Warfare helps explain why American welfare is different
One way of seeing the fight over health care is as a clash between two different Wagner’s laws
THE House Republicans’ health-care plan, the American Health Care Act, may, if enacted, leave 24m Americans without coverage, in the judgment of the Congressional Budget Office. But for those determined to shrink the government, that may not be enough. Americans for Prosperity, an influential campaign group, calls it Obamacare 2.0; FreedomWorks, an anti-tax group, Obamacare-lite. The Republican Study Committee, which consists of 170 House Republicans, describes it as “a Republican welfare entitlement”. When Obamacare became law, Democrats crowed that it would prove impossible to take health insurance away from people once they had it. For those on the drown-the-government wing of the Republican Party, the fight over repealing the law is an existence-threatening event. If a Republican president with majorities in both houses of Congress cannot succeed in taking away an entitlement, then they might as well give up.
Viewed from the rest of the world, this debate has an unreal quality. America is alone among rich countries in not arranging for its government to provide some form of health care for all its people. When Obamacare became law in 2010, America seemed to be converging with the rest of the world. The share of people who do not have health insurance, and are not covered by government programmes for the elderly or the poor, fell from 16% before the law was passed to 8.8% now, according to the Kaiser Family Foundation. It would have fallen further had more Republican state governors chosen to take federal funds to expand Medicaid, which finances some care for poor Americans. That convergence may now be reversed.
The American difference on health care is partly a question of philosophy. Americans are more inclined to believe that people make their own luck than people in countries with more developed welfare states. According to a Pew global attitudes survey, 31% of Germans think that success is determined by forces within their control, whereas 57% of Americans say the same. It follows from this that those who do not have insurance could get it if they only worked a bit harder.
But it is also a question of history and, more specifically, of how welfare states in the rest of the world developed alongside warfare. European welfare states began in Prussia at the end of the 19th century, when war with France required the mobilisation of a large number of civilians. Britain’s welfare state has its origins in the discovery that many of the men who presented themselves to recruiting offices during the Boer war were not healthy enough to fight. Before the second world war, British liberals would have seen the creation of a government-run national health service as an unwarranted intrusion of government into private life. After 1945 it seemed a just reward for a population that had suffered.
In America this relationship between warfare and health care has evolved differently. The moment when the highest proportion of men of fighting age were at war, during the civil war (when 13% of the population was mobilised), came too early to spur the creation of a national health system. Instead, the federal government broke the putative link between war and universal health care by treating ex-servicemen differently from everyone else. In 1930 the Veterans Administration was set up to care for those who had served in the first world war. It has since become a single-payer system of government-run hospitals of the kind that many Americans associate with socialised medicine in Europe. America did come close to introducing something like universal health care during the Vietnam war, when once again large numbers of men were being drafted. Richard Nixon proposed a comprehensive health-insurance plan to Congress in 1974. But for Watergate, he might have succeeded.
Still, though slow to get going on welfare, the direction of travel in America has been unmistakable. Beginning in the 1930s during the Depression, Congress gradually added federal entitlements. They multiplied again in the 1960s and have grown steadily since. The last time the country had a Republican president, a new entitlement, Medicare part D, was created. Rather than oppose this, many Republicans reasoned that if anyone was going to create a new social programme, it might as well be them. This creeping growth of government provision has left those conservatives who really do want to cut social programmes to try and starve the federal government of revenue, in the hope that one day they will collapse under the weight of their own contradictions. The reckoning is yet to come. Wagner’s law, named after Adolph Wagner, a German economist, states that as societies grow richer, government consumption tends to take up a greater share of GDP. The pattern holds for America, too (see chart). Hence the distress on the right over the American Health Care Act.
Pushing against Adolph Wagner’s law is another, newer tendency. Americans who recalled the Depression and the second world war tended to look more favourably on the redistribution of income. Ilyana Kuziemko of Princeton and Vivekinan Ashok and Ebonya Washington, both of Yale, have found that support for redistribution has dropped among retired people over the past few decades (see chart). One explanation for this is that people retiring now have no memory of the two big, unifying events of the 20th century. It may be no coincidence that this reluctance to redistribute, which comes out particularly strongly in the opposition among current pensioners to extending health insurance, followed a surge in immigration at the end of the 20th century. In the 1950s, immigration to America averaged 250,000 people a year; in the 1990s, it reached 1m a year.
If true, this tendency (which could be called Richard Wagner’s law, after the composer who understood how powerful the urge to root for your own tribe can be) is as alarming for America’s liberals as Adolph Wagner’s law of ever-increasing spending is for its conservatives. For it seems to suggest that by embracing the causes of immigration and diversity, they may have accidentally weakened support for the economic policies they favour.
Take Donald Trump, Paul Ryan and Barack Obama out of America’s current argument about health care, and it could be seen as a clash between these two Wagner’s laws: Richard versus Adolph. Whether American welfare continues to converge gradually with the rest of the rich world, or stays distinctively flinty, depends on which Wagner comes out on top.
This article appeared in the United States section of the print edition under the headline “Wagner vs Wagner”