Will Obamacare "Destroy" America? How Would We Know?

A long, long time ago I said on Twitter that there is a 50/50 chance that Obamacare will “destroy America.”

This has been throwing Twitter maven Richard Yeselson into conniptions for literally months now so I figure some clarification is in order.

Obviously I did not mean that Obamacare will cause a destructive meteor shower, or an alien invasion, or the second coming.

So, what did I mean?

Quite simply this: I think most observers, whatever their political outlook, would agree that there is something unique or at least different to the political economy of the United States. There’s a bit of a “je ne sais quoi” to what Jim Manzi has called “the American system”, but it mainly has to do with a greater comfort with economic risk-taking, creative destruction, entrepreneurial spirit, and so on, than in most, if not all, other countries on the planet. Some might deplore that this is so, but saying that American culture is uniquely friendly to the capitalistic ethos is the most commonplace thing in the world.

I also think many people (though not enough) would agree that a political economy is a delicate and intricately complex thing. It depends not just on policy, or law, or levels of taxation, but also on the underlying culture. The rule of law, for example, which is so crucial to economic flourishing, depends not so much on what laws are on the books as in the way that they are applied.

I also think that many people (though not enough) would agree that social policy can often have unintended consequences, and that these unintended consequences can ripple out into second, and third-order differences and cause widespread social change. For example, nobody, even the most rabid opponent, would have said in the 1960’s and 1970’s that no-fault divorce laws would lead to a 50% divorce rate, and yet in hindsight that is obvious.

Now, where does that leave us with Obamacare?

Well, I think that, broadly speaking, the US political economy is in danger of losing that “special je ne sais quoi” I mentioned earlier.

The size of government, the size of the tax code, the size of government regulation, occupational licensing, all of them have increased over the past decade and a half.

Furthermore, if you count up the number of sectors where government influence is preponderant, they have increased, both in terms of the number of sectors and their relative importance. For example, the entire government contracting industry has ballooned over the past 15 years, meaning that (just with one industry) an increasing % of GDP is government-directed. More importantly, an increasing percentage of people in the workforce are in danger of having a “controlled economy” ethos rather than a “free enterprise” ethos.

That is the problem I see in France. When businesses in Sector X have a problem, the instinct is to get together and lobby the government for a fix. That is not the American Way. But it is increasingly the way in a number of sectors (finance is a very striking example). And the problem is that this phenomenon is self-sustaining, and even snowballing. Once the door is open to using lobbying to get an advantage in the marketplace, everybody floods. If your competitor is doing it, you have to do it.

With that idea in the backdrop, then, could it be the case that there could be some sort of tipping point? Some sort of point of no return, where so much of the economy’s productive activity is controlled, directly or indirectly, by the government, that the very ethos, or culture that I have been talking about dies? That, there might be a point at which so many people in the US economy are in a “controlled economy” ethos rather than a “free enterprise” ethos that the process becomes self-sustaining, irreversible, and snowballing? That at some point we head inexorably for what I have called the Francification of America? (And what Hayek in his day called the Road to Serfdom.)

Now, let us look at the healthcare sector. The first thing to note is that it is an enormous part of the US economy, and growing, and set to keep growing, both in terms of GDP % and (especially) employment. The second thing to note, is that there is a bit of a battle for the soul of the healthcare system going on, which is broader than Obamacare. On the one hand, you have a vision which is friendly to decentralized control, a la David Goldhill and the great right-of-center wonks and a bunch of smart left-of-center wonks right up until the point everybody rallied towards Obamacare. On the other hand, you have the vision of Vulgar Arrowism and central control. The US healthcare system, historically and for a very long time, has been a bizarre, even baroque mix of “free market-ish” and “government control-ish” aspects.

The question then arises: does Obamacare “tip the scales” towards the eventual centralization of healthcare in the US (as liberals dream), especially by making anything other than the comprehensive insurance model (which is the devil) unthinkable?

And if that happens, might this not in turn, given the size and significance of the healthcare sector, tip the scales for the entire political economy, towards a “Francified” direction? One in which that special “American Way” is irretrievably lost?

If so, it would certainly represent, in a real sense, the “destruction of America”—of an enormous part of what makes it both so unique and so prosperous.

Is that the most likely outcome? I don’t know. Is it a possible outcome? Is it a more likely outcome than most people think? I very much persist in thinking so.