Our Intellectual Bankruptcy: The "Religion" Of Economics, UBI, & Medicare For All

Tyler Durden's picture

Authored by Charles Hugh-Smith via OfTwoMinds blog,

Clinging to magical-thinking fixes that change nothing on the fundamental level hastens collapse.

Here we stand on the precipice, and all we have in our kit is a collection of delusional magical thinking that we label "solutions." We are not just morally and financially bankrupt, we're intellectually bankrupt as well.

Here are three examples of magical thinking that pass for intellectually sound ideas:

1. Mainstream neo-classical/ Keynesian economics. As economist Manfred Max-Neef notes in this interview, neo-classical/ Keynesian economics is no longer a discipline or a science--it is a religion.

It demands a peculiar faith in nonsense: for example, the environment--Nature-- is merely a subset of the economy. When we've stripped the seas of wild fish (and totally destroyed the ecology of the oceans), no problem--we'll substitute farmed fish, which are in economic terms, entirely equal to wild fish.

In other words, the natural world cannot be valued in our current mock-science religion of economics.

Other absurdities abound. Stripping the seas of wild fish adds to GDP, so it's all good, right? Dismantling newly constructed buildings and building a replacement structure also adds to GDP, so it's an excellent source of "growth."

As Max-Neef points out, conventional economists have absolutely no understanding of poverty. If you need a sobering account of just how this abject willful ignorance works in the real world, I recommend reading The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good.

Gail Tverberg (among others) has shown how the existing economic model no longer makes sense of the actual economy we inhabit: The Economy Is Like a Circus.

As for rising wealth/income inequality--there is a cure for that, but it's not in mainstream econ textbooks: The Only Thing, Historically, That's Curbed Inequality: Catastrophe Plagues, revolutions, massive wars, collapsed states—these are what reliably reduce economic disparities.(via Arshad A.)

2. Universal Basic Income. As noted in yesterday's essay, wages are no longer an adequate means of distributing the dwindling surplus of advanced economies. Wages as a share of GDP have been declining for decades, and only click up temporarily during massive speculative bubbles. Once these bubbles pop, which they inevitably do due to their instability and unsustainability, wage earners' share of GDP plummets to a new low.

The mainstream is enthusing about the "solution": Universal Basic Income (UBI). The solution to low pay and scarcity of middle-class paid work is to give everyone a basic income for doing nothing.

Delusional academics anticipate a flowering of creative talent akin to a new Renaissance as people are freed from work by robots and automation. But if we look at people already receiving the equivalent of "free money" UBI--disability-- studies find recipients are simply watching more TV and YouTube videos and pursuing opioids, not writing poetry and composing concertos.

They are not volunteering in their community or engaging their communities in any positive fashion. What actually happens with UBI is recipients become isolated and miserable because UBI strips their lives of meaning, purpose and the need to contribute to a community.

The real purpose of UBI is to chain every household to the state, and drain all social relations between the isolated "consumer" and the state.

As tragic as the delusion of UBI is to individuals, it is unworkable financially because profits will fall as automation becomes commoditized, and the surplus available to distribute to every household will diminish.

I explain this at some length in my books Why Our Status Quo Failed and Is Beyond Reform and A Radically Beneficial World: Automation, Technology & Creating Jobs for All.

Much of what is passed off as "corporate profits" is accounting fraud and the monetization of what was once free. For example, all that customer labor: now that we pump our own gasoline, check and pack our own purchases, do our own banking--who's skimming the output of our labor? Yup, the corporations.

Commoditization of software and tools + the Internet = loss of monopoly. This is a problem, for the core function of the state-cartel version of capitalism we inhabit is the state enforces a cartel-monopoly structure to guarantee steady surpluses it can tax for its own expansion.

As automation is commoditized, profits plummet as competition can no longer be controlled by cartels or even the state--just as Marx laid out.

Combine declining productivity and declining surplus (profits) (both for deeply structural reasons) and there cannot be enough money to fund UBI. Weirdly, proponents of UBI never even perform a back of the envelope calculation of cost and the source of all this free money (tax revenues and/or borrowing from future generations). Perhaps they intuit that such an exercise would reveal the bankruptcy of their magical thinking.

As we shall see below, the system can't even support the entitlements it has already promised to hundreds of millions of people, never mind an additional universal entitlement.

(Note to UBI enthusiasts: there are limits on what robots and automation can and will do: they will only perform work that is highly profitable. Since most human work is not profitable (or even paid), the idea that robots and automation will free everyone from work is delusional fantasy. I explain all this in greater detail in A Radically Beneficial World.)

3. Medicare for all. I understand the desire for a single-payer healthcare system, and have published various proposals over the years for such a system.

The latest magical-thinking "solution" attracting widespread support (again, without any basis in actual numbers) is Medicare for all. The idea is: take a system (Medicare-Medicaid) that's already bankrupting the government and the nation and expand it from 70 million people to 320 million people.

Uh, right.

Shall we consult reality before embracing delusional "solutions"? Here's a chart of the rise of administrative costs in healthcare, public and private. Proponents of Medicare for All claim admin costs are lower in Medicare, but this conveniently overlooks the estimates that 40% of Medicare costs are paper-shuffling, needless or harmful tests, procedures, etc. and outright fraud.

We know a few things as fact. One is that the populations qualifying for Medicare and Medicaid (the elderly and low-income households) are expanding at a high and very predictable rate.

The other thing we know is that the Medicare-Medicaid costs are rising at a rate far above the growth rate of the economy that supports these programs (GDP), far above the growth rate of tax revenues and far above the growth rate of wages, which matters because payroll taxes fund Medicare.

It doesn't take much to extend these lines and conclude Medicare-Medicaid alone will bankrupt the federal government and the nation. The problem is these programs are bloated by fraud, defensive medicine, predatory pricing for medications, and every other costly ill of our healthcare system.

Like every other centrally funded/regulated sector, Medicare-Medicaid is optimized for maximizing private-sector profits and increasing regulatory costs. This is one manifestation of the diminishing returns on the entire centralized-control model:

We'd all like "solutions" that don't change anything, but when the system itself is the source of our problems, changing nothing guarantees collapse. As noted in the article linked above, various inequalities and asymmetries get resolved by collapse.

Clinging to magical-thinking fixes that change nothing on the fundamental level hastens collapse. In that sense, magical-thinking fixes are "solutions," but not the sort their proponents imagined.

*  *  *

If you found value in this content, please join Charles in seeking solutions by becoming a $1/month patron of my work via patreon.com. Check out both of Charles' new books, Inequality and the Collapse of Privilege ($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle, $8.95 print, $5.95 audiobook) For more, please visit the OTM essentials website.

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Fake Trump's picture

Trump is a snake-oil president.

orangegeek's picture

really???  that you nigga???

junction's picture

For how the United States really works, read the article on New York City rents at:


The article shows how vacancy decontrol was put in place by City Council President Peter Vallone's chief of staff, who then got a job in 1994 from the Rent Stabilization Association that now pays him $800,000 a year.  The decontrol bill was passed with the votes of City Council members who were black and Hispanic, who won't admit they were paid off by Vallone.  Council member Anthony Weiner also voted for decontrol and he now stands by his vote and for Pizzagate.  This vote is a classic example of honest services fraud, where elected government officials sold out their constituents.  Naturally, the U.S. Attorney's office ignored this corruption, empty suits who protect people who will later hire them. 


847328_3527's picture

... not ot mention that $85 Billion is embezzeled from Medicare and Medicaid by fake suppliers, fake doctors, fake chiropracters (are they real anyway?), fraudulent and crooked government office workers, and so on. The medical supply group is esp prone to fraud.


The DOJ should set up a special health care fraud department to do nothing but chase these embezzlers. They can probably save or recover Billions of that money.

Stuck on Zero's picture

The drive toward perfect socialism is the last step before the whole system collpases.

geno-econ's picture

Additional delusion----Limitless Neocon defense spending will preserve a debt ridden society from economic collapse by waging decade old  unwinnable Wars in MEon behalf of SA Royal Kingdom or to prevent a Communist domino takeover of the world.

new game's picture

only one delusion matters:we are  all in unison "believ9ing" our money is good and has value. opt out-lol...

INTJ Economist's picture

I like you, bruh.  I look forward to your posts.  However you miss one important point which is how the federal government actually spends (hint: it's NOT through taxes).  Fed can EASILY "afford" UBI for the masses; it can afford anything and everything, actually, because it creates DIGITAL dollars out of thin air.  I'll admit that I don't know enough about inflation to say what would happen (with certainty) if every citizen in the US suddenly had, for example, $18k per year to live on.  But, per this article, that is beside the point.  The POINT is that being able to pay for UBI is not a problem because the US gov't spends money into existence all the time.

lasvegaspersona's picture

Actually they must borrow it first. Some in Congress can stop that. Some understand the inflation issue, some don't care. Eventually, so far, all fiat currencies have failed. Maybe our current Fed has figured a way to make life easy for all!......ya think?

waspwench's picture

The Gubbmint prints money.   The Gubbmint gives the money to the Tribe (aka the Banks).   The Gubbmint borrows this money back from the Tribe and pays them interest.

The Tribe gets richer and richer and the country gets poorer and poorer.    The Gubbmint has to print more money but can never get out of debt.

This is the purpose of the Fed. as intended by the Rothschilds.

eggsistense's picture

You took the words right out of my mouth.  Alan Greenspan even admitted as much in 2005 when he told Paul Ryan in testimony to Congress that "There is nothing to prevent the Federal Government from creating as much money as it wants and paying it to somebody."  That's because "money" is nothing but a unit of measure.  It all depends on what it is that we decide to measure with "money."  Both air and gold can fill a cup, after all.  The real "magical thinking" is that banks ought to be able to conjure "money" out of thin air based on one's signature on a piece of paper.  I get what Smith is saying and I like his stuff, but in this particular article, he doesn't address the most problematic magical thinking, which is creating money out of nothing and then acting like it's real.

Mustafa Kemal's picture

"The POINT is that being able to pay for UBI is not a problem because the US gov't spends money into existence all the time."

Moreover, how much a dent in the MIC budget would it take?

Of course, thats just the up front expense. The solialogical expense will be huge

Dragon HAwk's picture

But if they can print all the Money they want, we're saved Right?

Akzed's picture

If they can print all the money they want, why tax us?

eggsistense's picture

I get that your question is rhetorical, but Randy Wray gave a great answer in a podcast from a few years ago:

“People need to understand what is the purpose of the tax—I just want to repeat this.  When the British went to Africa, they didn’t need to get pounds from the Africans.  They didn’t need pounds.  All the pounds in Africa came from Britain.  The Africans didn’t use pounds, they didn’t print pounds.  Every pound that an African had came from Britain.  So, the colonial governor in Africa did not need the pounds, he needed the labor.  He wanted the roads built.  OK?  So the purpose of the tax was to move resources, that is, labor, to the colonial governor.  It was not to get pound revenue.

And that is still true today in the UK and in the United States. Our governments do not need dollars or pounds. All the dollars and pounds that they receive came from the government.  The purpose of the tax is to drive a demand for the government’s own currency. The government doesn’t need its own currency—it issues the currency.  It can never run out.”

Muroluvmi's picture

UBI - Unproductive Brainless Individuals. Those are the folks who will be the recipients of such a program.

marathonman's picture

Watched a TruthStreamMedia youtube video the other day that talked about psychological experiments run on high density populations and unlimited free food.  The tests were on rat colonies but were in some ways duplicated on a human scale with housing projects across the US in the 60's.  It never turned into Shangra La.  It always degenerated into a cess pool.  UBI is the same type of deal.  It strips away peoples dignity and will further degenerate society.  The Democrats have been actively doing that for at least 60 years.  Maybe now they'll finally succeed at full degeneration.

Muroluvmi's picture

The UBI sales pitch: folks will be freed to create and invent. Today's worker has the most liesure time in history. What do most folks do with it? Watch youtube and netflix. But UBI will somehow magically motivate them to become creative and inventive. That's some strange logic.

bobdobolina's picture

Pretty fascinating read if you ask me. I'd love to see the underlying data for the chart that shows the growth in healthcare administrators vs the growth in physicians. Something there feels a little off--I can't quite put my finger on it but I don't think that's the whole picture. Even as part of the picture it is still terrifying.

Also, Keynsian economics doesn't necessitate total disregard for the environment. Typically these are considered non-excludable, rivalrous goods (common resources) and must be protected as such else face a tragedy of the commons scenario.

clade7's picture

Question for the membership here:...Is there any fast and simple way for an honestly disabled yet still working nearly 60yr old White guy taxpayer SBO to get on Disability?  Just thinking about Plan B from the article last weekend...I gotta climb a ladder today and patch some woodpecker holes...and I dont bounce as well as I once did...I'm just getting tired of trying to make money if theres free stuff blowing around out there...

MsCreant's picture

Get the right doctor/lawyer/shrink combo.

clade7's picture

Thats the thing...When I need a doctor/dentist, If I cant Heal myself, I pay cash...I have not seen a Doctor in 10yrs....Also want to say...Love your posts MsC!  You have helped me more than you will ever know!

NoDebt's picture

Takes about a year or so and you have to be committed to the process.  Getting a disability determination from the VA is more about persistence than it is about disability.


clade7's picture

Thats the unacceptable deal there ND...It didnt take them 'a year' to peel off my money for the past 40yrs or so.... It was pretty much immediate and non negotiable...

Well, I guess I'm climbling that damned ladder...wish me luck!  (Takes Deep breath)

MsCreant's picture

This is OT and yet maybe not. 

Anyone listening to Rickards talking about this April 21st, trigger event where the BRICS get a greater than 15% influence in the IMF and the dollar is going to start tanking? I know he is selling a product, but, I wonder if anyone here has given this event some thought. What Rickards says about the dollar losing its reserve status is not all that nuts. There are all kinds of deals we know about where countries are agreeing to NOT trade in dollars. 

BigFatUglyBubble's picture

Hence the aggressive Foreign Policy...

MsCreant's picture

That too was my thought, that Trump was clued in and he has changed his tune.

  • Rapidly, Russia is not our friend.
  • Rapidly, we need to remind folks of our military might. Getting Lil' Korean Kim under control shows our "usefulness" as the world's police, for instance.
  • Rapidly, we need to start doing our Allies favors to keep them in the dollar and on our side.
  • Rapidly, he supports NATO. 

I wonder if every flip and every flop could be storied back to this "existential threat?"

seek's picture

It fits in with the long-long-term narrative that everything the US does is about protecting the petrodollar hegemon.

If you view all US actions as being decided by an amoral entity who's sole job is to keep the petrodollar system intact, the world political landscape makes a hell of a lot more sense. It's not pretty, but logically consistent, and explains why we're OK with taking the side of terrorist states and allowing actions that result in the slaughter of innocents. Of course if this truth were revealed and it was shown we were expending our own military's lives for what amounts to a political theater, it wouldn't go over too well.

VK's picture

It no longer makes any logical sense for the USD to be the world's reserve currency. After WW2, the US was close to 50% of global GDP, today it's about 16% and smaller than China in terms of purchasing power. The idea that the US can remain the global hegemony is only if the other competitor nations are bombed to pre-1950. The fact of the matter is that there are hard working intelligent people in all nations, their numbers vary but they are competing with the US for resources and they are doing so quite well. The US is a hegemon in decline and war is the last throw of the dice to regain a lost glory.

Consuelo's picture



 I believe that as well.   In fact, I'd wager it isn't even so much the (real or perceived) $value of the $USD, as it is the continuity of remaining the primary vehicle of global trade, especially with regard to petroleum products.  

11b40's picture

I'm on the same page with you....but don't hold your breath wating to hear about it from the corporate media.

Consuelo's picture



 Be careful with regard to those like Rickards.   Not to short-change the man - he's been around the block a few times.    However, by the time someone like Rickards is out there garnering the type of attention that makes people think he is speaking original thoughts, it is far along time to keep both hands on your stash...

MsCreant's picture

Totally agree, he gets none of mine. 

NoDebt's picture

"But if we look at people already receiving the equivalent of "free money" UBI--disability-- studies find recipients are simply watching more TV and YouTube videos and pursuing opioids, not writing poetry and composing concertos."

Right.  That's what it's supposed to do.  The alternative is that these people go out to commit crimes- idle hands being the devil's workshop and all that.  Because God knows they can't support themselves through gainful employment- their job was either outsourced to China or given to a robot.  Unless you like things messy (crime) or REALLY UGLY (killing the non-productive) your alternative is to pay them just enough to survive and chill them out with drugs.

I'm not saying I'm agreeing with this, I'm just saying that's the argument.

How you pay for it is even more complicated.  The problem is that once you put that money out there what's to stop the rentier class from just raising prices on things, absorbing all that money and leaving everyone no better off than they were before?  The entire tax structure would have to be different than it is today.  

NoDebt's picture

"What actually happens with UBI is recipients become isolated and miserable because UBI strips their lives of meaning, purpose and the need to contribute to a community."

Also part of the plan.  I think the author is mistakenly confusing this as a "bug" when it's actually a "feature".


BigFatUglyBubble's picture

So idiocracy is the plan?

imo The opioid related deaths are going to skyrocket even more than they are now, if (hypothetically) UBI is introduced

NoDebt's picture

Oh, absolutely they will.  The problem for the US is that globalization and automation are all hitting like a tidal wave at the same time as demographics are turning against us.  When you had 2/3 of the people working and 1/3 sucking off the productive it was tolerable.  That number will be 50/50 at best within a few decades.  And that is NOT a tolerable number under the current system.  Like so many things, it's a problem you can choose to tackle or choose to walk away from.  But it's a problem either way.


clade7's picture

Opioid Death/addiction is encouraged by Big Pharma and merely fosters 'measured outcome studies' for more Social Tax payer Funded related activities in a Community ...


Well before an addict overdoses and dies, they peel off a massive unmeasured amount of GDP from Family....Thats the real tragedy...The unrecompensed personal loss wreckage is unmeasurable and unrecoverable by the front line "responders" like Parents....


Its a wonder any Family can make it through such an experience...no help coming for them though, no profit in it to nobody...The utter despair visited upon Parents of an Opioid addict is about the 7th layer of Hell....Seeing the 'Little Kid' Family pictures in the hallway as you put your work boots on early in the morning tears your heart out every single damn day...

11b40's picture

Absolutely, the drug problems will only increase.

I firmly believe that the overwhelming majority of men want to work - Want to have a job, structure in their lives, and to be productive.  They want to be able to support a family and have a personal sense of value, even if they don't consciously recognize it.

For over 40 years I have traveled a territory that covers much of the Southeast.  I watched as the textile mills closed, the furniture factories closed, the main streets dried up, and the towns became ever more seedy and run down.  The drug epidemic and increases in crime walked hand in hand with the demise.  As someone noted above, idle hands are the devils workshop.  Men need something constructive to fill their hours, or there will be problems.  Just look at the generations of welfare mother's who get that monthly check.....seemingly forever, and watch how the morality and competency of parenting has steadily declined.  

Jobs, jobs, jobs......been saying it for 3 decades at least, as I questioned what we would do with all of the poorly educated as their numbers keep growing.  All of this stuff about high-tech jobs is just BS.  Sure, for some it is great (but even those numbers are decreasing), but not for the majority as vast swaths of the population are left behind.  Same with the "service" economy.  I'm sorry, but being a dog groomer is not like turning a lathe and building a table, or repairing a loom.  Giving away our manufacturing base was absolute stupidity, and I don't have a clue how to get it back.  Long term, we are well and truly f**ked.

clade7's picture

As a fellow SE States Mfg traveller and witness to this carnage.... You speak the truth.....thanks for your input here, a guy feels like a lone voice or sole crime scene witness sometimes......I wish you All the best Brother!  To you and your loved ones...I got no answers here either...just know theres a lot of us out there that would be your friend in a heartbeat, and I would consider myself proud to make your aquaintance someday....

11b40's picture

In the early 80's, most of the products we sold were still made in the U.S.  Now, hardly anything we sell is made domestically.

In the 90's, our sales agency had over 2300 accounts in the SE, with a showroom in the Atlanta Market Center, satellite offices in 4 states, plus our home base in SC.  But the 90's also saw the beginnings of a huge consolidation in the retail industry, as Wal-Mart's march across America accelerated.  The regional mass merchants, local department stores, and the stores on main street started their long death spirals.  By the early 2000's, even the catalog showrooms (Best, Service Mdse.) were gone.

2008/09 put the nail in the coffin for many of the independents who had been holding on.  Thank God I got out of my showroom in early 2008 as we wisely decided not to renew the lease after 20 years in that location.  Today, it is just me, my partner, and a part time office manager, down from 16 people a decade ago.....and we work less than 25 accounts.

I know what you mean about being a lone voice.  Best to you, too, kind sir.

Consuelo's picture



And as always...


Don't forget to $buy my book...!!

BigFatUglyBubble's picture

I am putting out a coffee table book of nude (but classy) photos of my wife (as pictured in iconograph.)

I am currently taking pre-orders.

withglee's picture

Clinging to magical-thinking fixes that change nothing on the fundamental level hastens collapse. In that sense, magical-thinking fixes are "solutions," but not the sort their proponents imagined.

I did not see a "solution" presented in this essay. Could someone point it out to me?

If you found value in this content, please join Charles in seeking solutions by becoming a $1/month patron of my work via patreon.com. Check out both of Charles' new books, Inequality and the Collapse of Privilege ($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle, $8.95 print, $5.95 audiobook) For more, please visit the OTM essentials website.

Only two things would lead me to give Charles any money: (1) To see the solution he proposes to mitigagte the problems he illustrates in this essay; and (2) to tell me what money is ... and be right.

I'm not holding my breath.

csmith's picture

Plagues, revolutions, massive wars, collapsed states—these are what reliably reduce economic disparities.(via Arshad A.)


Which tells you that economic "disparities" are the natural state of free human societies. Yes, a calamity puts EVERYONE back closer to the base condition of privation and (even) death. But free, talented people again begin to build better lives again as soon as the tragedy passes.

barysenter's picture

Don't cry Chuck. Volunteer at your local prison. It'll wake you up. You invest in it every day, without knowing a thing about it? Dummy.

MrBoompi's picture

Do we want a healthcare system that actually provides cost-effective services to all US citizens or one which provides outstanding profits to insurance companies, drug companies, or hospitals and other private sector healthcare companies (all cartels)?  Because we will never have both.  

UndertheDRADIS's picture

We can open by making a quick study of who supports which destructive policies the most, then stab them politically by doing the following:

  • Deny the AMA the ability to control the supply of doctors through control of the medical school admissions process.
  • Prosecute and deport Medicare/Medicaid fraudsters. They might not worry about jail, but they really don't want to return to their point of origin.
  • Increase the number of OTC medications, as well as the potency.
  • Make health insurance á la carte and fully competitive across state lines.
  • Torte reform. Worked some wonders in Texas. More doctors and fewer lawyers. Win-win for normal people.
  • Have real Health Savings Accounts that are tax exempt and can be passed on to one's children. The commies' objection to this is that "Only Da Rich" will have anything in the accounts, which isn't the point of the exercise; they're mainly complaining that they don't get to control who gets what. As a matter of fact, any time the commies complain about "Only Da Rich," you can be sure they're unhappy about being denied resources for buying votes.
Rubicon727's picture

What this article fails to include happens to be the REAL monsters involved in America's "healthcare."

Three names who come immediately to mind: BIG INSURANCE, BIG PHARMA, Big Medical Associations 

Those are the true vultures milking American health issues dry.

sam site's picture

You say "there are limits on what robots and automation can and will do: they will only perform work that is highly profitable".

I'm guessing you mean that a business will only invest in a robot if it replaces high-cost labor like welding and painting cars.

The bigger issue is that our hidden globalist rulers want us to create robots to replace rebellious, high cost humanoids. 

The only problem with that is that robots can't see or feel.  In fact they can't even think because they use a table look up depending on the inputs.  Just more delusional globalist propaganda.