New research from Aarhus BSS at Aarhus University explains why healthcare costs are running out of control, while costs to unemployment protection are kept in line. The answer is found deep in our psychology, where powerful intuitions lead us to view illness as the result of bad luck and worthy of help.
Illness and unemployment are two types of ordinary risks to which we are all exposed. But from a historical perspective, unemployment and illness represent two very different types of risks. Unemployment came about as a result of the industrialisation, while illness is something the human species has faced for millions of years. This difference is reflected in current-day political attitudes.
“People across countries are very positive towards the healthcare sector, but are not necessarily that inclined to give money to the unemployed. Why do people generally prefer helping the ill and not the unemployed?” This is the question posed by two professors in political science, Carsten Jensen and Michael Bang Petersen, from Aarhus University.
Using techniques to uncover people’s implicit intuitions, the researchers explored the fundamental differences behind our attitudes towards unemployment benefits and healthcare. According to the researchers, the differences may be found in the evolutionary history of our species.
“For millions of years, a need for health care reflected accidents such as broken legs or random infections. Evolution could therefore have built our psychology to think about illnesses in this way, as something we have no control over. People everywhere seem to have this deep-seated intuition that ill people are unfortunate and deserve to be helped,” Michael Bang Petersen explains.
Agreement across countries and political ideologies
Even countries like the US, which you would normally not associate with the term welfare state, healthcare costs are enormous. The researchers did research in both Denmark, the US and Japan and found that everywhere people intuitively believed that people who fall ill are unlucky, while unemployed people have brought it on themselves.
“Because we have this psychological tendency to regard people who are ill as unlucky, people’s attitude towards the sick are extremely difficult to change,” Carsten Jensen explains.
In modern societies, more people die from lifestyle diseases than from broken legs and infections, and there are considerable socio-economic differences in who will suffer from these lifestyle diseases. But we continue to think of illness as random accidents. This even applies across the political spectrum, where conservatives who normally oppose government spending think of ill people has unfortunate and deserving of care.
“The traditional attitudinal factors such as self-interest, access to information and political ideology do not really matter in the healthcare area,” says Michael Bang Petersen and continues:
“When it comes to healthcare, everyone seem united in the belief that people who are ill are unlucky and need help. This means that the policies in the areas of health care and unemployment are very different, as we all more or less agree on the goal in healthcare, while we deeply disagree on whether or not unemployed people deserve help.”
Pressure on the politicians
Increased healthcare spending is often explained by the supply of health – i.e. the costs of new technology and medicine. But the researchers from Aarhus University argue that when it comes to the rising costs of healthcare, we are also dealing with demand. Politicians find it hard not to accommodate people’s demand for better healthcare, and no one wants to be seen as responsible for a health scandal.
To gain a more comprehensive perspective on the repercussions of public policy decisions, a piece in the NYTimes shows the radical differences in impact on wellness by those on the two different sides of Texarkana:
http://www.nytimes.com/2014/06/09/business/economy/uninsured-on-the-wrong-side-of-a-state-line.html?_r=0
The assumption implied by the question is incorrect. Firstly and secondly because (a) some people including myself aim to help (b) the unemployed.
We (the Georgist School of economics) aim to do this by demanding a socially just society, which stops the unfair advantage enjoyed by land ownership. Speculation and misuse or non-use of land has the result of causing a reduced and unequal amount of opportunity for people to work. Without occupying a space in which to work, namely a piece of land, work cannot get done and in both rural and urban situations this criterion applies to a degree, where in town the value of the land is so huge and the area needed so small, that the value of the land actually needed by a worker is not very different to that when farming.
The value of land is expressed by the amount of ground-rent it generates when properly used, and this should be returned to the government as a tax instead of all the stolen produce and wages taken instead. If this tax was on unused land as well as used land, more land would become available and its cost of use fall.
A wise and sensible government would recognize that this problem of poverty derives from lack of opportunity to work and earn. It can be solved by the use of a tax system which encourages the proper use of land and which stops penalizing everything and everybody else. Such a tax system was proposed 136 years ago by Henry George, a (North) American economist, but somehow most macro-economists seem never to have heard of him, in common with a whole lot of other experts. (I would guess that they don’t want to know, which is worse!) In “Progress and Poverty” 1897, Henry George proposed a single tax on land values without other kinds of tax on produce, services, capital gains etc.
This regime of land value tax (LVT) has 16 features which benefit almost everyone in the economy, except for landlords and banks, who/which do nothing productive and find that land dominance has its own reward.
16 Aspects of LVT Affecting Government, Land Owners, Community and Ethics
Three Aspects for Government:
1. LVT, adds to the national income as do other taxation systems.
2. The cost of collecting the LVT is less than for all the production-related taxes.
3. The national economy stabilizes–no longer experiences the 18 year business boom and bust cycle, land value speculation ceases.
Six Aspects Affecting Land Owners:
4. LVT is progressive–owners of the most potentially productive sites pay the most tax.
5. The land owner pays his LVT regardless of how the land is used. Rent from tenants is most of the tax.
6. LVT stops the speculation in land prices–any withholding of land from proper use is no longer worthwhile.
7. The introduction of LVT initially reduces the sales price of sites, even though their value may continue to grow. As more sites become available, the competition for them is less fierce.
8. With LVT, land owners are unable to pass the tax on to their tenant renters, due to the reduced competition for access to the land that will be in use.
9. With LVT, land prices will initially drop. Speculators in land values will foreclose on their mortgages and to withdraw their money for reinvestment. Therefore LVT should be introduced gradually, to allow speculators sufficient time to transfer their money to company-shares and meet the increased demand for produce (see below).
Three Aspects Regarding Our Community:
10. With LVT, there is an incentive to use land for production or residence, rather than it being unused.
11. With LVT, greater working opportunities exist due to cheaper land and a greater number of available sites. Consumer goods become cheaper because entrepreneurs have less difficulty in starting-up their businesses–demand grows, unemployment decreases.
12. Investment money is withdrawn from land and placed in durable capital goods. This means more advances in technology and cheaper goods too.
Four Aspects About Ethics:
13. The collection of taxes from productive effort and commerce is socially unjust. LVT replaces this extortion by gathering the surplus rental income, which comes without exertion by the land owner– LVT is a natural system of money-gathering.
14. Bribery and corruption cease. Before, this was due to the leaking of news of municipal plans for housing and industrial development.
15. The improved use of the land reduces the environmental damage due to the sites being held unused as dumping grounds, and the greater traveling distances between home and workplace, and the associated emissions due to fossil fuel use.
16. Because the LVT avoids the advantage that landlords hold over our society, it provides a greater equality of opportunity to earn a living. Entrepreneurs can operate in a natural way– to provide full employment. Then earnings will better correspond to the rise in the value that the labor put into the product or service. Consequently, after LVT has been properly introduced it will eliminate poverty.
TAX LAND NOT PEOPLE; TAX TAKINGS NOT MAKINGS!