, for instance, solely by taxing them.

Second, please note that these figures relate to mean gross income, not including transfer payments. In order to be truly fair, any analysis of income inequality should really be done on a median basis, net, after tax, including transfer payments. Those numbers are hard to come by, however (and they don’t look as compelling to liberals!), so most people use mean gross income. I’ll stick to the traditional method and remind readers of any misleading points. [For instance, if one divided the sum of welfare payments, Medicaid, food stamps, and child subsidies by the number of households in the bottom quintile and added the result to their mean income, I suspect Figure 2 would look somewhat different. It’s why conservatives often point out that the average household living under the poverty line owns multiple cars, even more television sets, and the most significant health issue for impoverished American children is obesity].

Let’s assume that a liberal administration implements a tax policy with a goal of both raising revenue and reducing income inequality. Presumably the intent of any such Policy would be to change the income distribution from the figure above to look more like the green line in this chart to the right. (Let’s ignore the fact that we are analyzing income on a gross, not net basis!).


But we’ve already established that these policies might also likely reduce the amount of GDP per capita. As such, we should ask ourselves a question: is it possible that rather than the new targeted distribution, we might actually get one which looks more like the one here to the right? This new income distribution also decreases income inequality, but everyone is worse off. Importantly, even the poorest people in the nation are worse off than before.


I would like to think that even the most die-hard liberal would concede that this is a suboptimal result, but I am not so sure. The prevalence of recent opinion pieces which conjure up happiness studies and other evidence suggesting that income inequality itself is a cause of mental distress may suggest that liberals are intent on providing cover for this dirty little secret. The line goes like this: well, yeah, maybe nobody in Europe has as much money as Americans at any level, but, hey, they’re all a lot happier than we are! This line of thinking has so many faults that it will require a separate post to deal with – here I’ll move onto more pressing topics.

Given the possibility that any particular policy might affect all points on the income distribution curve, it seems to me that each policy ought to be analyzed not solely on its capacity to flatten the curve, but also its likelihood of affecting income generally (either positively or negatively). Politicians should be required to tell us what they think the optimized income distribution curve ought to look like: how flat it should be and how much net, adjusted income should be claimed at the lower quintiles. It seems to me that the very least important consideration should be the steepness of the curve at the far right of the distribution, and yet this is the very point over which so many people are expelling so much hot air!

Unfortunately, economics being the dismal science, it’s not so easy to determine the true effect of a given policy on the shape of future income distribution curves. I suspect Paul Krugman would give a very different answer than Art Laffer if President Obama asked each of them to analyze his pending tax proposals. Nevertheless, this should not stop politicians from being required to tell us what they think the curve ought to look like and how we’re going to get there. Then, we can have a national debate comparing the merits of Laffer’s model against Krugman’s as a means to analyze the proposals.

Doubly unfortunately, this is not how politics works. I have been dismayed at the breathtaking disingenuousness of the current rhetoric surrounding Obama’s proposed “Buffet Rule” – the fuzzy notion that millionaires ought not pay a lower effective tax rate than secretaries. In the thousands of words that Obama has spent on this issue, he’s never once admitted that there is a difference between the taxation of labor and the taxation of capital, and the reason that Warren Buffett pays a very low effective tax rate is because virtually 100% of his income is from dividends and capital gains rather than salary. Somehow, it doesn’t matter anymore that we got here (i.e. Buffett paying 15% effective tax rate) for a reason. That reason is because people argued, correctly or not, that low tax rates on dividends and capital gains would be good for all of us, including those at the bottom of the income distribution. Instead of revisiting that proposition, for some reason, we’ve skipped the analysis and started appealing to Obama’s sense of “fairness.” Obama’s fairness may end up costing all of us – even those at the bottom of the income distribution – a whole lot.

In fairness to Obama, I do not know the answer. My gut tells me that low tax rates on dividends and capital gains are good for poor people, but I have not personally analyzed the issue yet to my satisfaction (another Polartics post coming!). But we should not let liberals jam policy down our throats without a clear answer from them on this issue. We should call out any politician, blogger or editorial page writer who favorably invokes the Buffet Rule, but does not tell us why they think raising Buffett’s effective tax rate won’t affect everyone negatively, including poor people. That even goes for Warren Buffett!

That’s it for now, but if you want more good thoughts on the issue, here is a splendid article (from the reliably unreliable Economist) on “fairness.”

And for those of you who suspect this article may be self-serving, unfortunately, I have not achieved that level of success yet where the majority of one’s income is comprised of dividends and capital gains; my effective tax rate last year was 30.1%.

Japan's Nuclear Meltdown

As of today:

Number of people killed by Japan's recent earthquake: 10,000?
Number of people injured by Japan's earthquake: hundreds of thousands

Number of people killed by nuclear meltdown: 0
Number of people injured by nuclear meltdown: 0

Ability of CO2 emission-free nuclear power to avert climate change: virtually limitless

Come on, people! We need to start getting serious about how to measure risk!

A Proposal for my Liberal Friends

With the most liberal President in my lifetime proposing policies which cause some to deem him a Socialist, and with a countervailing popular sentiment having arisen in the form of the Tea Parties, it seems that the people of the United States are engaging in a more substantive debate about the best principles for governing than at any time since the 1930s.

In celebration of this national debate, I offer a proposal to my more liberal friends: you read one book of my choosing, and I’ll read one book of your choosing, and then we’ll meet for beers and discussion.

The books I have chosen for your pleasure are one (or both) of the following: Hayek’s The Road to Serfdom or Rand’s Atlas Shrugged. No cheating, you’ve got to read every single page from beginning to end. No skimming just to get a feel for it. You’ll notice that I’ve included a novel among the choices (making no representation about the quality of Rand’s prose), although I am quite willing to wade through an excruciating tome on Economics if that is most appropriate.

The problem is, I have no idea what liberals consider to be the most compelling literary work to elucidate their modern ideal. Please help me out by suggesting works in the comments here or on my Facebook page. If it seems like there’s a consensus, I’ll read it.

Then, when I see you next, we can talk about it. I’ll buy the beer.

Prediction

Lee Bollinger will not be President of Columbia University in 18 months.

My Views on Climate Change

I would call myself of a skeptic of the most aggressive theories of Anthropogenic Global Warming (AGW). Upon hearing that, many people would assume that I have stuck my head in the sand - that I don’t believe, for instance, that global temperatures have increased, or that Arctic sea ice is disappearing, or that glaciers are retreating.

Nothing could be further from the truth. I do not dispute facts (although it is true that there are facts, and then there are other facts). In fact (ha ha), most thoughtful skeptics do not dispute facts. Facts are stubborn things, as Ronald Reagan used to say, so such a strategy would be a waste of time.

No, the beliefs of most skeptics are actually quite a bit more nuanced than your average bear is willing to admit. Mine, in fact (there he goes again), take quite a long time to explain, so I don’t often do it. However, I’ve wanted to catalog a short list of my AGW beliefs so that I can track them and see how they change as I continue to learn about the issue. So I’ve gone and done it here.

Some of the beliefs below are factual and some of them are just beliefs. It’s hard to organize them, but I’ve done the best I could. They do not constitute one long argument; they jump around a bit.

If you dispute any of the beliefs here, please feel free to post a response and I’ll try to engage in a civil debate. You score a point if you can educate me and get me to change one of my beliefs. If I educate myself and am forced to change a belief, I’ll post a blackline.

My Beliefs about Anthropogenic Global Warming
• Global temperatures have increased by approximately 0.4 -0.5C since 1979 (that's when the satellite record began)
• Global temperatures likely increased between the beginning of the thermometer record (1850s) and 1979, but the magnitude of that increase is more uncertain
• This temperature increase has been more severe in the Arctic than just about anywhere else; the Antarctic has shown very little, if any, temperature increase
• Atmospheric CO2 concentrations have increased in a manner highly correlated to man’s industrialization
• It is likely that the majority of the increase in global CO2 concentration is due to man, and particularly his emissions (watch out – I said nothing about temperature here)
• The land temperature record has been significantly corrupted by land-use changes and urban heat island (UHI) effects and requires adjustment to eliminate those effects
• Adjustments to the land-temperature record lack rigor, but may be approximately correct on average
• It is reasonable to conclude that a meaningful percentage of the increase of global temperatures since the mid-1800s may be entirely natural; after all, at the time we were still emerging from the Little Ice Age
• It is reasonable to conclude that a doubling of atmospheric CO2 concentration might result in a further rise in global temperatures of at least 1C; without taking into consideration feedback mechanisms, simple physics would seem to suggest such a result
• The science regarding climate feedback mechanisms, particularly cloud cover, are not well understood
• It is not reasonable to assume that virtually all important feedback mechanisms are positive
• Climate models are essentially useless without well-understood feedback mechanisms
• Virtually 100% of future climate predictions are based on advanced climate models
• Therefore, future climate predictions of a rise in temperatures of between 3-5C based on a doubling of CO2 concentration are highly uncertain
• It is certainly possible that a doubling of CO2 would result in an increase in global temperatures of between 3-5C, but as of today that conclusion is not proven
• Personally, I have no guess what temperature increase would result from a doubling of CO2

Considerations of the Hockey Stick and Paleo Reconstructions
• An important aspect in the argument for a link between the rise in CO2 and the rise in global temperatures is the contention that the current rise in temperatures is unprecedented
• Studies which purport to show unprecedented warming have largely been discredited; until the theory of AGW became de rigueur, scientists generally believed that the Medieval Warm Period (MWP) was warmer than today
• While the discrediting of paleo reconstructions has not disproven the theory of AGW – surely there is considerable other evidence – it has clearly affected the first argument above, and claims based on reconstructions should be removed from the literature

Other Important Considerations
• There are important benefits of increasing CO2 concentrations, including increasing crop yields and a more robust biosphere
• It is extremely important to study the benefits of increasing CO2 concentrations at the same time as we are studying their deleterious effects
• It is highly likely that aggressive AGW prevention strategies would have certain unintended consequences
• It is possible that aggressive AGW prevention strategies would have meaningful negative unintended consequences

Supremely Important But Highly Uncertain Conjectures and Conclusions
• The true cost of weaning ourselves off CO2 emissions is orders of magnitude larger than the assumptions of most proponents of aggressive AGW prevention strategies (with one exception mentioned below)
• Even if the theory of AGW is true (say, the midpoint of IPCC projections), the net present value of 100% of the costs (including loss of human life) of mitigating the effect of AGW are lower than the costs of preventing AGW starting now, even using very low discount rates
• Regardless of whether the theory of AGW is true as outlined by the IPCC, it is incumbent upon us to research mitigation strategies in addition to prevention strategies
• If we are to truly undertake aggressive prevention strategies, the laws of physics are too rigid: nuclear is our only option if we are to maintain global economic prosperity

A Few Assertions whose Logic Should Withstand Scrutiny
• The disappearance of Arctic sea ice may simply be due to the fact that it’s getting hotter in the Arctic (see above!) – this does not prove the theory of AGW – it only proves it’s getting hotter in the Arctic
• It is possible to believe in the fact of AGW but not necessarily the scope as outlined in the IPCC
• Being a "skeptic" is a good thing; that is why AGW proponents have changed their terminology to "deniers". There are undoubtedly "deniers" out there, but they're mostly quacks. Unfortunately, most AGW proponents do not take the time to distinguish who is a skeptic from who is a denier.

You Know You Live in a Rich Country #2

I devised the “You Know You Live in a Rich Country When…” series to illuminate other people’s faulty logic when they rail about the unfairness of it all in the United States. (To pick an easy example - the single largest health problem for young poor people in the US is obesity). Sometimes, though, the theme comes up in respect of my own personal foibles. It is perhaps an understatement to say that I am not a perfect human being (no need to go further with that one, thank you), but sometimes it is important to consider these small inconsistencies, ponder how they are prompted by our human-ness, and think about whether one can overcome them and thus be a better person for it.

The occasion for my thinking such things was while taking a shower in a Hyatt Regency the other day (ironically, in Mendoza, Argentina, which does not quite qualify as a prototypical Rich Country…). After luxuriating in the hot, cascading flow for a good ten minutes, I was pleased to find that the tiny bottle of hotel shampoo had a cap with a snap top on it. Often, these little bottles have screw off caps which require two hands – one hand to hold the bottle, and the other to hold the top as you screw it back onto the tiny little bottle. The problem, of course, is that one’s hand is often full of shampoo when the screwing-back-on is supposed to happen. When you turn your hand to screw the cap back, you must contort your hand a bit to keep from pouring that dollop of shampoo onto the shower floor. A snap top clips back shut with one hand – no contortion required! A small victory, but a victory indeed.

It occurred to me as I reveled in this packaging delight that my pleasure could qualify as a variant of the “You Know You Live in a Rich Country When…” theme. In this case, the theme was more like “You Know You’re Doing OK When Your Main Concern Relates to Keeping a Dollop of Shampoo on Your Hand…” The fact that such a victory even occurred to me probably meant that I wasn’t going hungry at that particular moment. Nor was I in need of clothing or housing. Probably, most of my other bodily needs were being met as well, maybe even amply. No personal crisis was overwhelming my brain, and no heavy world events were weighing on me. If the Greek debt crisis hadn’t been solved yet, it had no bearing on me at that particular moment, etc. etc.

OK, so such small victories are probably sweeter when all other concerns are satisfied, but what is the problem there? Where’s the inconsistency?

Well, for one thing, I hate packaging. I find extravagant packaging to be one of the worst sins of a consumerist economy. Though small, that snap top probably doubled the amount of plastic in the cap, and, millions of times over, added considerably to the hydrocarbons that needed to be sucked out of the ground, bubbled through a refinery, separated into resin, injected into a mold and distributed to all the showers of the Hyatt Regencies of the world and wherever else they may have gone.

And yet I took great pleasure in that tiny snap top.

I thought about it for a moment, thought about my dislike for packaging, and was confused for a moment. I couldn’t reconcile the two. They’re just incompatible.

Try as I might, I couldn’t make myself feel better for taking satisfaction from the snap top.

I am on the airplane now, coming back from Argentina several days later, and still haven’t made sense of it. The only thing I can conclude is that life is messy and filled with instances where one must make choices between inconsistent ideals and desires. I guess you just have to do the best you can, and when the issue is not a big one (like a shampoo bottle), don’t make a big deal out of it. Life’s too short.

I am still going to hate packaging, and I’m still going to choose products partially based on the efficiency of their packaging. But the next time I see a snap top on a bottle of hotel shampoo, I’m going to let myself enjoy it.

Part II

I am several weeks late finishing this post, having let it sit unedited on my computer’s hard drive instead of cleaning it up and putting it on my blog. In the meantime, I have travelled to various new ports of call, each, ironically, with a snap-top cap in the hotel room. I happen to be sitting in the Minneapolis airport right now, victim of a delayed plane.

I started to complain to myself about my travel misfortunes when I simultaneously realized that 1) I hadn’t finished this post, and 2) complaining about travel difficulties itself qualifies as a symptom of the “You Know You Live in a Rich Country When…” theme.

So - I guess I’ll shut up and get on with it.

A New Healthcare

Note: I am writing this blog post partially in response to a Facebook thread which you can find on my FB page.

President Obama signed the Democrat’s healthcare legislation into law yesterday amid the lamentations of me and millions of other freedom-loving Americans. A constant refrain from those who support this legislation is that the opposition is devoid of ideas and relies on lies and distortion to paint the healthcare legislation as an abomination.

So here I will set out my ideas of what a conservative restructuring of our healthcare system might look like.

In my estimation, the principal problem with the current healthcare system in the United States is that it is employer-centric, rather than individual or family-centric. Insurance is not portable, either from job to job (or to unemployment...), or across state lines. But the American economy is mobile and dynamic, and this sets up a clash of structures. As a result, the healthcare insurance market is unwieldy and beset by bureaucratic costs.

If we are serious about making real changes to our healthcare system while retaining consumers’ freedom, then there are several things we could do to help with these problems.

• Cancel the business healthcare tax deduction: The first thing we should do is make the provision of healthcare by employers taxable again. As it is, businesses have a massive advantage over individuals in providing healthcare. So the system has grown up around employers. There are two negative effects of this: 1) individuals do not have incentive to keep healthcare costs down and as a result we have massive healthcare inflation; and 2) it is difficult for the self-employed or unemployed to purchase affordable health insurance. In a system where individuals are on the same economic footing as businesses in the purchase of health insurance, there is a chance that these difficulties could be overcome. However, the implementation of such a system would require several changes to the way we do business. So, for example, we must

• Require businesses to administer any registered plan: Health insurance is a major financial undertaking such as social security and income tax. So the payroll deduction is an appropriate method for paying the cost. But getting business to subtract individually-owned insurance premiums from paychecks would require some arm-twisting. We’d probably need to legislate it. These administrative costs would go up slightly. Payroll processors such as ADP could implement this in a heartbeat, but it would take some small business some time to adapt.

In a world contemplated by a system such as this, the purchase of an individual’s first healthcare insurance policy would be a coming of age rite of passage, much in the same way that purchasing a first car or getting a first mortgage is today. Once purchased, this insurance policy would grow and offer new services (and premiums would likewise grow) as the individual aged and his family grew. It would follow the individual as he changed jobs, moved across state lines, became unemployed and reemployed, went freelance, and then it would finally disappear when the individual was covered by Medicare.

Such a system would be very powerful in helping us to reign in healthcare inflation. First, in the same way that automobile insurance tends toward catastrophic coverage and ignores the little dings and scratches, personalized health insurance would automatically tend toward catastrophic coverage. People would begin to utilize fee-for-service facilities for things like runny noses, bronchitis, allergy medicines and other small health annoyances. An entirely new service industry of general practitioners would grow up to service this type of consumer, who would end up paying $30 or 40 for a five minute visit with a physician instead of the $170 that gets charged to the insurance company today. Broken bones and real health problems would be dealt with in the industry as it appears today. The growth of health care expenditures in this world would be naturally restrained by the invisible hand, rather than by the authoritative but inefficient hand of a central bureaucracy. Furthermore, people would be free to purchase healthcare in the manner in which they see fit.

In this world, catastrophic healthcare policies for the young and healthy would be very cheap. The struggling 26 year old artist in New York City would easily be able to purchase insurance, and would visit clinics for life’s small inconveniences. A huge percentage of what is now deemed the uninsured could become insured again. (Note: the truly poor and indigent are already covered by Medicaid. That’s what Medicaid is for. Liberals often seem to forget this when they talk about the uninsured. If Medicaid needs to be expanded, then let’s contemplate that, but don’t lump the indigent into the “uninsured”).

In this world, most individuals would always actually have an insurance policy, so the difficulty of new policies for preexisting conditions would largely disappear. Those who fell through the cracks somehow and could not afford coverage would need to be picked up by Medicaid or be covered in the way they are today: by hook or by crook.

The best insurance policies in a world such as this could also include monthly additions to a reserve which would serve as “unemployment health insurance” in the same way that whole-life insurance policies have a measure of principal security. In this manner, individuals and their insurance companies could privately account for certain periods of unemployment (or underemployment), in the same way that, for instance, AFLAC provides supplemental disability.

The success of the real cost reductions and thus the affordability of personal catastrophic insurance for the now-uninsured would be truly dependent on the growth of this new fee-for-service model of private pay healthcare. In such a system, doctors would need to be able to make good-faith healthcare decisions without fear of bankruptcy. So, we will need to

• Cap punitive damages in malpractice judgments: Yes, I know all you fans of the trial bar will be upset with me for pushing this old conservative bugaboo. But any analysis of fixed versus variable costs of a small healthcare practice would need to acknowledge that a huge portion of the difference between my $40 mythical fee and the $170 real fee is comprised of malpractice insurance. I am not suggesting that we dispense with reasonable judgments in case of real loss caused by bad medicine, but rather only punitive damages. These are the judgments which make our system unaffordable. We need to start acting like grownups.

I would not be surprised if such a system resulted in the reduction of our total healthcare expenditures in the United States down to the single-digit percentages of GDP which is the norm in other Western countries at the same time as it offered better care with more options. In total, the system in the United States would always be more expensive than socialist systems, because there will always be people who will be willing and able to afford expensive services of questionable effectiveness or benefit, simply because they can. And a rich society can afford things like new, $10,000 titanium hips for 90 year olds – something which would be preposterous in a poorer socialist country.

A system such as this will leave quite a bit of discretion to the consumer, so it would need to be coupled with a genuine attempt to educate people about healthcare. I do not have any problem with using public funds for programs such as this, particularly since our education is largely public in the United States. Like your car comes with a user’s manual with a recommended maintenance schedule, people should be generally aware of good health care practices.

To be sure, there are problems with my system, both in the getting there and when we’ve arrived. Solving the interstate dilemma would be difficult under any circumstances. Medicaid is so entrenched with the regulatory apparatus at the state level that it has affected all attempts to make healthcare portable across state lines. Also, there will still be people who fall through the cracks of such a system, and there would continue to be horror stories, although hopefully diminished in number. Medicaid may need to grow.

However, like democracy is the least-worst form of government, I believe that this system would be the least-worst form of healthcare, both in its efficiency and its flexibility. I believe that the benefits of such a system in terms of cost-effectiveness and ability to provide quality care quickly would be unmatched in the world.

The current healthcare legislation signed into law by President Obama yesterday is like doubling down on a bad hand. It takes our bad system and makes it much worse. Honestly, I would almost prefer single payer to what is coming upon us soon. Consider that the IRS is being required to hire 17,000 new agents right now to enforce the individual mandate. Now that’s efficiency for you! The bureaucracy in Washington is going to be mind-boggling, and that’s before the plan is even implemented by state regulators!

But there is a general, more important point to be made here. With the passage of this healthcare legislation (and the ensuing, ineluctable flow toward a single-payer system), the third leg of the stool of European-style socialism has now been constructed right here on US soil.

I read yesterday that in the UK last year, government expenditures exceeded 50% of GDP for the first time in history. In the United States, the number is about 44% if we add federal, state and local expenditures. Almost fifty percent of every dollar spent in the United States now comes from some form of taxes. And it’s quickly going north.

I’ve made this point in these pages before, but I’ll make it here again. When I was a boy, growing up here in the United States, we took pride in saying “Hey, it’s a free country…”

Well, at what percentage of GDP consumed by taxation are we no longer free? Are we free when 50% of our money goes to other people and things? If it’s not 50%, then when is it? When are we not free?