Socialized medicine is a term used primarily in the United States to refer to certain kinds of publicly-funded health care.[1] The term is used most frequently, and often pejoratively, in the U.S. political debate concerning health care.[2][3][4][5][6] The term was first widely used in the United States by advocates of the American Medical Association in opposition to President Harry S Truman’s 1947 health-care initiative.[7][8][9]

Jonathan Oberlander, a professor of health policy at the University of North Carolina, maintains that the term does not mean anything at all.[10] Exact definitions vary, but the term can refer to any system of medical care that is publicly financed, government administered, or both.

The original meaning was confined to systems in which the government operates health care facilities and employs health care professionals.[10][11][12][13] This narrower usage would apply to the British National Health Service hospital trusts and health systems that operate in other countries as diverse as Finland, Spain, Israel, and Cuba. The United States’ Veterans Health Administration, and the medical departments of the US Army, Navy, and Air Force would also fall under this narrow definition. When used in this way, the narrow definition permits a clear distinction from single payer health insurance systems, in which the government finances health care but is not involved in care delivery.[14][15]

More recently, a few have used the term more broadly to any publicly funded system. Canada’s Medicare system, most of the UK’s NHS general practitioner and dental services, which are all systems where health care is delivered by private business with partial or total government funding, fit this broader definition, as do the health care systems of most of Western Europe. In the United States, Medicare, Medicaid, and the US military’s TRICARE fall under this definition.

Most industrialized countries, and many developing countries, operate some form of publicly-funded health care with universal coverage as the goal. According to the Institute of Medicine and others, the United States is the only wealthy, industrialized nation that does not provide universal health care.[16][17]

The term is often used in the U.S to create an understanding that the health care system would be run by the government, thereby associating it with socialism, which has negative connotations in American political culture.[18] As such its usage is controversial.[4][5][6][19]

Since leading the global drive toward trade liberalization by signing the Global Agreement on Tariffs and Trade in 1947, America has been transformed from the wealthiest nation on earth – its preeminent industrial power – into a skid row bum, literally begging the rest of the world for cash to keep us afloat. Our cumulative trade deficit since 1976, financed by a sell-off of American assets, exceeds $9.5 trillion. What will happen when those assets are depleted? Today’s recession is the answer.

Why? The American work force is the most productive on earth. Our product quality, though it may have fallen short at one time, is now on a par with the Japanese. Our workers have labored tirelessly to improve our competitiveness. Yet our deficit continues to grow. Our median wages and net worth have declined for decades. Our debt has soared.

Clearly, there is something amiss with “free trade.” The concept of free trade is rooted in Ricardo’s principle of comparative advantage. In 1817 Ricardo hypothesized that every nation benefits when it trades what it makes best for products made best by other nations. On the surface, it seems to make sense. But is it possible that this theory is flawed in some way? Is there something that Ricardo didn’t consider?

At this point, I should introduce myself. I am author of a book titled “Five Short Blasts: A New Economic Theory Exposes The Fatal Flaw in Globalization and Its Consequences for America.” My theory is that, as population density rises beyond some optimum level, per capita consumption begins to decline. This occurs because, as people are forced to crowd together and conserve space, it becomes ever more impractical to own many products. Falling per capita consumption, in the face of rising productivity (per capita output, which always rises), inevitably yields rising unemployment and poverty.

This theory has huge ramifications for U.S. policy toward population management (especially immigration policy) and trade. The implications for population policy may be obvious, but why trade? It’s because these effects of an excessive population density – rising unemployment and poverty – are actually imported when we attempt to engage in free trade in manufactured goods with a nation that is much more densely populated. Our economies combine. The work of manufacturing is spread evenly across the combined labor force. But, while the more densely populated nation gets free access to a healthy market, all we get in return is access to a market emaciated by over-crowding and low per capita consumption. The result is an automatic, irreversible trade deficit and loss of jobs, tantamount to economic suicide.

One need look no further than the U.S.’s trade data for proof of this effect. Using 2006 data, an in-depth analysis reveals that, of our top twenty per capita trade deficits in manufactured goods (the trade deficit divided by the population of the country in question), eighteen are with nations much more densely populated than our own. Even more revealing, if the nations of the world are divided equally around the median population density, the U.S. had a trade surplus in manufactured goods of $17 billion with the half of nations below the median population density. With the half above the median, we had a $480 billion deficit!

Our trade deficit with China is getting all of the attention these days. But, when expressed in per capita terms, our deficit with China in manufactured goods is rather unremarkable – nineteenth on the list. Our per capita deficit with other nations such as Japan, Germany, Mexico, Korea and others (all much more densely populated than the U.S.) is worse. My point is not that our deficit with China isn’t a problem, but rather that it’s exactly what we should have expected when we suddenly applied a trade policy that was a proven failure around the world to a country with one fifth of the world’s population.

Ricardo’s principle of comparative advantage is overly simplistic and flawed because it does not take into consideration this population density effect and what happens when two nations grossly disparate in population density attempt to trade freely in manufactured goods. While free trade in natural resources and free trade in manufactured goods between nations of roughly equal population density is indeed beneficial, just as Ricardo predicts, it’s a sure-fire loser when attempting to trade freely in manufactured goods with a nation with an excessive population density.

If you‘re interested in learning more about this important new economic theory, then I invite you to visit either of my web sites at OpenWindowPublishingCo.com or PeteMurphy.wordpress.com where you can read the preface, join in the blog discussion and, of course, buy the book if you like. (It’s also available at Amazon.com.)

Pete Murphy
Author, “Five Short Blasts”