Is Small government really a good thing? Is free market really effective?
It would make more sense to take on the real villains.
1. Medical Providers
They’re taking a lot more of our money than Medicare does. According to the Council for Affordable Health Insurance, medical administrative costs as a percentage of claims are about three times higher for private insurance than for Medicare. The U.S. Institute of Medicine reports that the for-profit system wastes $750 billion a year on waste, fraud, and inefficiency. As a percent of GDP, we spend $1.2 trillion more than the OECD average.
That’s an amount equal to the entire deficit wasted on private medical care companies. One out of every six dollars we earn goes to doctors, hospitals, drug companies, and insurance companies. All good reasons to redirect our hatred.
2. Retirement Brokers
Various reports have concluded that administrative costs for 401(k) plans are much higher than those for Social Security — up to twenty times more.
It would be difficult to find, or even imagine, any short-term-profit-based private insurer that is fully funded for the next 25 years. Social Security is. It works for all retirees while private plans work for a limited number of investors.
Government is often blamed for local budget shortfalls, but cities and towns around the country have been repeatedly victimized by a “bid-rigging” process that diverts billions of dollars — a few thousand at a time — from numerous unsuspecting communities to the accounts of a few big banks.
Individual homeowners, especially minorities, have also been victimized by the banks. Because of the housing crash and the corresponding decrease in home values, black households lost over half of their median wealth, and Hispanic households almost two-thirds.
There are scandals and scams galore: the privately run Mortgage Electronic Registration System (MERS) headed up the illegal foreclosure business; the banking association LIBOR was guilty of interest rate manipulation; and plenty of financial institutions have engaged in the subtle art of imposing hidden fees. Credit cards are loaded with “gray charges” like surprise subscriptions and auto-renewals that cost the average consumer $356 a year.
Yet we’re forced to keep paying. Shockingly, it has been estimated that 40% of every dollar we spend on goods and services goes to banks as interest.
Public banks, on the other hand, focus on the needs of communities and small businesses rather than on investors. The most well-known example is the Bank of North Dakota (BND), which has successfully worked with local banks throughout the state, promoting business growth through loans that a larger bank might be reluctant to make, while managing to turn a profit every year for the past 40 years.
4. Higher Education Operators
Outside of the banking industry, there may not be a more egregious example of public abuse than the expropriation of higher education by profit-seekers who have subjected underemployed young people to years of student loan obligations. The collection of outstanding student debt is managed in good part by big banks like JP Morgan and Citigroup.
In most countries tuition remains free or nominal, but in America, as noted by Noam Chomsky, the belief that education strengthens a country is giving way to a philosophy of paying for your own educational benefits. Meanwhile, the “corporatization of universities” has led to a dramatic increase in administrators while relatively expensive programs like nursing, engineering and computer science are being cut.
But the easy loans keep accruing interest long after college ends. With a hint of foreboding, the Consumer Financial Protection Bureau and Department of Education reported that the student loan debacle has been fueled by the same forces that led to the subprime mortgage collapse.
The “invisible hand” of the free market is unable, or unwilling, to satisfy the needs of society in all these areas. For that it is worthy of our contempt.