Is it a fact that the USA is not a socialist country, or has it in fact been selectively socialist all along?
Total US land area is 2.3 billion acres, half of which is farmland. Of the one billion acres being farmed, 270 million acres was distributed to 1.6 million homesteaders by the Homestead Act of 1862. There were only four requirements; live on the land, build a home (no building code applied), make improvements and farm the land for 5 years. To "prove up" after five years just took two witnesses and a filing fee, then the title to 160 acres was all yours. This opportunity was open to immigrants, former slaves, single women and anyone over 21 (age requirement waived for head of family). In 1830 this would indeed have been equal opportunity for all.
But by 1862 farming had industrialized. A homesteader needed a John Deere moldboard plow to break into the tough prairie soil, a disk harrow, a grain drill, a swather and last but not least a McCormick reaper. In other words: debt. Could everyone get a fair share of the credit they needed to compete? Only 40% of the applicants came back in 5 years for title. Some women and former slaves were successful. Many immigrants were. But this up hill battle got steeper as time went on. The long story short is best told in Small Farms, Externalities, and the Dust Bowl of the 1930s. 2003 by Zeynep K. Hansen, Washington University, St. Louis and Gary D. Libecap, University of Arizona, National Bureau of Economic Research, pp. 9-10:
"Most estimates by agricultural economists and extension agents in the 1930s of appropriate production sizes for the region suggested two sections of land, 1,280 acres, depending on location in the plains. ....Nevertheless, in the 1930s, most farms were smaller than the prescribed levels for optimal production. The Great Plains was covered by hundreds of thousands of small farms. This condition was largely a legacy of the Homestead Act that limited claims to 160 to 320 acres when the region was settled between 1880 and 1925."
"The excessive tillage practices of small farms were noted by the U.S. Great Plains Committee (1936, 3, 40-6, 75), appointed by President Roosevelt, '…. although we now know that in most parts of the Great Plains farms of this size [homesteads]….were required to put this land under plow, regardless of whether or not it was suited to cultivation.' Cooper, et al, of the Bureau of Agricultural Economics (1938, 146-8) claimed that farms “are so small that the establishment of a system of farming that will conserve soil and produce a desirable family income is practically impossible.”
So why would the US government promote agricultural settlement yet not provide an adequate stake for the purpose? Was it simply ignorance? Maybe, but the Homestead Act was also secondary to the primary goal of the great Pacific Railroad Act of 1862. Opening up the plains for economic development and uniting a large country into a single nation required federal incentives for a transportation system to tie it together. Four of five transcontinental railroads were built using land grant incentives. Section 3 granted, in addition to the right of way, 10 square miles of public land for every mile of grade except where the line ran through cities or crossed rivers. That is 6400 acres/mile of line. Between 1850 and 1871, the railroads received 175 million acres, larger than the area of Texas. That's a little more than half as much as the 270 million acres given to homesteaders, but the direct beneficiaries were far fewer, relatively minuscule in number. The homesteaders provided railroads with captive customers, for land initially and later crop transportation. Despite the tremendous service provided by the land grant colleges, having the knowledge without the means could not save most farmers. The land vomited them out, and the farmland of today was bought for a dime on the dollar by the survivors.
How does this gigantic land grant payout to railroads and current farmers compare with the GI Bill of 1944? The low interest, zero down payment home loans for 4.3 million veterans amounted to $33 billion. The 8 million veterans who received college, on the job training and technical training between 1944 and 1956 accounts for $14.5 billion. For roughly $50 billion dollars unemployment and displacement for the returning veterans was avoided. Income tax receipts from their social and economic success far exceeded the costs.
By 1956, when it expired, the education-and-training portion of the GI Bill had disbursed $14.5 billion to veterans—but the Veterans Administration estimated the increase in Federal income taxes alone would pay for the cost of the bill several times over.
In principle, providing public funds for "economic development" distorts the playing field, creating losers to be exploited by the government backed winners. On the other hand, social welfare benefits given, not to the pitiful, but to the deserving, delivered benefits to everyone in the society. Reward the good, starve the bad. You get what you pay for. Another principle is that subsidies help the sellers. Food stamps are part of Farm Bills because the purpose is to provide price support for farmers. Once farmers don't need price support, just see how fast the needs of the poor are kicked to the curb.
Which brings us to the biggest payout of all time: the financial crises of 2008-09. The US Government and the FED spent, lent or committed $12.8 trillion dollars to save the banks. That is almost as much as the total US GDP of $14.2 trillion dollars. The nature of a financial collapse is that as asset values fall, money is destroyed. Until the new money moves in there can be no bottom. That's why traders run to turn assets into cash (the dry powder they'll need to get in at the bottom). In other words, financial crises can be self fulfilling panics. But as money is destroyed so quickly, where is enough new money to come from? No new money, no bottom. Alas there's no alternative, the Fed and the Government provide the new money. The question is: to whom do they provide it? To the financial engineers who created the failure to begin with? Yes, that's exactly who got rescued, the bastions of "private enterprise", the banks. The very next year, in 2010, the most generous bonuses ever were distributed to the banks' traders. The US taxpayer pulled them out of the hole, but all the way back up our pockets were being picked. Socialize the costs, privatize the profits. Use taxes to provide incentives to fail. Then rescue the failures provided they are the deserving rich.
USA; that's the kind of socialist country we are.
America's Feudal Class "farms" Tax Shelters to lose money, which drives the real farm businesses out. Congress is then extorted for $millions in subsidies to "help" these tax cheaters succeed. Recently they kicked the food stamp program to the curb. Supplementing demand for food by helping the poor is too socialist.
If Obamacare is the only legacy to define the Obama Presidency, that's still good enough for "great".
Something had to be done. Year after year healthcare costs have been absorbing productivity gains and any potential raises for US workers. Healthcare costs amount to $2.5 trillion dollars or 18% of GDP. Americans pay twice as much as the other developed nations, and for all this the health outcomes here are worse. Kimberly Amadeo, economist, writes eloquently on the subject as follows:
"Why is it so high? First, most of the cost comes from the first 10 days and last 10 days of life. A lot of progress has been made on medical procedures that can save premature babies and extend the life of seriously ill elders. However, those innovative procedures are very expensive."
Of course saving babies is priceless. But how is prolonging a death saving a life? If this is where the money is going down the tubes, that's a moral issue. The living are being drained of resources so that the dying can "live", drugged up, one more day. Talk about a Godless ego that can't let go. And yet the opponents of reform characterize the obvious solution as "death panels". They blame the usual suspects: the poor, the old, the sick and uninsured. In other words the people who can't afford to continue spreading the risk for this Cadillac care of the dying.
Who get's blamed for skyrocketing medical costs predicates the solution, so let's look at "who's at fault"! To put things in perspective the first chart shows how much we each pay. Then the following chart shows how much it costs to be in the same insurance pool as fat people. And why we're at it, how much more do smokers and drinkers cost? If it's not bad habits that make healthcare extortionate, then we know it has to be the cost of getting Old. Everyone knows the burden of old people is bringing down the entire Federal Budget, right?
A person 20 years older than I am costs $225 dollars more or 4%. But if they are 40 years older that's 8% more than me. Since children don't pay anything, being the free riders they are, that means people over approximately 60 are bringing down the whole federal budget! Can it be the medical costs of old people that are stealing our raises and eating up federal discretionary spending?
Between 1965 and 2005, medicare and medicaid spending on healthcare has been relatively equal to what everybody else spends. The trends are going up calmly together. This is not a chart that supports the thesis that old and poor people are accelerating and out of control with their health care. One might even say since 1965 medical innovation could be driving these trends, not rising costs.
So where are the opponents of Obamacare, medicare and medicaid getting data that show socialized medical costs (which is what insurance is) will crash the country? They use another CBO graph using recent GDP to healthcare spending ratios and project it out for 65 years.
As soon as GDP growth returns to a more normal 4-5%, the healthcare spending spike will disappear. The data shows that despite a recession people will continue spending on healthcare. It does not demonstrate that healthcare spending relative to GDP will continue spiking for the next 65 years! What was the CBO thinking?
This society has benefited from the demographic bulge called the Baby Boomers. Everyone in front of them benefited from the increase in demand for education, houses, stocks, and all forms of GDP. Now that the taxes they've paid into the system have to be drawn back out against their "entitlements", who should complain? Certainly not the "Greatest Generation" before them who have, on average, taken out of Social Security three times more than they put in. How was that possible? Taxes paid by the Baby Boomers.
It's true that the generation that follows the Baby Boomers has the problem. Never enough jobs, houses, and now Social Security. But this is a problem that will solve itself. Don't project the demographic graying of America out for 65 years. Old people die. Which brings us back to the extravagant cost of dying. The Baby Boomers may solve that problem too, thanks to their proclivity to ride motorcycles and party.