Labor protectionism by another name

Wal-Mart has recently released a letter supporting the idea that all employers be forced to include mandatory health coverage for workers. Think about this for a few seconds.

In the past Wal-Mart has fought state measures that would force them to provide health benefits for their employees. So then they were fighting something quite similar to what they are now supporting. Was this some benevolent change of mind? To quote an old TV show: "Don't bet your bippy on that."

Previously measures would have taken away a competitive advantage that Wal-Mart had over some of their major competitors. The current proposal, by mandating it for all employers, means that smaller competitors, who can't afford the measure, would be disadvantaged. Wal-Mart can afford it but they know that up-and-coming competitors may not be able to afford the same thing. Previously such a measure would have put them at a competitive disadvantage. The new proposal puts them at a competitive advantage.

Where state interference is good for profits then Wal-Mart supports state intervention. Where such measures reduce profits then Wal-Mart opposes state intervention. There is no consistent principle just a consistent desire to maximize profits coupled wiht an any-means-will-do mentality to secure those profits.

One of the most tragic features of the American health care model has been the union-inspired measure which links health benefits to employment. This sounds great but it means the policy is connected to one's job and not something the individual actually owns. Lose your job and you lose your coverage. Americans change jobs frequently, and that works to their good for the most part. It indicates a competitive market for employees.

But when health benefits are attached to a job it means Americans frequently lose their coverage for a period of time. The insurers don't mind. With each passing year your risks go up and so do your premiums. And since you are, in essence, starting over, all the previous payments you made don't count toward the new policy so the result is substantially higher premiums.

Individual health accounts would be far more beneficial to people than job-based benefits. But the unions don't want that. The current distortions in health care, caused by these programs to some extent, are now a major reason that employers are going to line up behind government provision of health care.

While everyone says that "all workers" should have health benefits no one wants to say that the workers are going to have to pay for it. So the debate is between forcing employers to provide it or having the state provide it. This means that employers will progressively begin lining up for the nationalization of health care. It will save them money.

Either way workers will be the primary funders. Either they pay directly, where they can monitor costs and know where their funds are going and what they are getting for them. Or they will pay higher taxes into the state and watch it disappear in the political black-hole. From that will emerge some sort of health care, muct akin to other government provided services. The services will be substandard and costly and no one will know why. There is no way to control what happens when that much money diasppeares into the federal treasury.

The net result is that workers will pay more their care and get less for it. A small number of people, who have nothing now, will probably be better off. A larger number of people will be made somewhat worse off. And a small number of people will be made substantially worse off. The total result will be a deduction in the quality of care in general.

As we move closer to a nationalized health care system we will see how the political process works. More companies will line up to try to push the laws in a direction favorable to themsevles or detrimental to their competitors. Other medical industries will push for "benefits" that they just happen to provide. Pharmaceutical companies will push for specific kinds of drugs while keeping competing drugs out of the markets. As political control of medical care increases the big players in medicine will work to manipulate the laws and regulations in their own favor.

The population story the media is missing.

The United Nations Population Division is estimating that the world’s population will top out at 9.2 billion in 2050. They increased it a slight increase from their previous projection of 9.1 billion because of anticipated declines in the death rate from AIDS and other diseases.

There are some who will take this as bad news. I am reminded of a “reviewer” who attacked something I wrote on population. He first admitted he had never read the manuscript in question and then said that my thesis was “not that birth rates are too high but that death rates are declining”. He then attacked me for not offering “a solution to this problem.” The problem being declining death rates. My reply was that he should think globally and act locally and that he always had the power to reduce the population of the world by one. Of course when he whines about low death rates it is always the death rates of others that worry him not his own.

I actually question the UN’s projection and I do so for a very understandable reason. I’ve been watching the population issue for some years now and I’ve read their population reports regularly. They are consistently wrong and drop their projections as they get closer to the dates in question.

More importantly they are always wrong in the same direction. They constantly overestimate population growth rates. To their credit they do give a low, middle, and high estimate. But the reality tends to be closer to the low estimate than the high estimate. I suspect, based on this record, that one should take a position somewhere between their low and middle estimates and you will be far closer to the truth. In fact a good case can be made for their low estimates being the most likely.

The new report, as per the media, gives a distorted picture in one important sense. It says that “46 countries are expected to lose population by mid-century.” But more nations than that already have birth rates below replacement levels. The reason for the difference is the time lag between one being born and one dying -- a lag most of us appreciate and work at extending. That lag increases as death rates decline. As people live longer the population continues to grow even though the total fertility rate is below replacement levels. Of course once the two catch up there is a rapid decline in population numbers.

Another report in the press says that “Fertility has already reached below replacement levels in 28 developing countries which account for 25 percent of the world’s population...:” Again you need to be careful in what you read. This is 28 “developing” countries not 28 countries. For instance most the countries that are already developed need to be added to that list.

In 1999 the UN noted that 61 countries had already reaching below-replacement fertility rates and said that by 2015 that would be true for 87 nations. One indication of how rapid the deceleration of the world’s population will be is that the number of people over the age of 60 will triple in the next few decades. The population grows but at some point soon large numbers of old people start to die and when that happens population numbers will plummet with all sorts of consequences. Expect numerous government commissions urgently trying to reverse the situation even while today they are urgently trying to create it.

The UN says that there will be more people over the age of 60 than there will be under the age of 15 for the first time in history. Consider the crisis for the welfare states of Europe. Already the number of people under the age of 60 is in decline in Europe while the number over 60 is increasing. The number aged 0 to 14 went into decline in 1965. And those aged 15 to 59 went into decline in 2005. But every years the number over 60 has been increasing. This trend will happen in every region of the world.



In fact the UN’s report, if you read their material yourself, focuses on the rapidly ageing population of the world. The media report focuses an a relatively minor increase in the projected maximum, from 9.1 billion to 9.2 billion. After years of conditioning by hysterical population gurus like Paul Ehrlich the media can’t get over the idea that the population explosion ended years ago. All that is happening now is that the world is waiting for the old people to die! Shocking but true.

The UN report says that the world has gone through a transition where birth rates are low and the numbers of children, and working aged people, will go into decline while the number of elderly will skyrocket. They write: “Today most countries in the world are already well into the demographic transition...” Most countries! Yet you won’t have trouble finding groups proclaiming that the UN report is a “wake-up call” due to over population.

You have to realize that there will be entire nations, by 2050, where the median age of the population will be over 50. Consider what this means to the issue of welfare, pensions and medical costs. And the disaster is particularly dangerous for those nations stupid enough to go down the welfare state road.

The number of people relying on such benefits will grow rapidly but those who work and pay into the system will be disappearing. There will be fewer and fewer people sustaining the system just as more and more people need it. Millions of elderly people are suddenly going to find out that the safety net they were building over their lifetime can’t sustain them. And because of the high taxes they haven’t had the opportunity to create private alternatives. They will be left out in the cold -- sometimes literally -- because the welfare state is built on a model that is the complete opposite of demographic reality.

I personally suspect, based on past overestimates, that the world’s population will peak at 8.9 billion and in the year 2045 not 2050. But the real story here is not one of “birth control” (which I happen to support) but one of welfare control. The disaster we face is not one of an overpopulated world. That disaster has not been looming for decades. But a world filled with elderly people reliant upon a safety net that doesn’t exist scares the hell out of me.