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September 24, 2017

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United States' diverse population and large size pose problems for Obamacare

With the recent inauguration of President Obama, the looming question heavily hangs on the shoulders of Obama and his supporters: Will Obamacare work? Conservatives point to Europe and wonder if it is enough proof that Obama's plans may only lead to the same situation Greece, Italy, Spain, etc. are finding themselves in. On the other side, Liberals point to several Asian and "socialistic" Scandinavian countries, and tell conservatives to stop worrying. (Note: to call countries that implement a handful of social programs "socialist" is not completely accurate and may be misleading.) Both sides have a point.

However, the current situation in Europe does bring up several meaningful considerations.

First, social programs work best with a smaller and homogeneous population. Smaller, homogenous populations are obviously less complicated and more easily managed than diverse and vast populations. It's the law of increasing disorder —the more you have the easier it is to get disorganized. Similar to any business or organization, welfare states must be highly organized and efficient to manage federal programs across the entire nation.

Second, social programs can only survive in stable economies. Welfare states have high costs and those costs must be balanced by sufficient tax revenue. Economies with high unemployment have correspondingly high welfare expenses — but lack the tax revenue to pay for it.

Third, those entering the workforce must be greater than or equal to the amount of those leaving the workforce in order to maintain stable wages and taxes to support the costly social programs. If fewer people are entering the workforce then wages increase. If wages increase, then business costs increase. If businesses pass the added costs on to the consumer, inflation gains steam. If inflation increases, then exports become more expensive and less competitive. Before you know it, the nation has trouble balancing its budgets, let alone the social programs. It's a vicious cycle. Now, here is where the problems come. First, the United States' population is not small or homogenous enough to effectively implement large federal social programs. The U.S. is considered one of the great melting pots of the world. Compare the U.S. with Taiwan — an Asian country that has one of the most successful social health care systems in the world. However, Taiwan is half the size of West Virginia with a population of about 15 million less than California. Now look at Denmark. Although small like Taiwan, Denmark is not nearly as homogenous.

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