The president also believes that government can fix the things. He says
that everybody should have basic health care security, meaning that the
federal government must level the field. The health bill assaults
inequality at the time when the share of the population with health
insurance has been shrinking. Meanwhile, much about health reform
remains unknown and the reform hardly solves any economic problems and
may even add to the debt. To help the economy, government would have to
trim trillions out of Medicare and Medicaid and cover only low-income
people. It would help to keep the cost of healthcare from rising and
thus level the field.
We need to cut taxes because high taxes restrain economic activity and
thus lift up the number of low wage earners. We should stop borrowing
and stop printing more money because it distorts the value of the
currency and increases living standard disparity. In short, we must
reduce government spending in order to level the field. Neither of the
above will happen because we believe that government can fix the rotten
things only by spending even more.
INCREASED PARTICIPATION
Indeed the participation of government, federal, state and local in
economy has been growing since the late 1970s and tax burden has
increased. Yet, the macroeconomic picture got progressively worse. Today
Medicare and Social Security have a total unfunded liability of $107
trillion. Within some 15 years they will become completely
unsustainable. Already this year Social Security will pay more than it
receives - something that was not expected to happen until 2016. In
reality, Social Security looks like Ponzi scheme so, when more baby
boomers retire, outlays will always exceed revenue, no matter how the
economy performs.
Even though Obama's "Paygo" requires that new spending be balanced by
cuts or tax increases, it exempted many federal programs including
Social Security and Medicare. It means that government will be stealing
even more from our children. The government cannot compete even on a
microeconomic level, in mail, rail, or auto business. The results are
contrary to the intended.
CRIPPLING EFFECTS
Overspending and waste, besides distorting the value of the currency has
crippling social effects. The inequality has been soaring. In response
government extends unfunded amenities so those in power can win the next
election. This way a government brings us ruin; it becomes the cause of
the collapse.
And yet we still believe that our problems are solvable only by vastly
expanding government participation in the economy. It is sad to see a
great democratic society support a policy which must lead to the
destruction of this democratic society. This reality seems to lie at the
base of Jim Parker's letter of March 18, to which Robin Lehman has
passionately responded.
The unskilled workers have limited employment opportunities and global
competition keeps the wages of less skilled workers at the bottom. In a
slow economy the standard of living of that group must fall the most.
The most of the rise in average incomes was owing to disproportionate
gains among the highly skilled. Not since the 1920s have people faced
such inequality of income. Congress has already been less tolerant of
the rising corporate executive compensations when the labor force gets
small wage increases or even salary reductions.
INEQUALITY
It is possible that the electorate may turn to populist politicians who
promise just anything. The growing income inequality already creates
demands for more government participation in the economy, for the
"proper" balance between the market and the government. Proponents claim
that we can respond to the growing inequality only by walking away
further from the free market and towards the welfare state model.
The U.S. income inequality has been deeper than in Europe, which appears
to be a result of dysfunction mostly of secondary education in the
United States. In our schools, run by the state, our students get
similar results at age 10 but in the next several years they fail to
learn enough.
America's good reputation in higher education is well earned, but
colleges depend on well-educated high school students. They may have to
accept more foreign students. If we do not reform our education we will
have to open up our labor market to the growing pool of skilled
foreigners.
We should address our school's failure to educate, so we can
successfully engage in the competitive high-tech world. We must break
the state's monopoly and allow competition. This will come with benefits
and costs, but welfare state can be even more costly. In order to
create bottom-up economic growth we must educate better.
Here the answer to the problem of growing inequality also seems to be:
the less government the better.
Jarosinski lives in Waitsfield.
