The blue social model posted a big win today as President Obama signed the Senate’s health care bill into law . I think it’s a bad bill that locks the United States more tightly into a medical system that is unsustainable in the medium term, and it is grossly unfair to the young. But extending health insurance to tens of millions of Americans is not the worst thing in the world, and while doing the right thing in the wrong way isn’t always helpful (look at George W. Bush’s efforts to promote democracy in the Middle East, for example), the bill could have been a lot worse than it is.
However, extending the old blue social model further into health care is not going to help matters. On the contrary, it advances the very painful day of reckoning this country faces when the bill for the unsustainable promises we’ve made comes due. Even as the House-passed health bill was making its way to the Senate, the financial system was flashing warning signs.
One was this story by Daniel and Brian Keogh on Bloomberg; Berkshire Hathaway two year debt is now paying a lower interest rate than Treasury securities of a similar maturity. In other words, investors think that Warren Buffet is a better credit risk than Barack Obama. Over at the Wall Street Journal, meanwhile, Andrew Biggs was making the case that public employee pension funds in this country are underfunded by $3 trillion and that in order to conceal the true dimensions of the problem, the fund managers are assuming unrealistic rates of return on their portfolios. John P. Lipsky, first managing director of the IMF, warned that the rich countries generally and the United States in particular will have to cut spending sooner rather than later.
There is more bad news. New York State is delaying tax refund checks because of worse-than-expected cash flow problems. Harrisburg, Pennsylvania is flirting with bankruptcy. State budget deficits across the country are spiraling out of control.
This is not, I fear, the beginning of a new era of expansive government programs and extended benefits. It’s the start of something darker as our dysfunctional political system grapples with unsustainable deficits. Reading those dark financial stories made me think of something out of Charles Baudelaire: the first stanza to Les Hiboux ( The Owls), one of the haunting sonnets in Les Fleurs du Mal.
Sous les ifs noirs qui les abritent,
Les hiboux se tiennent rangés,
Ainsi que des dieux étrangers,
Dardant leur œil rouge. Ils méditent.
It’s hard to capture the sense of massed, impending menace in translation:
Sheltered beneath the black yews,
The owls sit in rows,
Like strange gods,
Red eyes darting, they meditate.
This, I fear, is what our financial markets are up to these days. We spend and make happy plans; they wait ranged in rows in the black yews, red eyes alert, watching, thinking.
I’m glad that President Obama had a domestic political victory this week; a loss on health care would have crippled his presidency. The world is too dangerous and there is too much time remaining in his term for me to welcome the idea of a weak American president right now. I’m sorry, though, that so little was done to make our health care system more sustainable even as it becomes more accessible.
It brings me back to some of my earlier posts on the collapse of the blue social model and the failure of intellectual imagination among America’s policy wonks. There is a lot of talk about thinking ‘outside the box'; we need people who can think outside the blue. How can we harness our society’s unprecedented technological resources to address critical social problems and needs at a radically reduced cost?
Replacing expensive skilled human labor with information technology is the key to national economic prosperity and human progress in the decades ahead. Reconfiguring our medical, governmental, legal and university systems (to name only the largest and most obvious targets) to take full advantage of new technology and new productivity is the only way to meet our society’s rising needs for these services going forward.
Creating a marketplace that rewards innovation in these fields, funding basic research in the application of technology to social issues, and developing new ideas about how to re-engineer our society to take advantage of the immense potential coming on line: those are the primary tasks for the next generation of policy makers and creative thinkers.
If we get that stuff right our health care system will improve and access to it will grow, however we organize it financially. If we get that stuff wrong our health care system — and these other systems as well — will founder on our inability to afford the cost of what we need no matter how cleverly we strategize about how to pay for it.
I cannot overemphasize how important this is. Peter Hartcher has an excellent piece today that argues that America’s increasingly unsustainable debts will cripple the country’s ability to play its world role. I don’t think we are quite there yet, but if you keep edging closer to the cliff, sooner or later you will get too close.