Schemes of Socialism

The newly selected Republican Vice-Presidential candidate for the forthcoming US General Election is quoted as likening Obamacare - the compulsory provision of health insurance for Americans - to the 'socialised medicine' that is common in European countries.

The Opening Ceremony for the recent Olympic Games in London included a hospital scene that may have convinced millions of Chinese and Americans that UK health services are primitive, with nurses in antique costumes putting two or more children in some beds. Within the United Kingdom there is mounting scepticism about the Conservative Party's promise that while they are in government 'the National Health Service is safe with us'. The minister in charge, Andrew Lansley, has shown himself to be a poor communicator and deaf to challenges; while implausible 'efficiency savings' are advanced as the cover for real-terms reductions in the funding that will be made  available to many components of the system.

It is notoriously a fact that research is constantly presenting new forms of treatment and new drugs that are often very expensive. The pharmaceutical companies spend massive amounts of money on research, which they can only recoup by selling drugs profitably. Thus health services, whether state funded, insurance funded or charging patients individually, have to pay for the research through the purchase prices they pay for the drugs. It is also  notorious that new treatments, including surgical and radiological and pharmaceutical procedures, prolong the lives of patients; so those individuals are likely to live longer as users of maintenance treatments. So if any healthcare system were to provide the best available treatment to all comers, free to the patient at the point of delivery, the costs would increase massively year on year. If the funding for a state system of healthcare is capped, it must follow that some treatments are unavailable to some patients; and some treatments are not available to any patients. This all creates stress points where the decisions are taken as to which treatments shall be available, to what categories of patients. In a country like the UK, where the National Health Service is hugely popular, voters resent restrictions on treatments and would always vote by a huge majority for untrammelled funding of the Service.

Politicians are coming to understand that for at least forty years the state has been raising more and more taxation - and also borrowing massive amounts of money - to maintain the NHS while paying ever more massive sums in benefits and 'tax credits' both to non-employed citizens and in wage subsidies to employees. This massive scheme of socialism has constantly been extended by both Labour and Conservative [and now by Conservative-led] governments; and it is an unavoidable fact that the spending is grossly excessive. There is no practicable means by which voters can be kept on-side with the sham democracy that still totters   on by default, if a government drawn from any of the existing parliamentary parties made a realistic attempt to reduce spending on health and benefits and all other government services [not least the defence of the realm and the law and order system]. The bathos of the present coalition government's situation is that they are actually borrowing more money, year on year, while they are claiming 'success' by reducing the rate of increase of borrowing that might occur without the cuts that they are making in public services and in defence.

The conclusion that US conservatives have reached, that any system of state-supervised compulsory healthcare becomes an intolerable burden on taxation [and that the same would apply to any open-ended permanent benefits system for people of working age] is born out by the British experience. Greece, Spain and Portugal are in varying degrees of proximity to bankruptcy because they have had similar systems. In the Greek case welfare costs have been accompanied by massive state spending on excessive public sector salaries, excessive pensions available from early ages, and tax avoidance on an heroic scale has ensured that the state met spectacular budget deficits by borrowing: time has now been called on that country.

To the American conservatives there is no difference in principle between Greece and the United Kingdom. They are not wrong as they hark back to the founding fathers of the republic and the great libertarians who have ensured that the massive scope of the US federal government has been restricted as compared to European countries. One of the many reasons why Americans strongly supported the foundation and the expansion of the European Union was that it presented a good prospect of becoming a federation like the USA, where there would be a balance between federal and state powers; leading to less 'big government' over the long term. The dishonest way in which the eurorats have tried to establish federalism by stealth meant that countries like Greece were able to act irresponsibly and continue to sell government bonds because international bond buyers assumed that Europe would collectively guarantee the debts of all the member countries. German voters are now determined not to be suckered in consequence of the eurolies that their government allowed to become common currency. The majority of Germans [and Finns, and Swedes, and Austrians, and Slovaks] are prepared to let Greece fail economically. Europe will then permanently be changed: jerked back into at least partial reality.

Britain has so far maintained its AAA credit rating: in defiance of the evidence that is all too apparent. The fake prosperity that engulfed and deluded the population for two generations is rapidly coming to an end. Both the safety net of benefits and the beloved National Health service are in danger: as are the equivalent systems in Italy and France, even though their different funding mechanisms partially obscure the parallels. The future is bleak.

Jobs and Wages

There is a great deal of talk - and much less action - from government about the need to create jobs in the economy to produce growth. There is also a recognition that any sustainable increase in jobs should focus on 'manufacturing': a series of sectors that have been continually in decline and in default throughout the careers of most working retail bankers, setting up institutional and psychological barriers to lending for any such development. There is also a very emphatic policy from the Department of Work and Pensions to push benefit recipients into employment.

Most bar-room conversationalists, through the length and breadth of the Kingdom, take it as axiomatic that that there are 'no jobs' that have any attraction for many of the British unemployed. There is huge resentment about the plain fact that there is still a torrent of immigration into unfilled existing jobs as well as of benefit-hunting immigrants. In the high-earning employment categories, British graduate doctors, scientists and engineers migrate to North America and Australasia; and their places in the UK are filled in the NHS by Europeans, Asians and Africans, and in science and technology by Europeans and Asians. Thousands of British engineers, physicists and mathematicians are also lost to the 'real ecnomy' when they take employment in casino banking. In middle remunerated ranks, plumbers and builders from East Europe have supplanted much British recruitment. In hourly-paid jobs with some 'unsocial hours' working Brits are conspicuously less abundant among applicants than are migrants.

If the country is to avoid Islamisation by mass immigration, British people have to fill the jobs that are available in Britain: but the second-and third-generation non-employed population show no inclination to work. Hitherto they have been able to show how much benefit they would loose if they took jobs: they could surrender 38 or 40 hours a week of their time to the discipline of the workplace and receive only a few pounds a week in higher nominal income. So the glib answer is to say that their benefits must be reduced. This supposedly would provide a stick and a carrot: the individual would have a lower standard of living if they did not work, and would have the opportunity - perhaps - to buy more if they did get work.

But if such people have children, an ages-old problem arises. It appeared first in its contemporary form in the eighteen-seventies when Poor Law Guardians began to put up workhouse orphans for fostering by working families. Tables were drawn up of the clothing, food and other necessities that each such child would need: and it was immediately evident that the sum of money required to deliver that subsistence each year was very much more than any lower-paid working family had for each of their children. The same arithmetic applies today: the cost of keeping a child in care or in state-sponsored fostering is far more than the portion of millions of parental earnings that they can make available for each child. This recognition is carried forward in the 'tax credits' that governments give to families. If wages are reduced in real terms the 'needs' of children will have to be provided for in increased credits. This is axiomatic, because it is pretty well universally accepted that nobody can expect seriously deprived children to grow into good citizens. So if tax credits [or their successors] are to keep pace with prices, any incentives or penalties on parents to 'make them work' will largely be rendered nugatory.

Of course parents are only raising children for part of their lives: but many, many people think in terms of short-term living rather than of lifetime earnings, or career progression [when many jobs offer no prospect of promotion]. So the conundrum of 'childrens' needs' set against rates of parental remuneration will not go away. Hence much of the government's talk about employment, pay rates and benefits, is nonsense. Deeper thinking in this, as in other crucial issues, is urgently needed.