Martin Wolf, to keep the welfare state alive, before considering taxes, look at what real economy you need for that.

Sir, Martin Wolf asks: “Will the UK public sector be able to provide the benefits the public expects in return for the taxes it is willing to pay? The answer to that question seems to be “no”. If so, will the promise to provide some universal services be abandoned? Will taxes be raised? Or will debt be allowed to grow until it has to stop?” Wolf answers: “With current commitments, [fiscal] revenue must rise relative to GDP… The alternative is to abandon pillars of the welfare state.” “It is time to talk about raising taxes” May 19.

That starts from the wrong end. The real question should be what future economy do we need so that it will allow fiscal revenues or other means by which not having to abandon the pillars of the welfare state? The answer to that question might be increasing taxes as Wolf recommends but it could also require many other means, not necessarily including extreme ones like to “choose a collapse in life expectancy”

For many decades I have argued the best and most sustainable pension/health plan to be that of having children who love you and are working in a healthy and functioning economy.

I have been blessed with loving children, thank God, but I do fret about the future economy, as there is no way on earth for it to be either healthy or functionable with regulators distorting the allocation of bank credit, with their insane risk weighted capital requirements.

Since 1988, with Basel I, that set the risk weight of the sovereign at 0% and the citizens at 100%, public indebtedness has been artificially subsidized.

Unless that distortion is eliminated it will guarantee to deliver unsustainable public debt levels and an unhealthy economy. That is because whether the statists like it or not, reality is that government bureaucrats do not know how to use bank credit more productively than the private sector’s SMEs and entrepreneurs.

Having allowed the banks to run up such huge exposures to what is perceived as safe, the past and the present, while refraining from financing the riskier future, will cost our aging society much, because frankly, why should our children and grandchildren ignore that regulatory discrimination against them.

If we do not rectify, there will come a day where the young will show the elderly the finger… pointing at the closest “ättestupa”

PS. My decades long insecurities on the debate about social security

PS. Of course immigration and emigration could also help.

PS. A 2022 letter in Washington Post: “Before the debt ceiling is lifted, Congress must dare to at least pose a question.”

@PerKurowski

Lawrence Summers defends convincingly voucher programs in health and education

Sir, in “The US state will expand no matter the election result”, August 20, Lawrence Summers writes: 

“Increases in the price of what the federal government buys relative to what the private sector buys will inevitably increase the cost of state involvement in the economy. Since the early 1980s the price of hospital care and higher education has risen fivefold relative to the price of cars and clothing and more than 100-fold relative to the price of televisions.” 

Even when netting out of the technological advance’s impact on costs, it would seem that the above constitutes an extremely spirited defense of vouchers programs.

What we first need is an insurance that covers the risks of the discoveries.

Sir, Stephen Cechetti argues in “A future of public healthcare for all” July 3 that the advances in genetics and that will be able to provide for better individualized projections of expected health costs will translate into a market failure that will force the private health insurance system into the arms of the public sector. Actually it is not a market failure that will do so since in fact the market could only benefit from knowing more about the risks, it is the market results that will be unacceptable, or at least let us hope so, since if those prognosed as much healthier sneak out from sharing the risks, society could turn much much nastier. For instance, there is nothing to stop a good health prognosis to also influence such variables as the admittance to universities.

Before we put any new safeguard system in place, which will certainly only happen when it is much too late for many, what we most need is an insurance that covers the risks of whatever extra costs we could suffer because of what they discover in our genes, and have everyone subscribe such an insurance, before they are allowed to take any genetic samples

The sale of healthcare should follow stricter standards than the sale of timeshares

Sir, Brad DeLong in “Obama can remedy an ailing healthcare system” (why only Obama?), June 4, says that “the US spends twice as much as Western Europe for little benefit” but then continues writing only about the need of increasing the health-insurance coverage and which presumably could only increase health-spending.

I am a foreigner and no expert in the area of health assistance in the US (probably thankfully) but, from the little I have seen the number of uninsured is large, but so are also the costs they are charged.

Whatever you do there should be no place for timeshare selling procedures in healthcare and there should be a rule that clearly states that you are not allowed to charge someone without coverage, more for medicine or any health service than what you would charge a covered patient.

By the way, and before you lose all sense of social solidarity, please develop an insurance that covers any additional costs because of what could be discovered in your DNA when gene tested.