The 80/20 Scam

Under normal circumstances, 80% of the American people will not agree to an arrangement in which they are to be significantly burdened in order to benefit the remaining 20%.

The political entrepreneurs of the left who are marketing the “80-20 package” tend to hit a stone wall of sales resistance whenever the 80% already feel overburdened. The sale becomes impossible when the 20% to be benefited are seen to be undeserving or when the benefit to them appears to be greatly exaggerated.

The 80/20 formula is in fact the realistic maximum burden/benefit ratio for any such sale – assuming that the electorate – (a) is actually consulted and (b) not misled. If you tweak the ratio, say to 70/30, the actual burden on the 70% needs to increase in order for there to be a significant benefit to the remaining 30%. 60/40 is flat out unmarketable (provided people are paying attention) because a critical mass of voters, the productive 60% ACTUALLY KNOW lots and lots to the benefited 40% and begin to think, “They aren’t much worse off that I am”.

And so it goes. Trust me, 80/20 or a number very close to that is the political sweet spot.

And there lies the rub: Over the years, left-driven redistributionist policies have thrived on the “micro-redistribution” market, i.e., those schemes that imposed a tiny burden on the tax-paying 80% in order to benefit a very deserving (recall we’re dealing with perceptions here) 1%. But over the last five decades, the 80/20 game began to flounder because a few hundred “tiny burdens” add up to a real burden.

This is why the game is almost played out. We are now in its dangerous last stages. I say dangerous, because if the left ever manages to move the needle a bit farther, the game changes radically. [And make no mistake, some on the left are willing to use whatever means necessary.]

The goal of the astute members of the left is to simultaneously burden and benefit about 80% of the people such that it is not immediately apparent just who the winners and losers are. This allows the political deal makers to tweak the mix from election to election in order to stay in power.

But there is a classic left-utopian scenario, one even more dangerous. This is the scenario in which an enduring majority of takers, say 55%, are benefited by an enduring minority of bleeders who are forever locked out of political power. In that grim scenario, the left is gambling on keeping the productive-but-exploited class in-country and on-board. This works short term because, after all, where do you run? {Ayn Rand’s Atlas Shrugged is a variation on the capitalist-escape scenario, but was written before outsourcing and upper class guilt-taming had taken hold.} That “trap the rich” game can’t go on forever but, regrettably, it can run long enough to totally wreck a national economy.

If you’ve been following the news, then I probably have your attention.

We are about to enter a life-death struggle, the outcome of which could be the end of the redistributionist left or the demise of the free enterprise system, the “whoops, we killed the golden goose scenario”… at least for the lifetimes of the above-forty generations.

Those of us who deeply care about the future of freedom can be useful in stopping this last-gasp juggernaut of the left (instead of being the left’s useful idiots) provided we are sharply aware of the looming crisis and are willing to stand up and be counted…over and over again.

The left is now desperate to move the needle well past the 80-20 sweet spot. There are three strategies in play: run with a crisis, repeat the lies and exploit survivor guilt:

(a) Crisis exploitation

“No crisis should be wasted” is the admission of an ideologue who knows that a majority of voters would not normally go along with the game plan, absent a crisis, real or manufactured.

(b) Misrepresentation

By now voters are appropriately wary of claims that a given plan will really benefit the putative objects of its attention. Many voters have caught on that the real object of many left wing driven programs is not to benefit the “poor” or “oppressed”, so much as to make those who are well off to feel better about themselves. And many other voters understand that a direct tax on a small percentage of highly productive citizens is an indirect tax on all of us who benefit from living in a highly productive economy. But far too many voters are functionally illiterate when the economics of productive enterprises are concerned.

(c) Guilt manipulation of a plurality of the productive 80%

As most of us know, the guilt game has been going on for two generations, at least, but most of it has been driven by the so called, “oppressed class” guilt. Where economic issues are concerned, most women are no longer fooled. The outer limits of the inherited “racist guilt” game have already been reached. Affirmative action as an engine for reverse (or compensatory) discrimination has run its course; the notion of reparations for the actions of some slaveholders that no living descendant can even name is dismissed out of hand. And no one seems to care whether high achieving Asians get reparations or a “leg up”.

That leaves disparities of our economic circumstances as the remaining “social justice issue” of the age, which places the American left in the awkward place of complaining about “poverty” in the USA. But by any reasonable definition poverty describes the circumstances of fewer than 9% of the US population. The American left wrings its collective hands about this while ignoring the non-voting millions outside our hallowed boundaries for whom merely being “poor” in America would be good fortune indeed.

As of this moment, all three strategies are sort-of working, especially on the minds of that subset of the well-off intelligentsia whose gullible members have been pre-indoctrinated in the “right wing demon” theory of history.

But moderates and non-Marxist inclined liberals are equally worried about a leftwing takeover of the US economy. The Russians and the sane members of the Chinese post-communist communists abandoned state socialism for a sound practical reason. Bureaucratic, authoritarian egalitarianism ends up in a somewhat more equal distribution of economic stagnation and dysfunction. This was the egalitarianism captured in the old joke: The man with the paralyzed right arm pleads with the Commissar, “Please, please comrade – make my right arm the same as my left!” And she walks away from the meeting with two equally paralyzed arms.

Bureaucratic authoritarian egalitarianism Lite ends up dragging down the well-being of the productive 80% to a common denominator so low that the bottom 20% no longer aspires to achieve it.


Before the American people will have a chance to vote again in November 2010 (roughly a third of the Senate and all of the House members are on the ballot) there will be a crucial test. The pending leftwing health reform proposals will, if enacted, lead to an inexorable chain of events that will seriously degrade the level of medical care now enjoyed by the 80% (polls tell us the about 80% of Americans are satisfied with their medical care situation) while marginally improving the overall level of care for the rest.

The dynamic is clear enough from the European and Canadian experiences. Grandiose and unfunded promises are made, often accompanied by poorly thought out and ineptly implemented cost savings. Within two budget cycles, costs continue to rise beyond predicted levels and the other government-supported bureaucracies and special interests begin to complain. Further cost savings are mandated. Then fiction overtakes reality. Needed care is delayed, showing phony savings that amount to deferred and even denied care. Eventually the incompetent bureaucrats who “manage” care achieve only by degrading it. Those with real health problems fly to America…or die.

Bear in mind that people are very rarely denied acutely needed care in the US; otherwise the emergency rooms would not be crowded with indigents.

And to achieve the massive changes proposed by the left, roughly a trillion new public dollars need to be spent over the next several years. So far, the left seems undeterred by the major practical difficulty that the needed money has already been spent – several times over, it appears.

The real problems affecting health case divide into those that can be ameliorated by careful, sensible incremental reform and those that might be addressed by a more comprehensive approach at the state level. Any attempt at a massive federal remake of America’s health care delivery system is comparable to swapping out the engines simultaneously on every commercial jet airliner with untested, environmentally friendly engines costing twice as much, but advertised as saving money on fuel. “What about accidents?” you may ask. That’s rightwing alarmist talk.



A. Three No’s:

  1. NO NEW ENTITLEMENTS. Nothing that will eventually generate an entitlement downstream should be approved (much less a multi-billion starter kit for health care “reform”) until all of the existing under-funded entitlements in the pipeline are curbed and fully funded. Top of the list is the Medicare drug benefit, then Medicare itself.

  2. NO PHONY SAVINGS. Projected cost savings cannot be used as if they were real money. If savings are to be implemented, let them work first before spending them.

  3. NO BURDENS ON PRIVATE PAY-FOR-SERVICE. The self-pay to a willing provider medical service models will save medicine from bureaucratic inefficiencies. Recall that “Hillary-Care” attempted to punish physicians who opted out of the grand federal scheme. “No, no, a thousand times no” to this idea.

B. Five Yes’s

  1. TRANSPARENCY & REAL PRICE DISCLOSURE. Require physicians to transparently post basic fees-for-service, disclosing without penalty the lower fees available to patients who are willing to bypass insurance and simply write checks. Require hospitals to transparently display actual costs, both at admission and at billing, by breaking out the surcharges and price inflation elements that cover the non-paying patients.

  2. FAST TRACK MEDICAL BILL BANKRUPTCY. A separate, streamlined track for medical bill bankruptcy should be established with more lenient provisions. It would apply to the medical debts only.

  3. TAX FREE MEDICAL SAVINGS ACCOUNTS. Without restriction, any taxpayer would be allowed to move money from savings or fresh income into a restricted account that could be used for direct-pay medical services or catastrophic premiums up to 50% percent of one’s annual taxable income. Donation, also tax free, form one account to another person’s similar account in time of need is permitted.

  4. INSURED LARGE RISK POOLS. For catastrophic insurance only, the kind with large deductibles, the industry needs a government-assisted restructuring. This would be incremental reform, state by state. To begin, all restrictions – anti-trust comes to mind – are stripped away to facilitate very large, potentially national medical risk pools to which any medical provider or insurance system could link for a fee. Once a risk pool reached a critical mass (to be determined by the number of states, patients and insurance and provider who sign opt-in agreements) then new patients must be accepted pre-existing conditions notwithstanding. Only a portion of the risk would be insured by a joint state-federal arrangement. For each insurance guarantee, there would be a reasonable liability cap that is related to the deductible. For example, a $10,000 deductible catastrophic policy might have a $1 m cap for insurance purposes. Provider networks could commit beyond the federal-state guarantee level as they determine prudent.

The market would determine, from year to year, the mandatory entry point for a new insured. For example, someone who enters as a child could lock in the lowest deductible. An older adult with a chronic, expensive condition who has never been insured might be allowed in only at the highest deductible. Again, I stress that this sort of thing needs to be implemented incrementally, and in cooperation with individual states, based on their local costs and resources. Eventually there would be a growing national risk pool at the highest deductible level.

  1. INDIGENT CARE CLINICS. Hospitals, whose emergency rooms are clogged with sick poor, uninsured people, would be given regulatory and tax incentives to off-load this group to ancillary clinics, staffed by a mix of hospital-linked medial staff and volunteers. A sliding scale of fees would be used based on ability to pay. Charitable donations, federal tax incentives and state and local government contributions would fill the gap. To the extent that a hospital sets up and adequately staffs such a clinic, it would be released from the obligation to treat indigent “sniffle cases” in the ER. NOTE: Providing direct services in this model is not an entitlement. Nor is the experiment mandated.


Every few years, conservatives and realistic liberals get played by the left. It is time to push back. The 80/20 scam has worn thin, but Americans are frustrated and worried about their future.

The wise admonition of Hillel the Elder comes to mind: “If I am not for myself, who will be for me? If I am not for others, what am I? And if not now, when?”

If we don’t save the engines of prosperity and economic progress for ourselves, who will? If we don’t secure them for the others who will follow us, what are we? If we don’t act now, when do we?


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