Why It's Worse Than the Great Depression and You Haven't Been Given a Raise

Here's some sick news: Real wage growth over the past decade hasn't just been below average. It isn't even just the lowest in post-war history. Real wage growth from 2001-2011 was actually slower than during the Great Depression decade of 1929-1939. That's scary. It's sad. It's pitiful.

There are all kinds of explanations for why you haven't been given a raise. Economic growth has been slow. A "flatter" world has increased competition. Those who used to have high-paying manufacturing jobs are now in low-paying service jobs.

But there's a lot more to it. Consider this conundrum: According to the Bureau of Labor Statistics, total employee compensation actually increased 3.58% per year last decade. That was about on par with the booming 1990s.

You can probably guess what's going on. When most people talk about pay, they focus on wages. But wages are just one part of the compensation equation. Growth in total compensation -- including paid time off, health insurance, and other perks -- can vary wildly from wages alone. The difference lately has been extreme: While compensation growth was fairly high over the past 10 years, essentially all of the gain came from employers paying a higher tab for workers' health insurance.

This isn't exactly breaking news, but the numbers might surprise you. Over the past decade, wages grew 0.76% per year; health insurance premiums paid by employers grew nearly 5% annually (both figures are adjusted for inflation). In 1990, employer-provided health insurance made up just less than 6% of workers' compensation. By 2000, it was about the same, at 5.9%. Today, it's 8.4% and growing virtually every month.

The numbers are actually worse than they look. According to the Kaiser Family Foundation, 69% of businesses offered workers health insurance in 2000. By 2009, that number had dropped to 60%. On average, employers are paying far more for their employees' health insurance than a decade ago -- but fewer employers are offering coverage at all. For those that do offer health insurance, costs are exploding off the charts.  

There are a couple implications here. First, and obviously, an economy where what little growth we have goes toward health costs shouldn't be viewed as anything less than a failure. I love you, UnitedHealth (NYSE: UNH  ) , but you aren't the growth America should be proud of. The economy won't pick up until consumers have more cash in their pockets and more confidence in their minds. That simply isn't going to happen as long as health insurance costs eat up all of compensation growth. Getting health-care costs under control isn't just vital to getting government budgets under control. It's vital to getting the private economy back on track.  

But the frustration doesn't stop there. The fact that most of us think that pay has been stagnant over the past decade when employers have actually been giving massive increases via health insurance costs highlights a fundamental flaw of our health-care system: Many of us are oblivious to the cost of medical care. Employers pick up so much of the total tab that millions of workers don't notice the full effect of rising costs. That's a huge impediment to fixing the system.

Ezra Klein of The Washington Post made a good analogy: "Imagine if people who touched a hot stove felt only a small fraction of the pain from the burn. That's pretty much what's happening in our health-care system. It hurts enough that we would prefer it to stop, but the urgency is lost."

What's the solution? All sorts of ideas exist for how to control health costs. Most are in some way tainted by political motives. One idea worth thinking about: A 2005 Purdue paper found that most workers would prefer a dollar wage increase to a dollar increase in employer-provided health insurance. Shifting compensation away from health premiums towards wages won't deliver a net raise, but it would make workers more aware of their health-care costs, and it might even end the perception of stagnant pay. Two steps in the right direction, you might say.

Check back every Tuesday and Friday for Morgan Housel's columns on finance and economics.

Fool contributor Morgan Housel doesn't own shares of any of the companies mentioned in this article. Follow him on Twitter @TMFHousel. The Motley Fool owns shares of UnitedHealth Group. Motley Fool newsletter services have recommended buying shares of and creating a diagonal call position in UnitedHealth Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On June 14, 2011, at 4:46 PM, TigerPack1 wrote:

    I think my rants over the last year and a half are starting to rub off on someone new (besides Bill Gross, George Soros and Jimmy Rogers)!

    Morgan, now wrap your mind around this fact. Inflation has been deliberately under-reporting for decades!

    In actuality, when you count inflation like we did in the 1970s, real wages are actually lower now than 1985!!!!! That's 25 years of going nowhere for the average, hard working American, under Reagan, Bush I, Clinton, Bush II, Obama and the two knuckleheads of Bernanke and Greenspan!

    -Tiger's Two Cents

  • Report this Comment On June 14, 2011, at 4:54 PM, daveandrae wrote:

    My Grandfather lived through the great depression. Back then people were buying groceries on nothing more than a promise note for Christ sake.

    Multiple families were forced to live in ONE house.

    I do not understand this site's constant need to "shock and awe" people with these ridiculous headlines. Honestly, I could not bring myself to read another word of your post.

    You really need to stop.

  • Report this Comment On June 14, 2011, at 4:56 PM, TigerPack1 wrote:

    Feel good economics of greater deficit spending and money printing each successive economic cycle have enriched those owning the assets using other people's capital as leverage, while raping and defaming regular savers and working class stiffs (with ultra-low bank yields and +6% annual inflation rates the last 40 years, compounded.)

    With 2% of the country now owning 50% of its assets, and the rest of the developing world benefiting greatly from free trade, the big losers have been the American middle class. Just like every other fiat currency experiment in history, the desire for free money is slowly destorying our society. When will it end!!!?????

  • Report this Comment On June 14, 2011, at 5:00 PM, TMFHousel wrote:

    daveandrae,

    I'm sorry if I offended you or your family. To be fair though, if you did bring yourself to read another word or two, I think the article makes a valid point about today's economy vs. the Great Depression in a non-sensational way: real wage growth was faster then than over the past decade.

    -Morgan

  • Report this Comment On June 14, 2011, at 5:26 PM, TheMotleyTimbear wrote:

    Nice UNH shoutout, hope there is a Housel bump in the price tomorrow!

  • Report this Comment On June 14, 2011, at 5:34 PM, TheDumbMoney wrote:

    Relatedly, our national net worth (of households and non-profits, not including wealth held by corporations), has essentially gone nowhere for six years, following the recent spike and dive:

    http://www.federalreserve.gov/releases/z1/current/z1r-5.pdf

  • Report this Comment On June 14, 2011, at 5:35 PM, PostScience wrote:

    Inflation isn't nearly high enough.

    The rich are hoarding cash. High inflation would create a disincentive to hoard, putting more money back to work in the economy.

    High inflation would ease debt burdens on the poor and middle classes.

    And high inflation would make it easier to pay off the national debt.

    4-5% yearly inflation would be a good thing. It certainly didn't kill us in the 80s.

  • Report this Comment On June 14, 2011, at 5:36 PM, 11x wrote:

    "My Grandfather lived through the great depression. Back then people were buying groceries on nothing more than a promise note for Christ sake. "

    Now they buy them on food stamps. 40 million Americans. A truly staggering number.

    No question, Great Depression lasted for decades and unemployment was routinely higher than 20%, compared to 9-10% today. But we didn't have such safety nets as we do today and people were forced to make do with what they had (my grandparents left Oklahoma during the dust bowl, were not welcome in California as farmers, and were forced to live under a tree).

  • Report this Comment On June 14, 2011, at 5:38 PM, banteng wrote:

    EXCELLENT CALL on the health insurance piece. As a nation we're ignorant to the true costs of health care, therefore we feel no real urgency to address its costs. Let's do away with employer subsidized insurance (or at least tax that as income) and we'll suddenly see people wake up and stop ignoring these rocketing costs.

  • Report this Comment On June 14, 2011, at 6:03 PM, Milligram46 wrote:

    daveandrae wrote:

    "My Grandfather lived through the great depression. Back then people were buying groceries on nothing more than a promise note for Christ sake."

    My mother and father both lived through the great depression. Back then my father was able to find work and my mother worked in the family candy shop (they were kids). They knew times were hard with hand me down clothes for my mom and ill fitting shoes for dad.

    Today we have food stamps, food banks that give good away for free, and soup kitchens in the 21st century have been replaced by the dollar menu at your favorite fast food restaurant.

    A whole dollar you say! Well adjusting for inflation, eight cents would buy you that McDonald's McDouble in 1930 dollars - well you'd actually probably get a healthier sandwich with more substance for eight cents in 1930. Brother, can you spare a dime was the old depression era song. Man could eat good on a dime.

    daveandrae wrote:

    "Multiple families were forced to live in ONE house."

    You're kidding right? Are you really trying to imply that we don't have that today??? We don't have adult children who are foreclosed upon living with parents, parents living with adult children, cousins and nephews, or two families living together to share costs and resources just to get by? You are aware that many of the exact same mortgage vehicles used in the 2000's through the 2008 collapse were the exact same tools of the trade used in the 1920s? Balloon payments, variable rates, interest only, don't worry about it, values are going up, its the roaring 20's!!!

    daveandrae wrote:

    "I do not understand this site's constant need to "shock and awe" people with these ridiculous headlines."

    What is ridiculous? That real wage growth is at its lowest level in a century? Ahem, how is that not true? Health benefits as an employee benefit didn't start until World War II. During the Great Depression the doc came to your house and you paid him directly, good ethical doctors on credit or promise to pay. But if you had a job you didn't have health insurance companies sucking your compensation increases away from you before you could even see them.

    I'm more than prepared to show you Depression grade poverty if you'd like - could happily take you to Nickelsville in Puget Sound to see what this economy has done.

    I've been lucky, when I look at my 2000 salary and my 2010 salary, adjusting for inflation my real cash leafy greeny money in my hand figure has kept up with inflation; and that's while getting world class benefits for most of that period. In my circle I don't know many who can claim the same.

  • Report this Comment On June 14, 2011, at 6:30 PM, 11x wrote:

    Why are healthcare costs going up?

    We can't compare what we spent on healthcare costs 30 or 40 years ago to what we spend today and see that it's higher, therefore suggesting something is wrong. We have come a long ways with medical treatments, instruments, and drugs that cost money. Stuff we didn't have 30 years ago to spend money on.

    What else is making healthcare costs so high?

  • Report this Comment On June 14, 2011, at 6:51 PM, Mozzman wrote:

    "What else is making healthcare costs so high?"

    Lawyers sueing doctors.

  • Report this Comment On June 14, 2011, at 7:00 PM, dbjella wrote:

    Morgan -

    I think the introduction of high deductible health plans will help lower costs; at least, it makes me think alot more about spending my money on healthcare.

    But I can't say those savings won't get offset by increased gov't spending (more money in the system) and increase demand of healthcare needs by an aging population.

    I agree that healthcare costs are significant portion of our spending today.

  • Report this Comment On June 14, 2011, at 7:04 PM, sheldonross wrote:

    Part of the problem is all these people crying "Healthcare is a right!" As if all the medical equipment, doctor training, time spent helping them doesn't cost anything.

    People expect better healthcare then in the past, but boy do they sure not want to pay for it.

  • Report this Comment On June 14, 2011, at 7:27 PM, stan8331 wrote:

    The problem with trying to treat healthcare like the rest of the economy is if we make heath costs more directly payable by consumers, many people will economize by delaying or avoiding treatment. If someone avoids spending money on a car and the engine locks up due to lack of oil, the consequences are vastly different than those encountered when someone defers medical care and ends up dying prematurely and/or requiring ultra-expensive medical intervention to keep them alive.

    We must find a way to dramatically lower the percentage of GDP we spend on healthcare. If we don't, the country will eventually go bankrupt. However, buying into schemes that only shift the sky-high cost of healthcare from government to the private sector could leave us in an even worse place as a society than that which we currently occupy. Pushing people to pinch pennies on healthcare can be just as harmful as allowing them to be oblivious to the cost.

  • Report this Comment On June 14, 2011, at 8:07 PM, TMFRhino wrote:

    Thanks for the article Morgan. I was looking at productivity growth rates between the US and other developed countries the other day (The US is far, far, ahead of Japan, Britain, France, Germany and Italy over the last decade) and trying to rectify it with wage stagnation... Total compensation goes a long way to explaining it.

    -Eric

  • Report this Comment On June 14, 2011, at 8:38 PM, FutureMonkey wrote:

    Thanks Morgan. This one couples nicely with your earlier article on why we don't feel rich.

    As an employer and employee of my own company I see the total cost of compensation going higher and higher while my staff feels less and less compensated because they never see the invisible costs -- insurance, unemployment, payroll taxes, payroll fees. I bet if you polled most salaried and hourly employees less than 75% realize that their employers pay an equal amount to their FICA deduction, etc in payroll taxes on top of what is withheld. Now we get a lot back in the form of social insurance and other benefits for that money, so I'm not complaining. However it is hard for somebody getting paid a $15/hr wage to realize that the cost to the employer is closer to $18 and hour, just on payroll taxes alone and probably closer to $20/hr total compensation -- monetizing vacation, sick leave, and other indirect and direct costs.

  • Report this Comment On June 14, 2011, at 8:52 PM, FutureMonkey wrote:

    My health care solution is a cradle to medicare "catastrophic" health care policy issued at birth along side your SSN. Reasonable monthly payments or tax witholdings coupled with contributions from for profit medical companies, pharmaceutical companies, and insurers wanting to do business in our market. With 100% enrollment the risk in the pool is reduced significantly so cost of this type of coverage is probably fairly cheap. This frees up private insurers to provide basic health care up to that "catastrophic level" where the gov't coverage starts. Slicing out the very expensive payouts from basic coverage would reduce the premium to something much more affordable for most families and may reduce the need for insurance coverage entirely for people that can self-insure or afford out of pocket for "healthy" routine preventative care and minor procedures. Private insurance could also sell private supplemental policies that provide benefits in addition to the catastrophic coverage (private rooms, etc). These supplemental policies are likely to be highly profitable and totally voluntary or employment perks. Plus this catastrophic coverage is portable wherever you live and whatever your employement situation is you never have to worry about being dropped. Was thinking about this while reading the wiki on Switzerland's health care system. Seemed reasonable to me.

    FM

  • Report this Comment On June 14, 2011, at 10:02 PM, whereaminow wrote:

    "A "flatter" world has increased competition."

    Morgan, increased competition raises wages. Lack of competition keeps wages low.

    David in Qatar

  • Report this Comment On June 14, 2011, at 10:16 PM, TMFHousel wrote:

    ^ Competition among workers.

  • Report this Comment On June 14, 2011, at 10:16 PM, TigerPack1 wrote:

    Here is an example of how nonsensical the adjustments to CPI are:

    I like to use the example of eggs. Today we produce truly crappy eggs for the masses at industrial chicken farms. The birds are full chemicals and artificial hormones, the feed is pumped and enriched for quick bird/egg growth, and the process for boxing and transportation is rushed and sub-standard vs. 50 or 100 years ago.

    The CPI counts today's egg as a quality "improvement" to the old fashioned way of growing them organically in the back chicken pen on the farm!

    Not only are the eggs less tasty and satisfying, but they may help contribute to current and future health care expenses, that are NOT counted in the price of an egg for the CPI.

    In terms of apples vs. oranges, the 10-15 fold rise in egg prices as measured by the CPI the last 80 years is quite inaccurate. If you compare using an apples vs. apples analogy (organic eggs today vs. organic eggs in 1932), their prices are more like 20-30 times the Depression Era price!!!!

    When you count inflation accurately, our economy (including "real" growth, both wage and production) are a complete sham! The government has been lying to America for decades about economic growth that has honestly not existed since the 1960s. WE have been on a downward trajectory since we left the gold standard in 1970-1972, and our government has just gotten more creative in its reporting of reality.

  • Report this Comment On June 14, 2011, at 10:30 PM, egabriellemoranU wrote:

    What a fabulously simple (partial) solution in shifting compensation from health care coverage to see-it-on-your-paycheck wage increases. You know what they say: people respond to incentives. Maybe individuals feeling the pain of skyrocketing health care costs is just what we need to get some civic engagement on the whole health care issue. One thing is for sure - keeping the system the way it is currently isn't solving the problem.

    Amid wage stagnation, at least there's one reprieve...my morning Starbucks is still just $1.50. Thanks, SBUX!

  • Report this Comment On June 14, 2011, at 10:33 PM, daveandrae wrote:

    Morgan-

    Thank you for the apology. I appreciate it. And no, I did not read the article. For it is painfully obvious to me that we are not suffering nearly to the degree of our grandparents. Need I remind you how racially segregated this country was in 1929-1932?

    Neither you, I, nor John Doe on this forum has ANY idea what it was like to be a man of color, in the south, during the 1929-1932 period.

    None whatsoever.

    The simple fact that you and I are corresponding via the internet on personal computers in homes that have electricity and air conditioning makes your argument sound even more absurd in my opinion.

    50% of the world's population lives on two DOLLARS a day, would cut off their right arm to live here in "poverty," and all we know how to do in the U.S.A. is whine about the health care system.

  • Report this Comment On June 15, 2011, at 1:43 AM, ershler wrote:

    No one has brought up the point other countries have much higher standards (for the average person) of medical care but spend a fraction of their GDP compared to the USA.

  • Report this Comment On June 15, 2011, at 2:36 AM, Ulv wrote:

    In Norway we have a national health system, which includes every body. If you are sick or need medicine you pay a fixed fee per visit / prescription and The State pays the rest. This prevents people misusing the system.

    The big saver however is that we do not have any private insurance companies making fortunes without actually contributing directly to peoples health. We don't need them. I wonder what the total cost is for the whole health insurance industry in U.S.A

  • Report this Comment On June 15, 2011, at 7:09 AM, JCashForever wrote:

    With all due respect, the editors of Fool.com have got to do a better job of linking the headline with the article.

    This is the second time in a week that I've seen a total disconnect between the two.

    The headline is great, but an article on the impact of rising health care costs is not what the headline promised.

    Catchy headlines might increase readership in the short-term, but a bait-and-switch approach is not a way to retain loyal readers over the long haul.

  • Report this Comment On June 15, 2011, at 7:55 AM, Darwood11 wrote:

    @Whereaminow, "Morgan, increased competition raises wages." That's true, if you are in a developing nation with low wages and high exports, such as China. Wages there are rising.

    Morgan, "The economy won't pick up until consumers have more cash in their pockets and more confidence in their minds." I see deeper problems and I think you do also. With high energy costs, stagnant wages and hidden (stealth) taxes imposed by a declining dollar, it will be difficult for many to have a surplus of "cash in their pockets" for a long time.

    This economy ran on debt and the health care and housing industries. Local taxes are increasing. Public pensions are underfunded, the rising costs of essentials such as energy will continue to sap the purchasing power of the consumer.

    Confidence isn't created by the rise in the S&P 500 index. It's created when personal financial plans indicate a future possibility and a solution to individual predicaments. At present, according to numerous financial studies, a significant number of Americans lack basic financial skills. They are unable to formulate a simple budget. They have insufficient savings and no retirement plan. Many others have grossly underfunded retirement accounts. Since this country has a high literacy rate, I can assume most Americans can read the headlines. They have some understanding that their financial future really is in jeopardy and coupled with their current financial distress, they have some awareness of the magnitude of the problem.

    Currently, many people are attempting to get their fiscal house in order. The government has not helped people to do that. I think that is the single greatest failure of the administrations over the past 25 years.

    I think this article at Wharton sums up the current problem well.

    http://knowledge.wharton.upenn.edu/article.cfm?articleid=279...

    There is an article posted at the Fool; it's entitled "Hey, Who's Flying This Thing?" I read the title and thought the author was talking about the U.S. Silly me! It's about RPV's.

  • Report this Comment On June 15, 2011, at 8:46 AM, cybdiver wrote:

    Why it's worse, the sky is falling, the earth is cracking and scorched. Doom is coming. How easy it is to write about the bad events going on and speculate why. Blind faith in government to fix things is foolish since the economy is not manipulated by government but by a hand full of extreemly weathly. The price of fuel is going up for no reason except they want the black guy out of the white house. Through destruction of America with crazy fuel prices we can kill the economy and make it almost impossible for the Black guy to get re-elected. If you are still relying on on a pay raise to succed then you are living in the dark ages. If you are not out hustling for your super then you become collateral damage. Investing alone will not get you out from under, it could make things worse. How do you compete when certain individuals can cause fluctuations in the market just by saying or doing. If I buy stock no one notices if Gates buys stock the price jumps as the sheep get on the band wagon. Get out from under, steer your own ship.

    I should write a book about it.

  • Report this Comment On June 15, 2011, at 8:50 AM, VerdeDeLeon82 wrote:

    I think the bottom line is very simple to understand. Big Corporations are the ones that drive the economy. Consumers are just the passenger. The economy will not get better until consumers, human beings are allowed to drive.... Given the fact these monsterous corporations are the employers, and determine market flow they could change things but they don't want things to change. Its a war on the middle class and we are weaponless....

  • Report this Comment On June 15, 2011, at 9:07 AM, Darwood11 wrote:

    @Ulv, I agree that the problem is the method of disbursement of health care in the U.S.

    Costs continue to rise because everyone in the system profits, and there is no commitment to good health or good results.

    If I take my car to the mechanic, I get an estimate which I sign, and then a warranty, and there are remedies if he doesn't fulfill his part of the agreement.

    If I go to the hospital or to a doctor, I will be given treatment if I have insurance. but I will not be told what it will cost, I will not be given any assurances about the outcome. I will be required to sign a waiver in which I state the doctor and the hospital have not responsibility!

    While undergoing treatment, I may get MRSA or some other terrible affliction. If I do, I will then pay again and again to overcome that health care induced sickness.

    The U.S. health care system is entirely a "for profit" system and is part of the politician inspired and supported "service economy." It, like insurance and finance provides a lot of PAC money to politicians in the U.S. So the general public suffers.

    There is no commitment on the part of government to reduce the costs of health care to the public or to improve it. Obamacare transfers more of these costs to taxpayers. Taxing the majority works when a minority benefits. When the majority expects a handout, then this transfer system breaks down because there are insufficient people paying who are not recipients. The downward spiral continues.

    As someone who is an entrepreneur, I, for decades had minimal health insurance for myself which had very high deductible. That gave me an incentive to be healthy and to live a healthy lifestyle. Ditto for my family, including children. The first $5,000 each year came out of my pocket. This also had a secondary benefit. I had to save to build up that deductible, which meant I had to forego certain things to do that. It has worked very well, and I am generally much healthier than most of the people I know who are my age. Even with all the stress of my life! Exercise and good diet played a big part in that.

    I think I have gotten the better part of the deal. I prefer that to drugs and lousy health care.

  • Report this Comment On June 15, 2011, at 9:25 AM, Gator626 wrote:

    Doesn't the 2.5% margin in the health insurance industry make the greedy for-profit private insurer argument a little moot?

  • Report this Comment On June 15, 2011, at 9:32 AM, Gator626 wrote:

    Mr. Housel wrote an article a few months ago explaining the high cost of health care in this country - Medicare not acting as a price setter. Medicare in its current form pays for any and every procedure/medication at any price. When Medicare is willing to pay said price, health care providers can charge private insurers the same amount, in turn making your private insurance premiums as expensive as they are, even on a 2.5% profit margin like I previously mentioned.

    If you think the U.S. going on a European-like Nationalized health coverage program will fix that, don't expect your paycheck to change, as the cost of employee compensation will shift from private insurance premiums to additional FICA taxes, all while operating under a government run program even more inefficient than the private insurers.

  • Report this Comment On June 15, 2011, at 9:56 AM, miguelito6704 wrote:

    The problem is simple: 80 years ago, people did not spend as high a percentage of their incomes on quirks like cellphones and cable TV, which are staples in the modern household. We are spoiled when we spend $50 or more for a basic pair of jeans. We have to get over and read instead of watching that TV. And Heaven forbid we should learn a skill - saving money. We are spoiled rotten; this is our problem and we'd better get over it fast.

  • Report this Comment On June 15, 2011, at 10:15 AM, Gorm wrote:

    Terrific perspective! Bottom line is disposable income and purchasing value for that income.

    Americans are mired in debt, besides facing negative equity or at best diminished equity, an uncertain future.

    Government interference is a root cause. Look at our leadership's long term neglect on pressing issues like energy independence, immigration, unaffordable entitlements, slipping educational performance, lost manufacturing industries and jobs, etc.

    Now look at what the government has done with medical care. Medicare KNOWS half its expense goes to treating those in the last year of life. YET families still dictate ill-advised procedures just to extend life. It is easy to be noble when spending someone else's money. When Medicare pays roughly 36% of the bill, we all know someone is picking up the tab.

    Our stupid leadership extends a drug bill, Part D, enabling the ailing elderly to hang on longer (often in nursing homes) at government expense, thereby exacerbating our problems with Social Security, Medicare and Medicaid. Think about it!

    Now Obamacare eliminates maximum policy limits, reduces the donut hole, saddles business to choose program elimination or an unaffordable cost (Obama's friends are garnering exceptions for a reason), setting the stage for socialized medicine.

    Our standard of living is doomed to fall as the drag on our economy is surging as the government becomes increasingly more dominant.

    Gorm

  • Report this Comment On June 15, 2011, at 10:56 AM, noryakerson wrote:

    Enlightening article. I'm always looking for non-sensational reporting to help me understand the condition of our economy. There is so much biased opinion out there, that it's hard to no where to look for the truth. What you have written here feels right to me on a gut level.

  • Report this Comment On June 15, 2011, at 11:01 AM, BruceHBi wrote:

    As a small aside, it seems to me that more co-pays and higher deductables would require the insureds to have a better understanding of the real costs of healthcare today. No matter who you blame for those higher costs, a more universal grasp of what the costs are would aid everyone in assessing what they need and what they are entitled to receive.

  • Report this Comment On June 15, 2011, at 11:02 AM, Bobbyk492000 wrote:

    The political right and left have not addressed the real issues impacting rising health care costs. As a consequence we now have Obama Care which has been shoved down our throats. Trial lawyers do not want malpractice limits imposed, and hospitals are obligated to treat everyone regardless of their insurance situation or immigration status. The net, net, is the destruction of the middle class who can not keep up with inflation. Nearly 45% of the population is now on some form of assistance from state or federal government. The great American experiment is dying.

  • Report this Comment On June 15, 2011, at 11:11 AM, TMFHousel wrote:

    <<With all due respect, the editors of Fool.com have got to do a better job of linking the headline with the article.This is the second time in a week that I've seen a total disconnect between the two. The headline is great, but an article on the impact of rising health care costs is not what the headline promised.>>

    How is the headline misleading or not backed up by the article? The headline is two parts:

    "Why it's worse than the Great Depression ..." Because real wage growth was slower over the past decade than during the Great Depression. This was mentioned in the first paragraph.

    "... and why you haven't been giving a raise." Because health care costs have consumed compensation growth. This was the thrust of the article.

  • Report this Comment On June 15, 2011, at 11:11 AM, rhutmacher wrote:

    @postscience

    High inflation would raise interest rates, which would increase the incentive to keep money in the bank instead of spend it.

  • Report this Comment On June 15, 2011, at 11:22 AM, TMFHousel wrote:

    <<The problem is simple: 80 years ago, people did not spend as high a percentage of their incomes on quirks like cellphones and cable TV, which are staples in the modern household. >>

    This is one the biggest misconceptions about consumer spending. The average American spends a far lower percentage of their income on almost all major spending categories today than in past decades, save for three areas: health care, education, and housing.

  • Report this Comment On June 15, 2011, at 11:35 AM, TheDumbMoney wrote:

    While I don't care about the headline one way or the other, the issue is the contraction, "it's."

    Whether deliberately or not, as used, the contraction is very ambiguous. That is because the headline itself does not refer to something specific like healthcare at all, so a reasonable inference is that the word/contraction "it's" in the headline is meant to refer to the economy generally, or to our crisis generally.

    That inference is the source of much irritation, and of all of the above comments generally comparing how people live now to how people were living under trees and six to a home during the Depression, etc., since we are not net worse off and unemployment is lower now, etc.

    Given that the headline on Foxnews, as I write this, is "WORSE THAN THE GREAT DEPRESSION, HOUSING CRASH HITS HISTORIC LEVEL...'NO RECOVERY IN SIGHT," maybe we should lay off Morgan a bit about a mildly ambiguous use of the contraction, "it's."

  • Report this Comment On June 15, 2011, at 12:54 PM, Nahzuul wrote:

    That raise you could have gotten has gone to rising healthcare costs. The healthcare system in the United States is an economic cancer. It needs to be fixed. We pay more and get less for healthcare than any other industrialized country. This needs to be changed or we will no longer be a first rate economy.

  • Report this Comment On June 15, 2011, at 1:36 PM, Pushpaw wrote:

    Excellent point ershler:

    "No one has brought up the point other countries have much higher standards (for the average person) of medical care but spend a fraction of their GDP compared to the USA."

    Being a Canadian, I am continually shocked by the healthcare situation in the US. Canada's system is far from perfect (we famously have a problem with wait times in hospitals in certain provinces), but per capita, in 2009 (as an example), we spent about half of what Americans do on healthcare, and every Canadian is covered for just about every medical issue.

    Americans not only pay more (both collectively as a society and as individuals), but they get less and have to haggle with insurance companies to get reimbursed. I just don't get why America can't do this more efficiently and put the health of its citizens first, above profit. And clearly, from Morgan's article, the current US health care system is a major force in eroding the country's economy.

    Can someone explain what's so wrong with socialized health care, when it actually seems both more economically viable and humane? I'm willing to bet that the main problem with it is basically the name: "Socialized." It just means "social" -- as in, for the benefit of the many, at a lower cost to each, rather than for the benefit of the few, at a high cost to the many. It doesn't mean anti-american, or anti-freedom, or communist or any of that stuff.

    Just my Canadian two-cents (which, consequently, is becomming worth more than US two-cents, given the strength of our dollar lately).

  • Report this Comment On June 15, 2011, at 1:38 PM, Jazzenjohn1 wrote:

    I think we'd get a handle on the health care issue really quick if we had employers give us what they spend on health care and let us pay for it ourselves. All of a sudden we'd be looking for a high deductible, or a limited coverage plan. We'd pay attention to generics, We'd care if someone was double covered or didn't belong on a policy etc. etc.

    How many people would take a plan that was $200 less a month if you gave up the right to sue for more that $250,000 in pain and suffering?

    How many people would take a plan that saved another $200 a month if you wouldn't be covered for any treatment that cost more than a million dollars but had less than a 5% survival rate?

    Who would pay full price for a drug that you could get in Canada for 1/6 the price?

    All of a sudden these would be relevant questions that would effect peoples choices, and they would make decisions on them sooner rather than later, or never as things are now.

  • Report this Comment On June 15, 2011, at 2:05 PM, 11x wrote:

    Canadians will spend less on drugs since they piggyback off the EU which controls prices drug companies can charge for prescriptions. The USA does not have such price controls. In this way, USA subsidizes the rest of the world for cost of prescription drugs. Unless you feel they are gouging the US consumer and USA should have price controls as well, which can have very serious implications on future drug research.

  • Report this Comment On June 15, 2011, at 2:28 PM, Canture wrote:

    What most Americans are not letting themselves accept is that, in the USA and virtually everywhere else in the World, the economic "system" itself is the ROOT cause of the problems facing the USA and the rest of the World.

    We live in an economic "system" that became decadent since WW1 and has been on a general slow burning decay - with an inescapable series of "booms" and "bursts".

    Currently, the economic "system" has reached an impasse - with NO way out, except if we take effective actions to CHANGE the economic "system" to a viable/popular alternative. An alternative that was NEVER truly realised any where in the World.

    For example, Americans are right NOW seeing concrete proof WITHIN the USA that the economic "system" is decaying with - rising unemployment, increasing foreclosure, increasing homelessness (ironically, along with millions of empty homes), expanding "tent/trailer cities", more people at or approaching the "poverty line", increasing violence and drug abuse (along with the relative expanding prison population), a general freeze or lowering of wages (while you are made to work longer and harder), rising cost of living, crumbling infrastructure, crumbling schools (with significant level of functional illiteracy), worsening environmental issues, etc.

  • Report this Comment On June 15, 2011, at 2:30 PM, banteng wrote:

    Pushpaw:

    "Can someone explain what's so wrong with socialized health care, when it actually seems both more economically viable and humane? I'm willing to bet that the main problem with it is basically the name: "Socialized." It just means "social" -- as in, for the benefit of the many, at a lower cost to each, rather than for the benefit of the few, at a high cost to the many. It doesn't mean anti-american, or anti-freedom, or communist or any of that stuff."

    You're getting close. We don't have socialized police, fire departments or schools so socialized health care really has no place in our country. Oh wait...

    But what I think is the bigger issue is how this would impact unemployment and the markets. At the end of the day the trillions in market capitalization that would disappear if we adopted a socialized health system would destroy this economy. Let's treat employer paid health care premiums as the income it is and give Americans more options in the market and then go from there. A one shot solution is not feasible and the desire for Washington to come up with one is a waste of everyone's energy and resources.

  • Report this Comment On June 15, 2011, at 3:06 PM, chaz572 wrote:

    Many great posts here, but there's one thought on the increase in health care I've barely seen hinted at yet....

    In some sense, we are the victim of our own success in research and innovation. The extent of what medical science can do for us has been not only increasing, but accelerating for decades. I'd dare say that the range of tests and treatments available today is ten times what was available 20 years ago, and 100 times what was available during the Great Depression. It used to be common for a doctor to dance around the conclusion, "I don't really know what's causing your condition, and I don't have a treatment well-suited to it, but we'll try my best hunch and see if it helps your symptoms." As modern medical science has advanced, that is happening less and less. We can diagnose ever more. We have ever more targeted treatments. Doctors can do more.

    Which sounds great. Except that we all believe that ourselves and our loved ones should have everything done for them that can be done. Any why not? Anything less would seem cruel and inhuman. No feeling person could fault anyone for having that expectation. But what "everything that can be done" amounts to is ten times what it amounted to 20 years ago. It's 100 times what it amounted to during the Great Depression.

    Even during the Great Depression, "everything that can be done" was, in the grand scheme of things, downright cheap. 20 years ago, "everything that can be done" was a stretch, but mostly affordable with careful budgeting. Today it's completely beyond our means. And because insurance hides that fact, the vast majority of Americans don't realize it.

    Medical science is only going to get better, and I'd wager that the pace it improves will continue to accelerate for some time to come. Hence, no solution to the cost of health care can succeed without the public becoming acutely aware that "everything that can be done" is the road to bankruptcy -- it's no longer affordable for us collectively as a nation any more than it is for each of us individually were we paying out of our pockets. We have to grapple with the new reality that choices will have to be made on a regular basis -- "can be done" cannot anymore equal "should be expected to be done".

    We will solve the spiraling cost of healthcare only when we stop sweeping those tough, gut-wrenching choices under the rug, and have a national debate about how to make them in the most fair and socially acceptable way.

    Personally, I feel that those choices being made quietly and opaquely in the backrooms of insurance corporations that have a profit incentive is far from the most fair and socially acceptable manner possible.

  • Report this Comment On June 15, 2011, at 3:59 PM, Pushpaw wrote:

    banteng:

    First, thanks for the response.

    I agree with you: it would cause a lot of upheaval in the American market--and by extension the global market. This is one the difficulties of "the market"--to think about the market demands a short-term perspective. It seems to me that specific market interests will always subvert long-term plans that upset the market in the short-term. However, if socialised health care improved America's situation overall (say in the next decade or two), including by adding more cash to the average joe's bank account and reducing costs to employers, wouldn't it be a better option?

    But how to get enact a sensible long-term plan in the face of intense opposition based in short-term thinking (aka greed). I'm not sure, but I think the answer is one of two options: a) it's impossible to enact such a long-term plan or b) it happens one tiny step at a time.

  • Report this Comment On June 15, 2011, at 4:01 PM, Canture wrote:

    Again, the ROOT cause of virtually all the major issues we face is the economic "system" itself.

    It is a "system" in which goods and services are produced MAINLY for profits. Meeting the needs of the mass of people in society is only incidental in the pursuit of profits.

    The solution is to CHANGE the economic "system" to a viable/popular alternative. An alternative NEVER truly realised anywhere in the World, and one that addresses the ROOT cause of rising unemployment, over-population, racism, increasing homelessness, expanding “tent/trailer cities”, expanding slums, growing poverty, worsening environmental issues, wars (along with expanding military budgets), etc.

    An alternative in which people come to know that RATIONAL selfishness (self interest) is really in harmony with nature and that it is the EXCESSES (of any kind) that can potentially bring harm to self and to others.

    The "Wage-labour" system initially was a form of progress (especially as it moved the World from the "backward" feudalist stage). But, from since WW1 the system became decadent and has been on a "slow burning" decay (with it's inescapable series of "booms" and "bursts").

    Currently, the economic "system" in the USA (and the World as a whole) is more of a HINDRANCE to human progress and is potentially a threat to human existence (to all life).

    We must take effective actions to change the economic "system" to a viable/popular alternative before it is to late (and it might already be too late).

  • Report this Comment On June 16, 2011, at 10:09 AM, lowlypeon wrote:

    If the true cost of American style, top-of-the-line, cutting edge, laser boo-boo repair and mad chemistry medicine was passed on to the end user, then (as was mentioned earlier) poor people would likely delay medical care in order to satisfy other financial obligations (like dinner, or gas in the car to go to work). Not only poor people, but what one might for lack of a better term call the middle class.

    I work in a major medical center and have met some of the people who have been shuffled into HSA plans by United Health Care. For a $550 ER copay, and an eventual undetermined bill for non-covered services, a person begins to behave as any sane person does in an insane situation. That person with the mangled, clearly fractured arm begins to ask random housekeepers and receptionists, "Do you think this is really that bad? Because I can't afford this right now. Maybe I should just go home and put some ice on it. I have some fuzzy Tylenol in my purse..."

    Meanwhile, as broken arm lady waits an ungodly amount of time in the lobby, the triage nurse has to sort through fifty or so state-insurance or self-pay "can I get some financial assistance" patients who want pregnancy tests or STD checks or antibiotics for viral infections or socks. Yes socks. And sandwiches and a soda, because they have to wait and they're hungry and they need the two dollars they brought with them to get their sister's friend's car out of the parking garage.

    Back to my point. As a financial entity, UHC is great. Plenty of return, stable, not in a field that's going to disappear anytime soon. But when it comes down to out-of-pocket expense, some folks need cancer drugs. And those cancer drugs cost $10,000 a dose. I'm sorry Billy, Grandma has to write her will and die now because she got wiped out on her stocks and the equity in her house is gone in the housing crunch. And she can't qualify for Medicare and Medicaid because she was a good citizen and saved all her life. Her savings just aren't enough for her to continue to go to the doctor, and pay for treatment for a disease we are just beginning to be able to predict. (Thanks mostly to stupid amounts of money going to research. Research which will likely eventually be used to thin out "bad financial risks" (genetically predisposed to catastrophic expensive illnesses) from the patient pool of major insurance companies, which indirectly fund said research.)

    It is overwhelming to try to perceive an "insured patient pool" as one after another individuals, but for each of those underinsured or underfunded patients, there is an urgent life and limb need for the absolute best healthcare available. Period. Cost not a consideration until after the crisis has past, and most people don't have enough knowledge of medicine to say when the crisis part of their care is over.

    TL;DR: the total cost to save someone's life from a heart attack is about half a million dollars, for the time in the ER and the heart cath lab and a week as an inpatient. Go have a salad and take a walk, everybody, five days a week. It's cheaper in the long run.

  • Report this Comment On June 16, 2011, at 12:34 PM, FelixHoenikker wrote:

    One way to reduce the cost of heathcare is to bring out the death panels.

    Have a sore throat - just die.

    Need a bypass - should have thought about that before you ate that fatty hamburger.

    Oh save us Sarah!

    This message is brought to you by a fee for service health care system near you.

  • Report this Comment On June 16, 2011, at 1:25 PM, David369 wrote:

    Wow, one week as inpatient who had a heart attack costs about 500,000. So a little more than 70,000 per day. Think about it. Who is getting the bulk of the money? Hospitals or doctors? Or both? It would be interesting to see if their pay/income has gone up or down in the past few years.

  • Report this Comment On June 16, 2011, at 2:04 PM, AlanWest wrote:

    Like no other time in history, the whole world is now embroiled in chaos and catastrophe most similar to a world war. We have been basically stripped of our rights, options and opportunities like refugees of an occupied defeated country.

    People need to gather their family and friends together and begin caching food, water and other supplies in order to outlast the economic and environmental collapse that will play out slowly over the next couple years.

    http://www.familysurvivalcenter.com/supplies.htm

  • Report this Comment On June 16, 2011, at 5:56 PM, buffalonate wrote:

    This was a really stupid article. If you had ever read a history book you would know this article is garbage. We were still a developing nation during the 1930's so the more advanced an economy gets the higher the wages will get on average. Now we are one of the richest countries in the world so increasing the average wages is very difficult. The fact that you aren't able to comprehend this is scary. Find another career because you suck at this one.

  • Report this Comment On June 16, 2011, at 6:28 PM, TMFHousel wrote:

    ^ The US became the world's largest economy in 1898.

    PS. You need a hug.

  • Report this Comment On June 16, 2011, at 8:44 PM, fosket2 wrote:

    Article is only somewhat accurate. For the top 2% of wage earners, the previous decade has seen the largest wage increases in history. Corporate CEO pay has achieved historic proportions. So what can we do? Cut their taxes to boot! Brilliant!

  • Report this Comment On June 16, 2011, at 8:46 PM, TMFHousel wrote:

    ^ Fair point.

  • Report this Comment On June 17, 2011, at 4:03 AM, Sunny7039 wrote:

    "Real wage growth over the past decade hasn't just been below average. It isn't even just the lowest in post-war history. Real wage growth from 2001-2011 was actually slower than during the Great Depression decade of 1929-1939."

    -- Please provide a link to the original research that supports this statement.

    Oh, it's not that I doubt it. Hardly! I find it surprising that there was any "real wage growth" at all -- considering how our "core rate of inflation" excludes stuff like energy and food (but includes housing, which has been in steep decline). If you included energy and everything that depends on it for production and transport, would the bottom 90% of wage earners see any increase at all, or would there be a decrease in terms of real dollars? If I had to bet . . .

    Anyway. I simply would like a link to peer-reviewed research to read and circulate.

    Thanks.

  • Report this Comment On June 17, 2011, at 8:18 AM, MrsCathyGF wrote:

    Morgan is right. Funding of health care costs should primarily originate from the recipient of the health care. I like the idea of Health Savings Accounts where the account acts like an asset owned by the individual,is transferable,is or can be managed by the individual, and funded in whole or part by the individual. Certainly, for those who have less cashflow, no doubt a HSA that provides various levels can be designed.

  • Report this Comment On June 17, 2011, at 1:28 PM, ThePiperDown wrote:

    "What else is making healthcare costs so high?"

    Too much profit and protection... and I don't mean what is shown on the bottom line, I mean the vast amount of bureaucracy, hospital suites, marble-clad foyers, PR and advertising firms pitching viagra, REITs running giant medical offices, etc.

    Every doctor I know is making $200K+ a year, and many are making $600K or more. Meanwhile, god forbid you suggest that your local pharmacist write a simple script for allergy nose spray, or antibiotics for strep. No, you'd better make an appointment or see a nose/throat specialist to get those meds. And see them every six months for the rest of your life or they'll stop writing scripts for your allergy meds.

    A prescription my wife gets for ulcerative colitis costs $1,000 a month ($25 with our copay!) in the U.S., but costs $90 a month in Canada. How can that possibly be right? Are we subsidizing Canada, or are we subsidizing the corporations? It's not like they're NOT selling it in Canada.

    The associations that own the doctors, prescriptions, hospitals, etc. are in charge, and the moats and the barriers to entry they throw up chew up a tremendous amount of money and guarantee the status quo. Sure, UNH may be making a "normal" corporate profit, but how much money is spent before that profit is even shown? It's VAST.

    No one is fighting for what is best or what is affordable until after their giant staffs are paid for, their ad budgets paid for, dividends and the Vegas conferences paid for. And for what... insurance is just a giant intermediary. Maybe Apple needs to get into the medical industry and begin some real "dis-intermediation". Until that happens, you won't see any real change.

    Our system is the problem.

    Best,

    - C

  • Report this Comment On June 17, 2011, at 6:32 PM, JacobLadder wrote:

    Why is health insurance connected to your job? Why not get our employer's out of our health care, take the raise and buy our own health insurance. That way you still have it if you lose your job.

    It seems if you could get people more connected to the cost of their healthcare, not have it connected to your job, get insurance companies to cover EVERYONE for their lifetime. The way you make that work is require everyone to buy health insurance, which would not be bad if it eliminated Medicare which is not sustainable and your healthcare was covered for your lifetime.

    Think it would work?

    m~

  • Report this Comment On June 18, 2011, at 12:12 AM, Canture wrote:

    The ROOT cause of virtually all the major issues we face in the USA (and virtually the whole World) is the economic "system" itself.

    It is a "system" in which goods and services are produced MAINLY for profits. Meeting the needs of the mass of people in society is only incidental in the pursuit of profits.

    The solution is to CHANGE the economic "system" to a viable/popular alternative. An alternative NEVER truly realised anywhere in the World, and one that addresses the ROOT cause of rising unemployment, over-population, racism, increasing homelessness, expanding “tent/trailer cities”, expanding slums, growing poverty, worsening environmental issues, wars (along with expanding military budgets), etc.

    An alternative in which people come to know that RATIONAL selfishness (self interest) is really in harmony with nature and that it is the EXCESSES (of any kind) that can potentially bring harm to self and to others.

    The "Wage-labour" system initially was a form of progress (especially as it moved the World from the "backward" feudalist stage). But, from since WW1 the system became decadent and has been on a "slow burning" decay (with it's inescapable series of "booms" and "bursts").

    Currently, the economic "system" in the USA (and the World as a whole) is at an impasse - with NO way out. Even with trillions in bailouts with PUBLIC money to PRIVATE institutions, this is the FIRST time there is a "recovery" with rising unemployment and with Housing remaining in a BAD state (even getting worse). Meaning... the "recovery" is NOT real (not in the real economy) and the worst is yet to com.

    Currently, the economic "system" is more of a HINDRANCE to human progress and is potentially a threat to human existence (to all life).

    We must take effective actions to change the economic "system" to a viable/popular alternative before it is too late.

  • Report this Comment On June 18, 2011, at 12:14 PM, SpaceVegetable wrote:

    @Jazzenjohn1 and @19541960 make good points. With employers buffering the costs of health care, people really have no clue what anything costs. They just let the company take care of them and insulate them from the true costs. And before people blame doctors for cost increases, I'm betting they're in the same boat, with their wage increases going toward higher malpractice insurance and student loan payments coupled with higher administrative costs every time new regulations are added to the pile.

    I work as a contractor/freelancer and buy my small group health insurance policy through my own company (yes, you can be a small group of 1). My monthly cost has gone from $331 in 2002, to $831 now - just to cover me alone(I'm 45 and don't smoke). Granted, this is their priciest PPO option, but for me, it's actually the most cost-effective because I'm a heavy user of medical services due to a chronic condition (rheumatoid arthritis since I was 16). High deductible plans don't work for people like me because they're too expensive when you would have to actually use your insurance every year. Even before figuring the tax benefits of deducting premiums, paying higher front end costs is cheaper for me than having lower premiums and deductibles, higher co-pays, or co-insurance.

    I have one medication that has no generic yet and costs around $1800/month. Even making the 6-figure income I usually do as a techie, I can't afford to pay that out of pocket, making insurance a necessity. I've tried to find out costs for some services and the providers always look at me like I'm a loon when I ask how much things cost. There's a total disconnect between actual costs and people's usage of services.

    I expect to pay more than the average healthy person, due to my heavier medical needs. Even with the shelf full of medication, I'm still looking at 5 or 6 more joint replacements in the near future (already had all 8 knuckles replaced 10 years ago). These are not luxuries or unreasonable expectations for someone like me - not if I expect to have the ability to keep working and being a producer and taxpayer, and not another drain on the disability system.

    Obamacare was all about giving people access to health care, which is a good thing for those of us with pre-existing conditions. It does nothing to contain costs, however. It simply shifts more of the burden onto employers. It's frustrating to keep seeing "business" being demonized as evil and greedy by people who really have no clue what the costs of having an employee really are. Those costs have all gone up, leaving business with less available income, so it's no wonder they're reluctant to hire.

    I don't have the solution, but I do think separating health insurance from employment would help. Increasing competition by having all of us in one giant risk pool would be good, too. It would eliminate a lot of costs by allowing competition across state lines instead of the patchwork system we have today (which add to the administrative burden tremendously). I think if people had more awareness and more actual skin in the game, it would give them more incentive to control costs themselves instead of foisting that off onto the employer. Who is going to care more about your health: you or your employer?

  • Report this Comment On June 18, 2011, at 2:38 PM, Canture wrote:

    The permanent solution to the major issues within the USA (and the World as a whole) would NOT come from reforms or patchworks within the economic "system", because the economic "system" itself is the ROOT (fundamental) cause of the problems.

    The ONLY solution is a CHANGE away from the economic "system" to a viable/popular alternative. It is a "system" that became decadent since WW1, and has been on a "slow burning" decay ever since (along with the inescapable cycles of "booms' and "bursts"). However, this is the first time the system can not restart itself - despite trillions in bailouts with PUBLIC money to PRIVATE institutions.

    For example, Americans are right NOW seeing concrete proof WITHIN the USA that the economic "system" is decaying with - rising unemployment, increasing health care cost (with more than 30 million people without proper coverage), increasing foreclosure, increasing homelessness (ironically, along with millions of empty homes), expanding "tent/trailer cities", more people at or approaching the "poverty line", increasing violence and drug abuse (along with the relative expanding prison population), a general freeze or lowering of wages (while you are made to work longer and harder), rising cost of living, crumbling infrastructure, crumbling schools (with significant level of functional illiteracy), worsening environmental issues, wars (with expanding military budgets), etc.

    IF you want a future for your Children, please wake up, and see that the ONLY solution is to CHANGE the economic "system" to a viable/popular alternative that permanently addresses the problems.

  • Report this Comment On June 18, 2011, at 3:17 PM, wolfman225 wrote:

    Canture:

    All you've done is repeat yourself for days now. It's getting more than a little tiresome.

    Just what, exactly, is the "viable/popular alternative system" you are proposing. Do you have any specifics we can examine? Or is it more of the same H&C bs we've been getting fed for the last 3 years? What are the "ROOT" causes you are refering to? Specifics, please. We can't debate nebulous ideas.

    BTW, the bailouts were more of a confiscation of private monies given to a public entity (government); a goodly share of the bailouts went to the states in order to prop up spending on entitlements as well as to union donors and other favored parties.

  • Report this Comment On June 18, 2011, at 3:20 PM, wolfman225 wrote:

    Perhaps the system you advocate is that everyone contribute to a common pool that everyone can then draw on in times of need?

    "From each according to his ability, to each according to his need."

    Nothing new here.

  • Report this Comment On June 18, 2011, at 4:51 PM, jekoslosky wrote:

    Economist piece on health care costs: http://www.economist.com/blogs/dailychart/2011/06/us-health-...

    Morgan's ideas raise an interesting question: If Americans were receiving higher wages, but forced to pay a bigger share of their health care costs, would there be greater urgency to cut waste from the system?

  • Report this Comment On June 18, 2011, at 7:38 PM, Canture wrote:

    IF you want a future for your Children, please wake up, and see that the ONLY solution is to CHANGE the economic "system" to a viable/popular alternative that permanently addresses the problems.

    Once enough people realise that the economic "system" itself IS the main source of the problems, then people WILL find effective/permanent solutions (as humans are resourceful enough). However, the media, the education system and even religion are used to confuse people and prevent them from seeing the reality.

    The solution has NEVER been truly realised anywhere in the world because enough people are not aware of the real source/cause of the issues.

    Reforms and patchworks WITHIN the system is FUTILE (of course), and we will continue to go around in circles - like we have been doing for decades with the health care system in the USA (for example).

    Also, after many decades of the Dems-Reps dictatorship in the USA, it should be very clear to Americans (even to the most dim witted) that elections in the USA is a farce and that the Dems and Reps are NOT the solution to America's problems.

  • Report this Comment On June 18, 2011, at 8:21 PM, Canture wrote:

    Proof that what I am saying is TRUE can be clearly seen when you consider that, in a country like the USA (with the SUPER level of wealth it experienced for many decades now) Americans are right NOW experiencing (despite all that wealth!!!)...

    - rising unemployment

    - increasing health care cost (with more than 30 million people without proper coverage, with some people even lose their home to pay for a major operation)

    - increasing foreclosure

    - increasing homelessness (ironically, along with millions of empty homes!!!)

    - expanding "tent/trailer cities"

    - more people at or approaching the "poverty line" (why so in such a wealthy country?)

    - increasing violence and drug abuse (along with the relative expanding prison population)

    - a general freeze or lowering of wages, while you are made to work longer and harder ( so what is the purpose of all that wealth?)

    - rising cost of living

    - crumbling infrastructure

    - crumbling schools (with significant level of functional illiteracy)

    - worsening environmental issues

    - wars - with the vampirish expansion of military budgets - sucking the life out of the US economy

    - etc., etc. (and NO one can honestly deny any of the above happening in “WEALTHY” USA. Again, what is the purpose of all that wealth???!!!)

    All the above issues are due to the decaying economic "system" - with NO way out. The “system” is currently a HINDRANCE to human development. The ONLY solution is to change the economic "system" to one that truly works for ALL human life and development. A change to a viable/popular system that enhances the life of ALL

  • Report this Comment On June 18, 2011, at 10:36 PM, DinkSinger wrote:

    Real wages did not fall in the Great Depression because prices fell much faster than wages in the early years. The real wages of a worker receiving the same nominal wages in 1939 as in 1929 had increased by 23% over the decade. Their real wages had increased by 37% between 1929 and 1933 and declined for the rest of the decade.

    Wage "stickiness" in the early 1930s is seen by many economists as the key reason that the August 1929 to March 1933 downturn was the most severe ever experienced and the recovery from it was so slow. The combination of falling prices and relatively steady money wages led to an almost total elimination of corporate profits and the highest unemployment rates in U.S. history. When you get laid off, your wages decline by 100%, but you are no longer included in the calculation of average wages.

  • Report this Comment On June 19, 2011, at 2:59 AM, wolfman225 wrote:

    As I thought. Just another empty headed idiot wasting our time. "Canture" isn't a member. He/she hasn't even bothered to fill out a profile. Just logged on back on the 15th and decided to fill space with nonsensical ramblings.

  • Report this Comment On June 19, 2011, at 4:01 AM, Canture wrote:

    The depression in the 30s was simply one of the "bursts" phase in the inescapable cycle of "booms" and 'bursts”. Please recognise that this cycle of "booms" and "bursts" is part of the very essence/nature of the economic "system". You can NOT have the "booms" and not have the "bursts".

    From the depression in the 30s there was a series of (temporary) recoveries. However, beginning from around 1973, the decay of the "system" began to escalate, and with this current crisis, the economic "system" has reached an impasse.

    Even with trillions in bailouts by the government, the system is not able to restart itself - like it did following previous recessions. This is the FIRST time you hear of a "recovery" with rising unemployment and with Housing remaining in a BAD situation (even now getting worst). Meaning... the "recovery" is NOT real (not in the real economy) and the worst is yet to come.

    There is nothing that Obama can do (and surely, nothing the Reps can do) to save the "system". You see, the trillions in government/public bailouts of the private institutions were to prevent a total collapse of the economic "system". But the "system" WILL go back into a deep recession and the Government can not bailout forever.

    It is only a matter of time and Americans will face the same economic conditions like many "Third World" countries have been experiencing for over a century now. Conditions created by the very nature/essence of the economic "system".

    Eventually, Americans (your Children) will suffer far more than during the 30s, IF we do not take effective actions to change the economic “system” to a viable/popular alternative that really works to enhance the life of ALL.

  • Report this Comment On June 19, 2011, at 5:30 AM, Odysseus221 wrote:

    What is failing is the energy/military industrial complex economy. When the curtain of our economic/political system rises, we find that the government has been doing nothing for the US economy, except starting wars and running up huge budgets consistent with a welfare state. Suddenly, the economy falters and they can do nothing except start wars--this is absolutely no accident.

    The boom and bust cycles were based on deficit spending which, during the interim of 1960-2011 sapped the country of real wealth and opportunities and left a hollow shell of a society. Nobody complained because the society became dishonest and disingenuous. Meanwhile, corporations exploited a national policy of free trade while politicians spoke from both sides of their mouths about free trade and manufacturing.

    The SOLUTIONS are clear. We must rebuild a reliable infrastructure, we must have tax rates competitive with the rest of the world, we must create educational systems which respond not only to the social needs of our political system, but in general, answer the needs of our economic system as a primary function. We must look towards our established belief systems to create society not only just, but also reasonable; lifestyles that do not consume wealth based on unnecessary needs due to lifestyles which destroy culture and replace it with politically expedient solutions.

    We must establish communal living situations with fervor, but not a fanatical religious core, that creates a vision of productivity, personal growth and fulfillment. We must practice a living standard that takes responsibility for bringing life into the world and supports that life fully, within the context of a family of self-reliance. We must turn back the clock to a time where savings and investments were a key to prosperity, not spending and borrowing. Without a general consensus on these ideas and political leadership, greatness will always evade our people and our government. We shot the wad. Obscurity is our reward.

    It was this way in a Christian based world and make no mistake about these values and where they come from. Exploiting them as we have, and the purveyors of this culture, have destroyed the long staying stability of the society.

  • Report this Comment On June 19, 2011, at 7:54 AM, skypilot2005 wrote:

    Someone wrote:

    "Look at our leadership's long term neglect on pressing issues like energy independence, immigration, unaffordable entitlements, slipping educational performance, lost manufacturing industries and jobs, etc"

    I just read an interesting article relating to this:

    WSJ:

    · JUNE 18, 2011

    Death of the Duopoly

    http://online.wsj.com/article/SB1000142405270230384810457638...

    “It is generally taken for granted that the Democrats and Republicans will always be around. But that may just be the influence of what cognitive scientists call "existence bias"—the pervasive idea that the status quo is stable and ongoing. What if the same factors that have given our incumbent parties an advantage also threaten to hasten their demise?”

    “Economists have a particular fondness for studying what Democrats and Republicans have become: the longest-lived duopoly in American history. The Nobel Prize-winning economist John Forbes Nash (the subject of the book and movie "A Beautiful Mind") was all about duopolies. He showed that two powerful competitors frequently end up locked in a stable, mutually beneficial dance of t_t-for-tat—they collude, in short, to carve up a captive market.”

    Sky Pilot

  • Report this Comment On June 19, 2011, at 3:15 PM, Canture wrote:

    What has been referred to as the "longest living duopoly in American history" is what I refer to as a "Dems-Reps dictatorship".

    Make NO mistake, the Dems and the Reps generally collude to "carve up a captive market" and shut out any real political alternative to the Dems-Reps duo.

    However, Americans are to be blamed for not opening up their minds to the reality. Every 4 years or so, Americans go and "vote" for the party that spends significantly more money than all political opponents.

    Policy, plans for building the economy, plans for health, education, housing jobs, etc - will NOT get you into the White House. You simply have to spend significantly more money than all other political opponents and you are almost guaranteed to get to the White House. Does that say something about the intelligence (IQ) of the average American?

  • Report this Comment On June 19, 2011, at 3:39 PM, Canture wrote:

    The way the political game is played in the USA (and virtually everywhere else in the World) is to tell the people what they want to hear, while spending significantly more money than all other political opponents to get your "message" out. However, a lot of money is also spent in destroying the credibility of the opponents, sometimes even by spreading lies, half-truths and confusion.

    The above strategy works because of the intelligence (IQ) and political awareness of the average "electorate" (i.e. the average electorate is not (immediately) aware that the economic “system” itself is the ROOT cause of virtually all the major issues we face). Additionally, the major media networks (example, CNN, Fox, NBC, etc.) along with schools (the educational system) and even religions are constantly being used to confuse and misdirect the mass of the people.

  • Report this Comment On June 20, 2011, at 9:29 AM, ctyc wrote:

    I think we need to also look at the huge growth in executive compensation over the past 40 years - which has increased fourfold, while average wages remain relatively flat (as detailed in the Washington Post 6/19). The top 0.1 percent of earners are taking in 10% of income. Something is just not right there, and there is not good explanation as to why (is there a shortage of executives? are they that much more competent than in the past?) except for pure greed.

  • Report this Comment On June 20, 2011, at 4:13 PM, Canture wrote:

    The "...huge growth in executive compensation over the past 40 years - which has increased fourfold, while average wages remain relatively flat...", is one of the many symptoms of a decaying economic "system".

    The "executives" are paid outrageously huge amounts (in comparison to the mass of workers), so that "executives" would act as LOYAL "slave drivers", to help CONTROL the mass of workers - who would become increasingly aware that the economic "system" is really a form of "wage slavery" (i.e. just a "better" form of slavery then the raw slavery that the USA itself was founded upon).

    Make no mistake; the current economic "system" in the USA (and the rest of the world in general) is a modern form of SLAVERY. It is a system that is based on the (super/excess) exploitation of man by man and country by country. It is an unnatural "system" (since NO one wants to be exploited more than they accept) and it is maintained by deception, misdirection, confusion and even by religion or by force (police, FBI, CIA, etc.) when needed. (Please, observe carefully and objectively and you will see that what I am saying is TRUE. A peaceful demonstration from point “A” to “B” is allowed by the Authorities only because such actions are mostly ineffective and does NOT affect the status quo)

    However, a viable/popular alternative to the “system” has NEVER been truly realised anywhere in the World, so it would take some courage and boldness to make a CHANGE away form the current “economic “system”. But, as conditions get worse (and it will definitely get worse) and more people become aware that the “system” itself is the root cause of virtually all our problems, people are going to have the WILL to make the needed change.

  • Report this Comment On June 20, 2011, at 4:48 PM, critter88 wrote:

    Thanks Morgan. While wages, expressed in monetary currency, is one way to look at how we've fared during the past decade, I also consider what my wages can buy. When measured in terms of standard of living, we have seen an increase despite flat wages, because either goods costs less today or we enjoy much betters goods/services. If I buy a similar house today, my mortgage is lower. My computer and cell phone are a fraction of what I paid 10 years ago. Clothing costs have also gone down. Offsetting that is higher gas prices and my utility bill is higher. Medical care is a tough one because its difficult to do an apples-to-apples comparison. My doctor and dentist have superior equipment today so quality of care is better. Costs of certain procedures have plummeted but new procedures are very costly. While everyone's situation is different, I am better off today even with my salary of 10 years ago.

  • Report this Comment On June 20, 2011, at 10:59 PM, irvingfisher wrote:

    Shopping for a new TV to find the best deal, that I can do. Shopping for a CT scan or a surgeon to get the best deal, that I don't think I can do. Doc tells me to go to clinic X to get a procedure that's where I and 99.99% of the people are going to go whether they pay for it or not.

    There's not going to be any price competition in health care from patient/consumers because too few of them know enough to make a reasonable decision.

  • Report this Comment On June 20, 2011, at 11:09 PM, irvingfisher wrote:

    The idea that people spending their own money on health care will lower costs is a nice theory, however, the evidence suggests otherwise.

    An international comparison shows that health care spending is increasing faster in the US than in pretty much any other industrialized nation, most of which have universal health care provided at no cost to the patient. Yet, in the US, where most people co-pay or are rationed through HMOs, health care spending is rising fastest. Not only is health care spending rising faster in the US, it's also almost twice as high as the next highest country (Norway).

    So, your suggestion is unlikely to help. Perhaps looking at what the other countries are doing to keep their costs half of what they are in the US might be a good idea.

    See here:

    http://www.commonwealthfund.org/Content/Charts/In-The-Litera...

  • Report this Comment On June 21, 2011, at 4:21 AM, Canture wrote:

    Individuals who might be having a relative better wage (or greater buying power) then 10 years ago, can be deceived into thinking that things are better in general than 10 years ago.

    However, if you look objectively and honestly at the BIG picture, you will see that the percentage of unemployed (or underemployed) people today is greater then 10 years ago. That greater percentage of unemployed (or underemployed) has NO wage (or much less wage, in the case of the underemployed) to compare with 10 years ago. They depend on Government handouts and/or favour from friends, relatives, etc..

    But RISING unemployment is only one of many worsening conditions, relative to 10 years ago. You also have (compared to 10 years ago)...

    - MORE people now at or approaching the "poverty line" (i.e. both in numbers and as a percentage)

    - Expanding "tent/trailer cities" - i.e. besides the obvious LOWER standard/quality of life when (“permanently”) living in a "tent/trailer city", there is also the greater danger of being wiped out by a Tornado or Storm/Hurricane.

    - MORE people without proper health coverage than 10 years ago. For those, better health equipment and health care system would usually remain in their imagination as they (usually) do not have access.

    - MORE homeless people (in numbers and in percentage) than 10 years ago. (Also, usually, the homeless are among the unemployed, so not only there is no wage to compare with 10 years ago, but no home/mortgage to compare with 10 years ago).

    - Other issues like poorer quality of air and other environmental degradation, compared to 10 years ago, goes towards LESSENING the quality of life (of health) for ALL, even if some individuals might have a relative rise in wage (i.e. greater buying power).

    So overall, it is a WORSENING situation for a GREATER percentage of people, compared to 10 years ago. And it will continue to get worse in this decaying economic "system", until a majority of individuals begin to feel the PAIN. This will happen sooner rather than later, as there will definitely be another deep recession (more serious than the previous one) - as part of the inescapable character/nature of the current economic "system".

    Finally, another wider worsening condition is missed by the individuals who are “lucky” enough to have better wages (or greater buying power). There is now the general trend to LOWER the average wage of Americans (and Workers in other rich countries) to match that of LOW-Wage countries, like India, Vietnam, etc. This is what the out-sourcing and the shipping of jobs overseas is all about. As the economic “system” continues to decay (right before your very eyes), American companies would continue to DUMP American employees for low-wage employees in India, China, Vietnam, etc. – in search of SUPER profits. The companies that can not ship jobs overseas, are then seeking to “burst” Unions and freeze or lower wages.

  • Report this Comment On June 21, 2011, at 5:03 AM, Canture wrote:

    Health care is rising in the USA as a direct symptom/character of the economic "system" itself.

    The countries with health care systems that are half the cost (or close to zero) of what it is in the USA are countries that (get this) implement systems and regulations that partially or wholly go AGAINST the natural/automatic workings of the economic "system".

    You see, in the USA (as the leading country in this decaying economic "system") goods and services are produced MAINLY for profits, more so than virtually any other country in the World.

    Producing goods/services MAINLY for profits is the very nature/essence of the economic "system" - and this is how the "system" itself is the ROOT cause of rising health care in the USA (and the World in general). So some countries implement "lukewarm" solutions through regulations and government subsidies - hence, the cost of health care to the masses is effectively much lower than that of the USA.

    The solution, however, is not "lukewarm" regulations and structures to fix health care, because health care is only one of many issues that are rooted in the economic "system" itself. The REAL solution is a complete CHANGE away from the current economic "system" to a viable/popular alternative that permanently addresses ALL major issues facing mankind.

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