Our Intellectual Bankruptcy: The “Religion” of Economics, UBI and Medicare For All

Here we stand on the precipice, and all we have in our kit is a collection of delusional magical thinking that we label “solutions.” We are not just morally and financially bankrupt, we’re intellectually bankrupt as well.

Here are three examples of magical thinking that pass for intellectually sound ideas:

1. Mainstream neo-classical/ Keynesian economics. As economist Manfred Max-Neef notes in this interview, neo-classical/ Keynesian economics is no longer a discipline or a science–it is a religion.

It demands a peculiar faith in nonsense: for example, the environment–Nature– is merely a subset of the economy. When we’ve stripped the seas of wild fish (and totally destroyed the ecology of the oceans), no problem–we’ll substitute farmed fish, which are in economic terms, entirely equal to wild fish.

In other words, the natural world cannot be valued in our current mock-science religion of economics.

Other absurdities abound. Stripping the seas of wild fish adds to GDP, so it’s all good, right? Dismantling newly constructed buildings and building a replacement structure also adds to GDP, so it’s an excellent source of “growth.”

As Max-Neef points out, conventional economists have absolutely no understanding of poverty. If you need a sobering account of just how this abject willful ignorance works in the real world, I recommend reading The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good.

Gail Tverberg (among others) has shown how the existing economic model no longer makes sense of the actual economy we inhabit: The Economy Is Like a Circus.

As for rising wealth/income inequality–there is a cure for that, but it’s not in mainstream econ textbooks: The Only Thing, Historically, That’s Curbed Inequality: Catastrophe Plagues, revolutions, massive wars, collapsed states—these are what reliably reduce economic disparities.(via Arshad A.)

2. Universal Basic Income. As noted in yesterday’s essay, wages are no longer an adequate means of distributing the dwindling surplus of advanced economies. Wages as a share of GDP have been declining for decades, and only click up temporarily during massive speculative bubbles. Once these bubbles pop, which they inevitably do due to their instability and unsustainability, wage earners’ share of GDP plummets to a new low.

The mainstream is enthusing about the “solution”: Universal Basic Income (UBI). The solution to low pay and scarcity of middle-class paid work is to give everyone a basic income for doing nothing.

Delusional academics anticipate a flowering of creative talent akin to a new Renaissance as people are freed from work by robots and automation. But if we look at people already receiving the equivalent of “free money” UBI–disability– studies find recipients are simply watching more TV and YouTube videos and pursuing opioids, not writing poetry and composing concertos.

They are not volunteering in their community or engaging their communities in any positive fashion. What actually happens with UBI is recipients become isolated and miserable because UBI strips their lives of meaning, purpose and the need to contribute to a community.

The real purpose of UBI is to chain every household to the state, and drain all social relations between the isolated “consumer” and the state.

As tragic as the delusion of UBI is to individuals, it is unworkable financially because profits will fall as automation becomes commoditized, and the surplus available to distribute to every household will diminish.

I explain this at some length in my books Why Our Status Quo Failed and Is Beyond Reform and A Radically Beneficial World: Automation, Technology & Creating Jobs for All.

Much of what is passed off as “corporate profits” is accounting fraud and the monetization of what was once free. For example, all that customer labor: now that we pump our own gasoline, check and pack our own purchases, do our own banking–who’s skimming the output of our labor? Yup, the corporations.

Commoditization of software and tools + the Internet = loss of monopoly. This is a problem, for the core function of the state-cartel version of capitalism we inhabit is the state enforces a cartel-monopoly structure to guarantee steady surpluses it can tax for its own expansion.

As automation is commoditized, profits plummet as competition can no longer be controlled by cartels or even the state–just as Marx laid out.

Combine declining productivity and declining surplus (profits) (both for deeply structural reasons) and there cannot be enough money to fund UBI. Weirdly, proponents of UBI never even perform a back of the envelope calculation of cost and the source of all this free money (tax revenues and/or borrowing from future generations). Perhaps they intuit that such an exercise would reveal the bankruptcy of their magical thinking.

As we shall see below, the system can’t even support the entitlements it has already promised to hundreds of millions of people, never mind an additional universal entitlement.

(Note to UBI enthusiasts: there are limits on what robots and automation can and will do: they will only perform work that is highly profitable. Since most human work is not profitable (or even paid), the idea that robots and automation will free everyone from work is delusional fantasy. I explain all this in greater detail in A Radically Beneficial World.)

3. Medicare for all. I understand the desire for a single-payer healthcare system, and have published various proposals over the years for such a system.

The latest magical-thinking “solution” attracting widespread support (again, without any basis in actual numbers) is Medicare for all. The idea is: take a system (Medicare-Medicaid) that’s already bankrupting the government and the nation and expand it from 70 million people to 320 million people.

Uh, right.

Shall we consult reality before embracing delusional “solutions”? Here’s a chart of the rise of administrative costs in healthcare, public and private. Proponents of Medicare for All claim admin costs are lower in Medicare, but this conveniently overlooks the estimates that 40% of Medicare costs are paper-shuffling, needless or harmful tests, procedures, etc. and outright fraud.

We know a few things as fact. One is that the populations qualifying for Medicare and Medicaid (the elderly and low-income households) are expanding at a high and very predictable rate.

The other thing we know is that the Medicare-Medicaid costs are rising at a rate far above the growth rate of the economy that supports these programs (GDP), far above the growth rate of tax revenues and far above the growth rate of wages, which matters because payroll taxes fund Medicare.

It doesn’t take much to extend these lines and conclude Medicare-Medicaid alone will bankrupt the federal government and the nation. The problem is these programs are bloated by fraud, defensive medicine, predatory pricing for medications, and every other costly ill of our healthcare system.

Like every other centrally funded/regulated sector, Medicare-Medicaid is optimized for maximizing private-sector profits and increasing regulatory costs.This is one manifestation of the diminishing returns on the entire centralized-control model:

We’d all like “solutions” that don’t change anything, but when the system itself is the source of our problems, changing nothing guarantees collapse. As noted in the article linked above, various inequalities and asymmetries get resolved by collapse.

Clinging to magical-thinking fixes that change nothing on the fundamental level hastens collapse. In that sense, magical-thinking fixes are “solutions,” but not the sort their proponents imagined.

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

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  • Dr Mindbender

    WE can do Trillion Dollar Military and 350-MILLION DOLLAR BOMBS to KILL the POOR! Why not just make Trillion Dollar Bombs and EAT The POOR?

    Your models and charts are all for nothing, because you One GOD of a Fact. The US government is GOD, and if GOD does not have its way, the Earth becomes a Cinder. Nobody is going to fight the US government in any WAY, SHAPE or FORM … They will Only Worship their GOD. Only the American people by Revolt can bring downgrades to the US government and that will never happen. We will see Jesus First!

    The US balance sheet should have been “JUNKED” along time ago, but nobody will do it and risk losing their head. Also, you do not understand the problem of “why basic income is necessary,” it is because corporate America sent all the good paying Industrial Jobs to slave labor nations! Basic Income is just that, Basic, and does not Pay anyone enough to sit at home and watch TV, that`s silly. People on disability are sick and cannot work, that should be obvious!

    I know you want to whip the slaves and cannot stand the thought of ending poverty, but times are changing, and government/corps either make up for decimating labor or you kiss consumer driven economy goodbye!

    Funny, how you people never say a GD word about the 20-Trillion, or so, given to wall street! That could have paid for “years of basic income and universal healthcare.” Then, Increased Incomes and Consumption would pay for the expense, plus, No more Social Programs ( or a sever reduction) with Basic Income. If the American people were wise they would have demanded such long ago, so do not worry, it will never happen.

    And, like Pharaoh of Egypt Said, ” GET BACK TO WORK!”

    • Dr Mindbender

      Oh, and in closing, never forget, “Money is all Faith Based;”therefore, the US government is God and anyone or any nation that loses its faith has a terrible accident. I get tired of lame economic arguments that leave reality out of the equation. The US government is Violent and its Violence insures the US dollar reins Supreme! Do not worry about print, because the US government has a golden key to print money until GOD returns!

    • animalogic

      You’re spot on.
      This author is becoming tedious with his so-called facts & boundless negativity.
      On single payer: impossible, no money, system corrupt etc etc.
      Single payer requires an income source: a 1.5 % tax on ALL income would be a start. Perhaps a decrease in the defence/intelligence budget would help. Then, actually regulate the health system. Build up a public health space: ie public, nonprofit hospitals.
      None of this is economically impossible, merely politically impossible. I wish the author could distinguish between the two.

      • Dr Mindbender


        Yes, every “civilized” nation on the planet has universal healthcare. To even “dare” say that the us cannot do it is laughable! The US spends “Trillions” Blowing up third world nations, but cannot take care of its own people? That alone is reason for Revolution. Nevertheless, just trimming the gargantuan “Military Entitlement Programs” would pay for universal care for all. I am sorry, but a MOAB ( knock off of a WW-2 British: Tall Boy) is not worth 16-million ea., ( 350 million for the project) the taxpayers are being screwed again.

        Corporate Insurance is already subsidized, by the people, and it would be foolish to continue. Corporations raise the cost of healthcare. Simply, having one entity, the government, to set prices will save money. Corporations have been caught charging 1000% mark-up on product: This should be Illegal. Americans cannot afford Criminal Healthcare!

        The Author is confused with the economics that apply to the people ( slaves) and the economy that applies to the US government. The people have “limits” and are hindered by debt, the Government of the United States has no such problem. Nobody is going to downgrade the US government and risk their Job, Life or Nation. Simply, the US government can print money until Jesus Returns.

        The US government owns the planet, and anyone,who tries to discredit the accounting methods of the us government will be deemed a national security risk and dealt with harshly. This is why you never see a problem for USA. You never see any complaints when they print $20-Trillion ( more than Several Years of Universal Healthcare and Basic Income) and give it to Wall Street. However, the only time the us government is broke is when the people are in need.

        The people need to wise up to this reality and demand better! Otherwise, they will blow Trillions, annually, On Illegal War ( enough to pay for universal healthcare and basic income); but the anti-social groups who bemoan Universal Healthcare never complain about Foolish Trillion dollar Wars. Simply, they are Pathological and an Obstruction to Freedom. Corporate Healthcare is a tool to enslave people.

  • LeseMajeste

    Aided by Trump’s Bible Thumping VP Pence, who would love to decimate the Earth so that his version of Jesus would return.

    We live in the Garden of Paradise and all we do is sh*t all over the place and tear apart anything and everything that Nature provides.

  • Zartan

    Go Blow Another 100 Trillion On War, while people starve all over the World. Hopefully, God makes you Idiots use those Nuclear Weapons you Treasure so Much!

  • Tyler

    Charles should start every post by saying, “I’m a right-winger who believes in ultra-small government.”

    • Zartan

      And, how many GD Trillion have these Idiots blown on Illegal War costing the nation, Trillions More, while they cored out America sending all profitable Jobs to Slave Labor Nations. And, they have the nerve to say “Universal Healthcare is not affordable;” when GD CUBA provides excellent healthcare for its people and “anyone” who visits CUBA! Americans are known to go there for dental. Also, some of the 9/11 people went there for treatment. Cuba paid 100-percent, even for, non-citizens, because they know healthcare is a basic human right.

      You know, there is only one Solution for these Right Wingers … “Take them all out into the Middle of the Pacific Ocean, and Tie a Dead Bloody Tuna to their Neck, then Toss them overboard and encourage them: ” If you depend on Yourself and try, real hard, you just might make it to land.” This is what they all deserve.

      This would be doing GODS work.