History is full of examples of conquests that seemed easy and tempting, but later turned out to be gigantic blunders. One of them was Napoleon’s decision to invade Spain in 1808 and put his elder brother Joseph on the throne. That was the first great miscalculation of his career.
I strongly suspect that Obama’s decision to “reform” American health care by thoroughly politicizing it will become his Spain — a short-run victory that will in the long run prove disastrous for him.
Napoleon and Spain
In 1808, Napoleon was the master of continental Europe. To his south, Spain was officially an ally, but it was a nation long past its age of military power. The Spanish army was no match for the French and Napoleon was certain he could easily crush it, capture Madrid, and send the corrupt King Charles IV packing. Under the conventions of warfare at that time, once you had beaten the enemy army and taken the capital city, fighting ceased and the victor could enjoy the spoils of war. Napoleon, the great conqueror, couldn’t resist this piece of low-hanging fruit.
Things did not go according to Napoleon’s plans. Defeating the Spanish army was easy enough, as was the business of putting Joseph on the throne. But afterward, the country erupted in partisan warfare that gave us the word “guerilla.” French garrisons and supply trains were attacked. Spain was drenched in blood and the drain on French resources and manpower was debilitating. For Napoleon, conquering Spain was a self-inflicted wound that turned gangrenous.
Obama and health care
In early 2009, Barack Obama was in much the same position as Napoleon in 1808. He sat in the White House with overwhelming power in Congress to enact his initiatives for remaking the United States to suit his egalitarian, statist vision. Obama and his Democratic shock troops captured the auto and financial industries in blitzkrieg campaigns in the spring. He seemed invincible — and then he decided to launch a summer offensive to take over health care. Ever since, the fighting has been fierce.
Exactly what will happen on this front is uncertain, but let’s assume that in the fall, Obama’s forces — reinforced, re-energized, and inspired by the loss of Field Marshal Kennedy — ram through some variant of ObamaCare. (As I argued here, the details won’t matter very much.) Then they will be able to savor their victory — right?
Probably not. Here’s why I think such a victory will be like Napoleon’s “victory” in Spain.
In the past, every advance of the welfare state has been politically successful (and by that, I certainly don’t mean they were good policies) for this reason: government programs delivered concentrated, visible benefits to people while the costs were widely dispersed among taxpayers and consumers.
Social Security, for example, has been a political success because the benefits are tangible and well-publicized, creating a strong political constituency for continuing and expanding it. Of course, there are no free lunches and Social Security meant taking money away from workers. The Social Security taxes, however, are cleverly hidden by the device of withholding. Grandma Green sees her check, but the working people who were taxed to pay for it never saw their money.
That’s why Social Security has been a political sacred cow. Economists and policy wonks have been criticizing it for decades, but to no avail.
As “public choice” economists have long understood, even terribly inefficient and wasteful government programs will survive if they have concentrated benefits and widely diffuse costs. The beneficiaries will fight much harder to keep the goodies coming than the people who pay the resulting higher taxes and prices will fight to end the program. In fact, the latter usually don’t even know that they are being mulcted.
The list of programs like that is enormous: Social Security, Medicare, Medicaid, food stamps, sugar price supports, export subsidies, protective tariffs, pro-union legislation, ethanol subsidies, federal housing programs, and many more. In democratic politics, the “concentrated benefits, diffused costs” formula wins, no matter how much economic and social damage the programs cause.