A self-denying socialist friend of this author recently defended universal health care with the oldest argument in the book – that without socialized medicine, people would ‘die in the gutters.’ With last week’s one year anniversary of Obamacare, this argument needs to die in the gutter itself.

The ‘die in the gutter’ argument states that without universal access to health care for serious diseases like COPD and cancer, poor people will go without treatment and face ugly and painful deaths. While this argument seems obvious in today’s health care system, the argument sits atop a number of lies and market distortions caused by government meddling.

The biggest lie ever told is perhaps Medicare. Medicare is a socialist promise that, in exchange for 2.9% of a worker’s lifetime wages, the government will largely pay for any and all expensive medical care starting at age 65. Unlike real insurance, but exactly like Social Security, Medicare is a Ponzi scheme that has no reserves to back its promises. Medicare has no plan to continue operations as US demographics shift from a worker class to a retiree class. Medicare has no plan to cope with rapidly expanding health care options and costs. Medicare is a lie and a robbery; those who are working today are this crime’s victims. There is no money to pay for Medicare’s promise, and the Ponzi scheme is about to collapse.

Rather than simply stating that Medicare was a crime and that workers are its victims, Pres. Bush (43) chose to expand the crime. Pres. Obama chose to wave a magic wand at Medicare by pledging to cut $500 billion from its operations without reducing its services. Precious few in Washington, save a few brave warriors like Rep. Paul Ryan, even acknowledge these crimes. Instead, as the author’s friend does, Washington Pols claim that cutting or reforming Medicare will leave poor people ‘dying in the gutter.’ That is a false argument because Medicare will not prevent these deaths either; Medicare cannot treat everyone with every new treatment. Medicare promises what it cannot deliver, so eventually it is the socialist lie that will leave poor people ‘dying in the gutter.’

Government induced market distortions are also to blame for our socialist friend’s perception that without universal health care, people will ‘die in the gutter’. Consider that last week Bristol-Myers Squibb received FDA approval for a new metastatic melanoma treatment that will cost $120,000 per treatment, but it will raise the two year survival rate to 20% from 14%. $120,000 for an extra one in twenty chance of living an extra two years? Is that a call for universal health care? No, the new drug’s price reflects the market distortions of government health care and abusive regulations.

By pumping trillions of dollars into health care, the government has sent the market a message: we will buy any marginal medical treatment no matter what the price. The market has responded by developing expensive treatments that would not find buyers if they had to spend their own money. Further, the FDA’s counterproductive approval process adds billions to the cost of developing a drug, thus reducing the barriers to competition once a drug is approved. The combination of restricted competition and an unrestricted budget is the cause of many boondoggles like Bristol’s $120,000 melanoma drug.

Our socialist friend humanely worries that society will not tolerate leaving poor people untreated, but he ignores that government meddling caused the runaway costs and impossible expectations to begin with. The government alone caused the health care problem, yet many well intentioned people think more socialist policy will resolve it. It may seem cruel, but not everyone can have everything. Here’s hoping that the collapse of the US government is not required to bring universal health care socialists back to earth.

While a few news stories about the Japan earthquake suggest the disaster will stimulate that country’s long stagnant economy, most reporters have had the heart to see that in no way is Japan better off. The goal of economic activity is to maximize wealth, not output. After World War II, Europe was largely destroyed, and its economies grew as its cities were rebuilt. That economic activity, however, was just to restore Europe to where it had been a decade before. Likewise, Americans are far better off than any other people despite the US’s weak economy, in part because there hasn’t been a national rebuilding in 160 years. The example of disasters stimulating the economy is a case of the Broken Window Fallacy – the invalid idea that by breaking windows, the economy will grow by employing glaziers. If only today’s politicians understood this 19^th Century insight.

Natural disasters, war, and government invented industries are all artificial means of stimulating economic activity, yet they never create wealth, which may be defined as an increase in the general living standard of a people. As with the glaziers replacing broken windows, everyone can see the postwar construction, yet nobody else is any better off. Presidents tout the highly visible employment at their pet companies, but nobody can see the at least equal number of invisible jobs destroyed by government intervention.

Nobody wants the economic activity caused by disasters like war, earthquakes, or government programs. People would be much better off if war had never happened, or earthquakes never struck, or the government didn’t have so many new ideas. All of these are examples of a drain on the general wealth to focus economic activity in highly visible areas.

The most efficient example of government intervention to direct wealth to a visible few at the expense of the invisible many is Social Security. Social Security, contrary to its depictions as a savings plan, is a direct transfer of cash from younger, less wealthy workers, to older, generally wealthier retirees. Ignoring administrative costs, Social Security is cash in / cash out, with little meddling by the government. Since cash is the most useful economic asset (i.e. It can be used for anything), the government does not destroy wealth by dictating how retirees may use their Social Security payments. Because Social Security is a zero sum game, no wealth is destroyed by this form of government intervention.

Perhaps the least efficient example of government intervention is the ‘green economy,’ which forces relatively poor consumers to subsidize relative high paying ‘green’ energy jobs. The same political game exists here – vast numbers of nameless energy consumers pay extra so that politicians can present highly visible ‘green jobs. The ‘green economy’ is particularly inefficient because consumers give up valuable cash in exchange for the exact same energy they enjoyed before. Unlike Social Security, which is a transfer of cash from young to old, the ‘green economy’ destroys wealth by directing it to worthless make-work programs. The ‘green economy’ would actually work better if politicians simply gave cash to their friends in exchange for their doing nothing.

In the quest for the visible stimulation of economic growth, government programs are more often like the ‘green economy’ than they are like Social Security. Not only does the government not create wealth by redistributing it, the government destroys wealth by dictating that it be spent on unproductive projects. Pres. Obama proclaims that he will “win the future” by managing the economy and directing wealth to his pet projects. At best, this will do nothing, but more likely, it will destroy wealth and employment.

So, the next time someone claims that the destruction of wealth by natural disaster, war, or government program will stimulate the economy and promote employment, remember that these are all examples of the Broken Window Fallacy. Economically, “winning the future” is the same as dropping a bomb on a city and then rebuilding.