Thursday, September 30, 2010

The Welfare State, Reagonomics, and Lady Voldemort

Any economic policy can be brilliant in theory, but in practical application to modern society, human shortcomings make any political theory imperfect.

The Welfare State is brilliant in theory. It establishes a great safety net for the citizens of a nation. Offering up her first hand experience, JK Rowling discusses the UK’s Welfare State in an article she penned back in April.:

During my time in Belfast and Scotland, I have seen a wee bit into the complications that arise within a welfare state. First, is that if the safety net is set too high, then there is no incentive to actually maintain a job and stay off of benefits. (This problem is not just limited to the UK; it is very much present in American with welfare programs.) Secondly, when the government becomes the main employer in a region or even nation, the top down bureaucracy can be cumbersome, and when a major budget crunch arises, society is at risk of toppling under its own weight. It’s been interesting to follow the threats of budget cuts while in Northern Ireland – with the current amount of budget cuts totaling 128 million pounds, for a nation of about 1.75 million, that is a HUGE slash to their budget and equals many job cuts. (In U.S. terms, that might be comparable to a budget cut of 30 billion dollars, as the U.S. population resides at 300 million peoples. That’s a lot of government spending slashed right there.)

Another controversial part of the Welfare State is socialized medicine. In speaking with many people though, public health care is beautiful. Doug and Elaine testified that when one of their children was born with many health problems and needed several expensive surgeries, they never once had to stop to consider how they would pay for it. They didn’t have to fight with insurance companies; they didn’t have to hassle with mountains of paperwork. They just signed the consent for the procedure, and the surgery was done.

I have grown up with socialized medicine, courtesy of being a military dependent. There are drawbacks – I have probably never seen the same doctor more than once, sometimes your treatment is not the best. But it was awesome to be able to receive treatments and medication for free or at very low out of pocket expense. Thank you to all of the American tax payers for helping to cover treatment for all of my childhood ailments.

The general drawbacks of the welfare state are more than evident: the rampant possibility for abuse or misuse of the system, high taxes (sidenote: having sales tax already included in the price of an item makes shopping soooo much easier), and the bureaucracy it creates can often be a hassle.

But, in the U.S. where the government lacks transparency and already spends humongous chunks of money on war and to bail out banks, why not have a state that at least tries to take care of its citizens? If I am going to pay high taxes, please, let the money be channeled back in ways that benefit me – whether through public parks, national highways, public transportation, public schools, public libraries, and *gasp* public health care.

For those who shudder at the thought of big government, let me say: Ronald Reagans of America, I hear your cry. But I’m just going to put it out there: I’d pick any day the failings of the welfare state over the failings of Trickle Down Economics. On paper, Trickle-Down theory sounds brilliant. Lack of government involvement in the market allows for free trade, and as the rich get richer, the poor will also share in the wealth as it trickles down.

But humanity doesn't work that way.

In the U.S., the rich continue to get richer, and the gap between poor and rich Americans does not decrease or even remain the same. It grows. Released a few days ago, the U.S. Census Bureau announced that the gap between rich and poor Americans is the largest since 1967 as the average household’s income fell about 4 percent between 2007 and 2010. The money given to the banks and auto industry has not trickled down.

Like in the Welfare State, the problems with Trickle-Down theory in practice is humanity’s shortcomings. When times are tough, we strive to look out for ourselves. So as companies receive these huge sums of money, the people in charge of the money – those at the top of the food chain – are going to look after themselves while looking after the company. So the countless stories of executives who were let go during the 2007/2008/and ongoing crisis, are understandably often released with generous severance packages. But what about the employees down the foodchain? The working masses are given the pink slip and kindly escorted out of the building. Maybe they receive some severance bonus to carry them through the next few months, but what next?

The problem with Trickle-Down is it’s focus on the macro side of economics without consideration for the people. I would take the failings of the Welfare state: back in the 1950s when the welfare system was fully implemented in Great Britain, it nearly bankrupted the state as people rushed to get free healthcare that had not been affordable before. But the government survived, and the people’s lives improved. (Ok, maybe British people don’t have shiny pearls like Americans, but I would suggest that it’s more from different society norms rather than any shortcomings of dentistry.) Over the failings of Trickle-Down: tax cuts to benefit the rich are flat out not going to benefit the poor; instead the government faces huge loss in revenue and the rich sit on their money, watching it grow. The rich are the only ones who win. Congrats for anyone reading this who has a Trust Fund.

And finally, Lady Voldemort.

My history advisor/ professor who I took two classes with came of age in England during the reign of Lady Thatcher. In the second class I took with him, he finally explained why exactly he referred to Thatcher as She Who Shall Not Be Named. The basic summary that I can remember is: the professor’s dad and brothers all worked in the coal mines. During the coal miners’ strikes in protest of her shutting down some of the mines, Thatcher had no mercy. She branded them as enemies to the state as they were interrupting progress during a time of war (in the Falklands), and violence was rampant among the picket lines.

[Kudos to Thatcher for being the first female MP, but negative points for being so blind to the needs of the people.]

Lady Voldemort made many cuts during her time in power. However, she could not dissolve the NHS. Her intended privatization plans were never implanted due to public outcry against it.

What it comes down to is the question: is the government supposed to help people? I would say yes. While it is nice to think that private organizations, churches, and local communities would be able to take care of themselves, today’s modern world is not conducive to that. (Few people remain in the communities where they grew up; American suburbs are built so we don't have to interact with our neighbors.) We need government policies to establish a basic standard of living that ensures everyone has access to the basics – food, shelter, and health care. While concerns about Big Brother are sometimes valid, Obama is not Hitler. Do not even compare the two. Obama does not proclaim a master race and seek to take over the world. Bush proclaimed a master religion and tried to do that in the Middle East. Hasn’t worked out so well. Obama just needs to stop being a politician and follow through on his campaign promises. There is hope. Hope for a better future. But until parts of American society are addressed, those hopes will be futile for future generations. (See previous post on immigration.)

In viewing the UK with American eyes and viewing the U.S. from across the pond, there are many things of value within each society. My hope is that more Americans will travel, both around the nation and out into the world. To expand our perspective of the world, break others’ biased stereotypes of Americans, and through the exchange, work towards a better tomorrow. The world is getting smaller; when one nation’s economy crashes, the rest of the world feels the effects.

The UN Millenium Development Goals were supposed to have been reached by 2015. See here: Or even better, here:

It’s time for governments to stop spending money on war, but rather peace. To build a future rather than destroy what exists. Spend money on your citizens, bettering their lives, and on citizens of other nations, to provide the basic needs of living rather than guns or bombs. We are all God’s children.

Even as we stand reviewing our shortcomings, God gives us hope.

In grace and peace.

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