Socialism Kills

In a recent Health Alert I evaluated Paul Krugman’s claim that ObamaCare is going to save “tens of thousands of lives” and the repeal of ObamaCare will lead to the death of “tens of thousands” of uninsured people.

Krugman’s bottom line: Mitt Romney wants to let people die. The economics profession on this same subject: Krugman’s claims are hogwash.

But there is something that does cause people to die: socialism. More precisely, the suppression of free markets (the kinds of interventions Krugman routinely apologizes for) lowers life expectancy and does so substantially.

Economists associated with the Fraser Institute and the Cato Institute have found a way to measure “economic freedom” and they have investigated what difference it makes in 141 countries around the world. This work has been in progress for several decades now and the evidence is stark. Economies that rely on private property, free markets and free trade, and avoid high taxes, regulation and inflation, grow more rapidly than those with less economic freedom. Higher growth leads to higher incomes. Among the nations in the top fifth of the economic freedom index in 2011, average income was almost 7 times as great as for those countries in the bottom 20 percent (per capita gross domestic product of $31,501versus $4,545).

What difference does this make for health? Virtually, every study of the subject finds that wealthier is healthier. People with higher incomes live longer. The Fraser/Cato economists arrive at the same conclusion. Comparing the bottom fifth to the top fifth, more economic freedom adds about 20 years to life expectancy and lowers infant mortality to just over one-tenth of its level in the least free countries.

What about the effects of economic freedom on the poorest citizens? In the 2011 report, the average income of the poorest tenth of the population in the least free countries was around $1,061. By contrast, the poorest tenth of the freest countries’ populations earned about $8,735. If you are poor, it pays to live where capitalism is less hobbled.

What about equality of incomes? As it turns out there is almost no global relationship between the distribution of income and the degree of economic freedom. But in a way, that’s good news. It means that the rich don’t get richer and the poor poorer under capitalism. Everybody becomes better off.

What about within the United States? Some years back the Council of Economic Advisers (CEA) calculated a “predicted poverty rate” based on economic growth alone. In other words, economic growth by itself lifts people out of poverty, even if nothing else is happening. The CEA results suggest that if there had never been a welfare state (no Aid to Families with Dependent Children, no food stamps, no Medicaid, etc.) the poverty rate would be lower today than it actually is! This adds to a wealth of evidence that the welfare state is subsidizing poverty, not eliminating it.

I don’t like to get into partisan politics, because, like Milton Friedman, I believe in ideas and not politicians. But The New York Times editorial page is becoming increasingly partisan. The unsigned editorials these days are almost indistinguishable from the Obama campaign’s talking points. Far from being thoughtful, they are vehicles for White House propaganda. Many of Paul Krugman’s editorials read pretty much the same way.

So let’s consider the two political parties. Think of Democrats as being primarily responsible for the structure of the welfare state (social insurance programs) and Republicans as being primarily responsible for tax policy (including the Earned Income Tax Credit [EITC] — the embodiment of Milton Friedman’s negative income tax). Which policies have been better for poor people? If you buy the CEA analysis and the work of Charles Murray, George Gilder and a host of other scholars, the welfare state has led to more poverty, not less of it. On the other hand, almost every Republican tax change has made the tax code more progressive. That is, almost every time the Republicans change the tax law, the burden of the federal income tax is shifted from low-income people to high-income people! That’s why almost half the population doesn’t pay any income tax at all.

Although to be fair, Republicans have been as guilty as Democrats in creating high implicit marginal tax rates. When low-income people calculate how much extra cash they get to keep from an extra dollar earned, their return is lower than even that of the very rich!

[As an aside, Democrats have been very reluctant to give money to poor people through means-tested social insurance programs. Whether it’s food, housing, education or medical care, almost all the cash goes to a constituency that is definitely not poor. That’s why it’s hard to know how much anyone benefits from these programs. On the other hand, when the Republican-designed EITC delivers $1 to a poor family, the family gets $1 worth of benefit. Of course, the EITC may do other harm through its implicit high marginal tax rate, however.]

I’m not endorsing everything the Republicans have done. Rather, I simply note that under Republican policies we are likely to have less poverty.

All in all, the welfare state probably isn’t the primary reason poor people are poor. The main obstacles to success are (1) bad schools and (2) barriers to good jobs in the labor market.

What is the biggest challenge in making bad schools better? The teachers’ unions. They are dedicated to the idea that the school system is foremost a jobs program and only secondarily a place for children to learn. Teachers’ unions have steadfastly opposed almost every reform idea that has any promise whatsoever in every city and town throughout the country. As for barriers to entry into the labor market, who is the foremost backer of minimum wage laws, Davis Bacon Act restrictions, medieval-guild-type occupational licensing laws and labor union monopolies everywhere? You guessed it: the labor unions themselves.

Yet who forms the backbone of the Democratic Party? The very same organizations that are most responsible for keeping poor people poor and closing off their opportunities to succeed in life. Further, their perverse political influence disproportionately affects minorities. That is one reason why the black teenage unemployment rate is almost 40% — double that of white teenagers! It is one of the reasons for the very large student achievement gap: black student test scores are 70% to 80% of the scores of white students.

John C. Goodman, PhD, is president and CEO of the National Center for Policy Analysis. He is also the Kellye Wright Fellow in health care. His Health Policy Blog is considered among the top conservative health care blogs where health care problems are discussed by top health policy experts from all sides of the political spectrum.

23 replies »

  1. I remember the 70s. Bright-eyes young people extolling the virtues of Maoism, and the question “How does all that pretty theory actually work in practice” somehow never seemed to make tham think.

    The more things change…today it is the conservatives with bright mad eyes articulating their pretty theories and never, ever checking them against the real world.

    We know public systems work better in healthcare, and we know medical care are unsuited for market provision. Kenneth Arrow wrote the theory in 1963, it is orthodox among healthcare economists today. Every developed country on earth have more efficient healthcare systems, most get better results and all are far cheaper.

    Thats not an argument, its just observable fact. The pretty theory does not fit reality in any way whatsoever. At what point does willful delision shade over into actual mentall illness?

  2. Socialism is defined “as a system in which everybody would have free access to the goods and services designed to directly meet their needs. Socialism does not require a system of payment for the work that each individual contributes to producing goods and services. All work would be on a voluntary basis. Producing for needs means that people would engage in work that has a direct usefulness. The satisfaction that this would provide, along with the increased opportunity to shape working patterns and conditions, would bring about new attitudes to work.”
    goodman can carry on about how the Obama/Democratic approach is “socialism,” but the fact remains that nothing they’re doing fits the above definition (or any other definition) of socialism. Goodman is one of many Dark Side–a.k.a. the G.O.P.–“spouters,” people who fling many ill-formed notions at the wall in the hope that (a) some will stick and (b) that some people may believe them.
    As another commentator noted above, the rest of the industrialized, civilized world did not make a mistake in opting to include universal, single-payer, cradle-to-grave coverage for their citizens as part of the social compact. The so-called “Obamacare” program is a step in that direction; however, there is a long way to go, made longer by the contrarian sparks flung by Goodman and others.
    As Winston Churchill once observed, “Americans can always be counted on to do the right thing…after they have exhausted all other possibilities.”

  3. There is this big cold place right above your head – it’s called CANADA. You should check it out sometime. Downright socialist health policies and it absolutely annihilates your country in EVERY determinant of health.

  4. I think it is time for me to regain what little sanity I have left and get off the “grid” for awhile. There is no hope and change, the partisan madness is not going to stop just because the electorate voted the way they did, if anything, the outcome was saying “more of the same, please”. And WHEN consequences of PPACA become so apparent that people start experiencing real quantifiable increases in morbidity and mortality, forget cost issues for the moment, you think any partisan hacks shouting us down will think differently? No, it is about party first, profits second, and I don’t know where the hell the public falls in the list.

    Just look at the faces of these politicians who are the spokespersons for either side, when they are not mugging for the cameras. They are devoid of real emotion and concern, and if you have any slim interest in my opinion, it really does resemble the sociopathic expressions of serial killers and white collar criminals alike. Yeah, a harsh statement, but, for one, it is from me, and two, you can’t sugarcoat pending destruction.

    Well, amuse yourselves onward folks. I don’t know how long I will not surf into this site, but I hope I can commit to at least through the end of the year.

    Who knows, maybe I might get lucky and someone will brave the consequences of being a whistleblower and reveal what are pending disasters Nancy and Company did not even think anyone else would read, since these bozo Democrats certainly did not.

    Just remember my main point these past two years: politicians have no place setting health care policy, because it has at least two parts fairly much no incumbent possesses nor understands: empathy and foresight.

    But, as George Carlin said it best, it is not the politicians who suck, but, the public. Tuesday sure echoed those words, eh!?

    Hausta la vista, comrades!

  5. Wow, you said something reasonable!

    Congrats, DeterminedMD, your persistence has paid off!

  6. As corrupt as capitalism is these days, it is fascinating how supporters of socialism/communism just bury their heads in the sand when confronted by the repeated history of equal widespread corruption and favoritism that goes on in those political systems. Everyone is equal, gimme a break. As long as our species allows for pathological narcissism and antisocial elements who thrive in socialistic societies, those cultures are crippled within a few generations at best. And the loudest advocates are usually the covert operatives who want to prey on their own.

    Gee, Russia, China, Cuba, how ’bout them as a start.

  7. C’mon everybody.
    Doesn’t anybody read any more? Lookit this–


    Headline on Adelson’s paper: ‘America chose socialism’
    Mr. Adelson, a friend and supporter of Prime Minister Netanyahu, poured almost 100 million dollars into six Republican campaigns, but saw only one of his candidates win.

    Sore losers: Israel Hayom, the free daily paper owned and published by American gambling billionaire Sheldon Adelson, didn’t try to hide its disappointment over the results of the U.S. elections.

    This morning, a large headline in the news section declared that “America chose socialism.” The sub-headline reads: “Obama’s second term in the White House could lead to a greater economic crisis than that of 2008.”

    Early this week, articles in Israel Hayom were still reporting on optimism from within the Romney camp. On Tuesday, an article in the news section quoted Mr. and Mrs. Adelson’s op-eds, which urged voters to support the GOP ticket.

    A couple of weeks ago, Israel Hayom ran a chapter from Dinesh D’Souza’s “The Roots of Obama’s Rage”; the lede to the story declared that Obama’s “spiritual fathers” are an anti-Israeli and a terrorist. The book was also mentioned in the profile of Obama the paper ran on elections day, while the profile of Mitt Romney was entirely positive.

  8. Dr. Goodman forgot to cover environmental and foreign policy. I am sure he could have pulled this off with one more paragraph.

  9. I am quite agree with your view special on tax and challenge in making bad schools better. No guess for the future that what will happen to the poor people, they will grow or go down deeper.

  10. That is right. We’re getting crony capitalism in the form of a big wet, kiss to the insurance industry. 🙁

  11. “as we learn what is in the bill”

    It was enacted nearly 3 years ago (Jan 2010). Anyone who cares in the least has had ample opportunity to find out what’s in it.


    Oh! WAIT! Somehow, 1,794 pages are gone (of Scalia’s “2,700”). It’s only 906 pages — with 2″ left and right margins, meaning that 59% of the pages are white space. Were there std 1″ margins, it’d have been 670 pages long.

    The “Cornhusker Kickback” provision is not there either. Hmmm…

  12. Hey, I just want to see if the usual suspects have the guts to come to sites like this and either continue to blindly defend developing consequences “as we learn what is in the bill”, or, try to rationalize or even better minimize said consequences as “we’ll that’s just the way it is”.

    My bet, these defenders and apologists will just slink into dark spaces and hope their past documented supports are forgotten. Hence what people who support political causes do instead of supporting real public needs.

  13. You know, the fact you continue to let this idealogue have space on your site is the reason I stopped reading THCB regularly.

    I saw this headline posted on twitter and thought, “I bet that’s Goodman”

    Yup. Predictable.

    Get a conservative who has some ideas about numbers and policy, not a shill, and maybe I’ll come back.

  14. Most of the highest achieving school systems are also the most unionized. And saying Republicans are responsible for the EITC is like saying they are responsible for Obamacare. Yes, they once supported the policy. Now Republicans hate Romneycare, Obamacare, and the EITC. But don’t let me stand in the way of your fight with a straw man.

  15. /disagree. Socialism saves and uplifts. Capitalism consumes lives.