Imagine, for a minute, that you don’t have to worry about saving for retirement. Imagine that you don’t have to worry about health care costs bankrupting your family, or losing benefits when you lose your job. How would that affect your life?
Bubelah and I like to gripe that consideration of these two factors cripples much of the entrepreneurial spirit of America, or at least ours. I remember when I was working in western Europe most people had a very lazy attitude about saving for the future. The social contract in most of those states provided for their health care and retirement, so the practice of amassing huge amounts of wealth was not a popular one. Mortgages were much less common, so people would rent until they had enough cash to buy a home. At least amongst my colleagues the use of credit cards was minimal and concerns about the future seemed muted (or restricted to meta-problems like the environment or peace in the Middle East).
“But wait! The taxes!! The taxes!!” the American psyche cries. I pay a lot of taxes already. If you bundle up what I pay (and even worse, will be paying) in health care costs, plus the costs of what I have to save since there’s no REAL governmental pension forthcoming, I bet 80% of my income is gone:
- Approximately 40% goes to federal and state taxes.
- Another 6% goes to property taxes.
- I pay 8% of my gross monthly income to healthcare premiums.
- Another 20-25% (at least, sometimes more) goes to “savings” – loosely including IRAs, 401(k)s, our cash savings, our brokerage accounts.
Now imagine all that is gone and you pay a flat 70% tax, but in exchange you have free healthcare regardless of age/job status/condition/etc. Imagine that you have a guaranteed retirement income of 80% of your (admittedly quite low net of taxes) salary. In exchange you have a smaller income, but no need to save for retirement or worry about a single health-related incident bankrupting your family.
You know who doesn’t want this? Consumer products corporations. Companies that make flat screen TVs, iPhones, DVDs, designer jeans and gourmet coffees. The US stock market, because all that money that’s pumped into mutual funds and locked up until you’re 59 1/2 won’t be coming to them any more. Any company that makes stuff we don’t actually need. They want you to feel like you have that extra income. They don’t want the choice to save or spend taken out of your hands. They need you to keep buying.
No politician – not Barack Obama, not Ron Paul, not Ralph Nader, not John McCain – is ever going to seriously propose fixing this system. We’ll keep putting our “savings” into the market and spending money on cheap consumer goods imported from Asia, and sneer at Europeans and their high taxes. Yipee.
(photo by ButterflySha)