What’s Really Wrong With Entitlements
It’s an open secret that America’s entitlement state is in disarray, and that the United States faces a crushing debt, thanks to programs such as Social Security, Medicare and Medicaid. But as I argue in this talk, delivered recently in Chicago, that’s not the biggest problem with entitlements.
And here’s the Q&A:
7 Comments to “What’s Really Wrong With Entitlements”
Don,
One point you do not address in the talk is that: People generally agree that taxing someone who is struggling is wrong, but at some point you become “rich enough” that it’s now ok to tax you. “You don’t need all that money” It still is theft but they draw a line as to when it’s ok because they have deemed you to have too much money. You address it a little with the “rich is a relative term” but I still think people will have trouble connecting the point.
Otherwise, I really enjoyed the videos; clear, refreshing, enthusiastic (to name a few) Looking forward to more!
Is it reasonable to state that the entitlements are the problem with our current economic state and forecast, when they are pennies on the dollar compared to our ten-year plan that wasn’t planned for, occupying Afghanistan and Iraq as part of our campaign against a nationless terrorist network?
Bad decisions are bad decisions, and this one also requires addressing if we’re to discuss the economic impact of the entitlement nanny-state.
Sean, there is a lot to be critical of in our foreign policy, but the fact is that the threat to our economic well-being comes primarily from entitlement spending—above all, future entitlement spending. Even if we spent $0 on defense, Medicare lane would still bankrupt us unless something changes.
Fortunately, unlike foreign wars, these lines can be changed in a wide variety of ways (including backing up from the road entirely). I find it disincredulous however to believe that escalating American militarism is less important than entitlement spending in this sector, given that unlike foreign wars, our future spending can be changed as a policy decision before they wield truly destructive influences.
A systemic change entirely away from government in the health-care sector would not be unreasonable, though it is not something that is especially likely to pass given the current political climate. It would, however, need to be preceded by regulations to ensure that this sector followed proper ethical strictures - because as much as we might like not needing to, you do need to legislate morality before you can take these entitlement structures down, the free market in and of itself will not solve all woes adequately of its own accord.
The only proper ethical stricture is already in place: don’t initiate physical force. In the free market, some will addict themselves to bad things, make bad business decisions and other bad choices, and eat too much fatty food. The market corrects itself on this: others continue in their choices and are still there for those who make mistakes to deal with, again, hopefully doing better now. Plus, there’s charity. Others might even reject the market in favor of crime. Well, don’t initiate physical force. If you do, you go to jail.
If you start legislating morality, who’s morality do you base that on? Yours? Mine? That of the puritan or sociopath down the road? It is not the proper function of government to legislate morality. Government is there to protect individual rights or put it in another way, it is legislating the protection of objectively determined rights and nothing more. As for the military, I think the military budget can be downsize and trimmed to be less wasteful and bloated but ultimately the military is a proper function of government whereas entitlements/welfare are not.
This was a brilliant talk. Gov. Romney, please hire Don Watkins as your chief policy adviser. The sooner the better.
One point: I’m skeptical of the “no cut” plan as a viable option to avoid the next “crisis.” (Has this been put forth in writing?) The next “crisis” will be, as the last one was, an alarming collapse in the overall volume of spending in the economy and in asset prices, resulting in banks and others failing. This is how people identify a “crisis.” It will happen, not because government increases or doesn’t increase its debt even more, but because of the nature of our monetary system—a government-managed system, meaning a fiat money, manipulated credit system—which is vulnerable to collapse. Only a precious metals money system in a context of free banking—i.e., a money and credit system which the government cannot control—is invulnerable to such a collapse. (And, to be honest, even a transition to this optimal system would involve some temporary “crisis” features, but they would be relatively minor and very short-lived.) There is no avoiding the “crisis.”
The mere avoidance of further government spending expansion would not address the thoroughly corrupted money and credit system. There is still way too much debt, and asset values are still way too high to be supported by the unstable, dysfunctional money and credit system we now have. You could argue that, no, the banking system is strong enough to support current debt levels and will pursue exactly the right policies, but I doubt that.
The ideal solution would be re-privatizing money—returning all the government’s gold to the people, i.e., in the first instance to depository institutions (banks and money market funds) to stand as 100% backing of their existing demand deposits. (This is not to say new and subsequent deposits would necessarily have to be on a 100% reserve basis; that would be for the market to decide.) Doing this at a suitable ratio of gold-to-dollar would mean the money supply would no longer be in danger of collapse, thus avoiding the principal driver of a “crisis.” Benefits from monetary reform would, in turn, be vastly multiplied to the extent that steep cuts in government spending and wholesale slashing of regulations were adopted.
Just freezing government spending at present levels? No monetary reform? Not, in my view, sufficient to avoid another big time “crisis.”
History, I believe, will eventually identify the whole period 2008 to 20?? as one long, worldwide financial crisis, a titanic struggle of the entitlement-crats versus productive people.