A recession followed after reaching these levels in 2007.

How can we expect families and individuals to save any money in this environment we have created? Massive debt loads are taken to get an education, to drive a vehicle, and to own a house. Then, a couple of credit cards to make up for stagnant wages. And of course staggering health costs play a part as well.

We spend more on health care for worse results.

Maybe you haven’t heard, but there are still about 30 million (12.2%) residents in this country without health insurance and due to the sabotage of the ACA by Donald Trump and fellow Republicans, that number rose 3.2 million from 2016 to 2017. With the individual mandate set to expire next year, the uninsured rate will rise even farther.

It isn’t just about those who don’t have insurance. We, as a nation also spend more per capita on health care costs than any other developed country. Plus, those other countries guarantee universal health care to their residents. According to the OECD, the United States spends above 17% of their GDP on health care costs. The next closest is Switzerland at just over 12%. On average, the United States spends double per person on health than other wealthy countries. The Kaiser Family concludes:

As would be expected, wealthy countries like the U.S., tend to spend more per person on health care and related expenses than lower income countries. However, even as a high income country, the U.S. spends more per person on health than comparable countries. Health spending per person in the U.S. was $10,348 in 2016–31% higher than Switzerland, the next highest per capita spender.

If we spend so much more money on health care, we should be have better health outcomes, right? Not so fast. The Commonwealth Fund reported worse results for America than their OECD counterparts.

On several measures of population health, Americans had worse outcomes than their international peers. The U.S. had the lowest life expectancy at birth of the countries studied, at 78.8 years in 2013, compared with the OECD median of 81.2 years. Additionally, the U.S. had the highest infant mortality rate among the countries studied, at 6.1 deaths per 1,000 live births in 2011; the rate in the OECD median country was 3.5 deaths.

The prevalence of chronic diseases also appeared to be higher in the U.S. The 2014 Commonwealth Fund International Health Policy Survey found that 68 percent of U.S. adults age 65 or older had at least two chronic conditions. In other countries, this figure ranged from 33 percent (U.K.) to 56 percent (Canada).

The United States has increased rates of obesity, diabetes, and heart disease. One of the biggest contributors is higher stress levels from working longer hours, worrying about job insecurity, and crushing debt levels. Of course, the lack of preventative health care is a factor as well. Americans don’t see their primary doctor as much because of cost concerns.

America is facing an obesity crisis. 36.5% of adults are obese and the number is still rising. Black American adults are quickly approaching the 50% mark for obesity. With obesity comes other health-related problems like heart disease and diabetes. This all leads to higher costs for everyone, especially with private insurance markets.

So, not only do millions of Americans face difficult financial challenges, they also face more health concerns than other developed countries. It’s not a giant leap to recognize that these struggles go hand-in-hand. Someone who may have a lingering illness may put getting it checked out off because they can’t afford to see the doctor and they can’t miss work. Some may not purchase insurance on the ACA exchanges because it’s cheaper to pay the penalty to the government. Lucky for them, the penalty goes away next year. However, costs still need coverage if this person is injured and doesn’t have insurance.

This economy isn’t sustainable.

These problems laid out before us have built up over decades because of decisions our government has made.

• Starting with President Reagan, the decline of unions has accelerated, especially in the private sector. States continue to move to a “right-to-work” standard and there is a Supreme Court case that could soon make that the federal standard as well. Only 10.7% of workers were unionized in 2017 (6.5% rate in the private sector).

Source: Inequality.org

• Financial markets have been deregulated over and over and the largest banks have only become larger since the recession.
  
  
• Free Trade agreements were signed with no regard to American workers. In general, free trade is great. However, not enough was done to offset the effects of the displaced workers that resulted from agreements like NAFTA.
  
  
• Our health care system is still run by insurance companies and the pharmaceutical industry. Plus, the Affordable Care Act didn’t do enough to guarantee health care as a right or at least include a public option.
  
  
• Rather than the government providing a college education, we’ve allowed students to be charged exorbitant amounts to earn a degree. Elementary and high school education is lacking in many states. We are now seeing the aftermath with teachers striking all over the country.
  
  
• The tax rates on wealthy individuals and big business are consistently slashed while claiming we have to cut back on public programs that help the rest of us.

Something has to give. Soon, we could be back in the same predicament we were in just a short decade ago. And it could be worse. All of these developments in the U.S. economy has led to massive wealth and income inequality. The last time we saw inequality this high was just before the Great Depression. As of 2015, the top 1% of wage earners took home 22% of total income in America. Compare this with just before 1980 where the top 1% only took home 8.9% of total income — a much fairer distribution.

Inequality has now reached pre-depression era levels. Source: Inequality.org

Almost all new gains have gone to the top 10% of earners since 1979. Source: Inequality.org

Wealth inequality is also rising again, approaching pre-depression levels. The top 10% of households hold over 90% of the wealth in stocks and mutual funds. Meanwhile, the bottom 90% percent of households hold about three-quarters of all debt. One in five households actually have a negative net worth (Assets-Debt). The Washington Post reports that,

The 400 richest Americans control more wealth than the poorest 80 million households, and as the richest citizens continue to capture the lion’s share of new wealth — the top 5 percent has captured 74 percent of the wealth created in this country since 1982 — the situation is only growing more extreme.

The thirst for more and more wealth among the nation’s elite is only going to end in disaster as it did in 1929. The middle class in America is not progressing or moving up. All the gains this economy makes goes to the top.

There are no perfect solutions but we must try something different.

It’s obvious that what has taken place for over three decades isn’t working for most Americans. We’ve witnessed the costs of essentials like education, health care, and housing rise year after year as wages have remained stagnant. What can we do to alter this trend?

To the chagrin of many, the answer is probably through government action, specifically the federal government. We need to lay out our priorities in our budget and through public policy. We don’t necessarily need a larger federal government, but we need a government that is working on behalf of working Americans rather than big corporations and wealthy individuals.

To combat rising health costs and lack of insurance, we should move toward a single payer system or adding an Medicare Extra For All option as a part of the ACA. This would not only reduce costs on employees who receive coverage through work but many companies would be freed from the hassle of having to offer health plans creating more costs for the business.

Americans can’t afford to go to college anymore. We need a broad investment in students. We can create a program to allow free public college, with some restrictions. Even if students still need to take some loans to cover books and/or living expenses, the magnitude of debt will be much smaller. The state of New York has already moved to do this. They put income restrictions on who the program is available to and required students to say in-state for five years after graduation. The federal government can do something similar like ensuring students complete school or risk having to pay the grants back. We should also find a way to cut some of $1.3 trillion in student loan debt currently outstanding. For the same price tag to the deficit, the federal government could have wiped out all student debt instead of cutting taxes late last year, which would have a much greater impact on the American economy by freeing millions to go out and spend their newly found excess savings.

To tackle the issue of inequality and stagnant wages even farther, we need a multi-faceted approach. A revamped tax system that closes loopholes and raise income and capital gains taxes on the highest earners. Simultaneously, we need to raise the minimum wages for workers, Study after study shows that this has little to no effect on the unemployment rate. Some states are still holding their minimum wage at the federal level of $7.25/hour. We could even look into either a federal job guarantee or a basic income program. Labor also needs to recapture the voice they once had to negotiate better wages for not only union members, but all workers.

Of course, investment in infrastructure, family leave and earlier education are vital as well. Better transportation systems brings lower costs and more opportunity to low-income Americans. Starting to build around families is a good approach. Guaranteeing family leave to parents who have recently had a child is good first step and then we need to commit to providing the best education possible to the child in our public schools.

These aren’t radical ideas

Most of the proposals are already being done by other countries all over the globe and almost all of them are succeeding. When you create a baseline safety net for all people, the result is a healthier, happier, more secure society. We can ensure everyone’s basic needs are met and Americans are then free to chase whatever dream they so desire without worrying whether they’ll go bankrupt from a health incident or be in financial hell because they want to better themselves by going to college.

We can’t continue the path we’re on and things are only going to deteriorate further under the current administration. But we need to elect politicians that are willing reverse course and push for a better government and economy for working and middle-class Americans. Frankly, there is no other option. The United States can’t survive when most of us are struggling to just get by.

 

 

 

 

M.A in Applied Economics. I'm here to talk about economics, politics, and life. Follow me here and on Twitter @BagsFoSho

 

 

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