It has been with a combination of great amusement and severe annoyance that I’ve experienced US bureaucracy these past two years. While no system is perfect, I’m constantly astounded at how the system manages to survive the countless internal contradictions that should logically have caused it to implode ages ago.
Allow me to elaborate on a few examples.
Americans always regard the Canadian system of socialized healthcare with skepticism. Surely, they say, you can’t expect decent healthcare from a system that’s free to use? What if you need a transplant? Or special surgery? No no no, they say, I will pay for healthcare myself, and that way I’ll be certain that I get the treatment I require. The problem, of course, is that the system has been designed (either with extreme forethought, or the extreme lack thereof) to do everything it can prevent access to healthcare.
One co-worker related to me how she had badly hurt her knee on a ski trip in Lake Tahoe. Rather than seeking emergency care at the ski hill, she insisted on waiting until she returned home so she could have her own physician review the damage and handle the problem. Unfortunately for her, waiting meant that her case was no longer deemed an emergency, and she ended up having to “prove” the injury with two years of “preventative care” (a bastardization of the term if I’ve ever heard one) until her insurance company would allow her to have the surgery. Had she chosen to have the surgery performed right after the accident, it would have been performed immediately.
Cue brain aneurysm…now!
The United States portrays itself as the protector of individual choice, but everything about the bureaucracy it creates for its citizens seems specifically designed to limit choice. Healthcare insurance, for example, will only allow you to visit specific facilities and eliminates the very advantage that most Americans believe they are paying to obtain. While the argument for privatization is strong (e.g. greater efficiency, lower costs), the reality stands in stark contrast to the expected results. I find this hardly surprising, given the sheer volume of paperwork I receive from my insurer anytime I go to the dentist or hospital: I routinely get two “this is not a bill” statements in the mail for each visit, followed by another statement showing that my insurer has paid the bill. It’s no wonder the US is paying three times the amount of Canada on healthcare administration – they send three times as many bills!
This is a common theme in the US: provide the illusion of choice, while making the choice so painful or confusing as to prevent the individual from making any meaningful choice whatsoever.
Consider another healthcare example: The US has a concept called a Flexible Savings Account which is supposed to allow an individual to save funds to cover their medical expenses for the year on a tax-free basis. The idea is that you have part of your paycheck set aside to before taxes to allow you to pay for medical expenses, thereby lowering your taxes. Unfortunately, FSAs are subject to a number of caveats: you can’t change the amount you want to contribute halfway through the year, and you have to forfeit any amount you don’t spend by the end of the year. Pay too much into the FSA and you lose it. Pay too little into the FSA and you don’t get the benefit of reducing your tax bill in the event of an unforeseen medical emergency. It’s a tool to reduce your tax bill, but it only works if you’re a clairvoyant (“I foresee a terrible car accident in June of next year – better put away some cash now!”).
The same is true of 401(k) plans. The idea of a 401(k) plan is to allow you to save for retirement. Unlike RRSPs in Canada, your employer is responsible for administering the 401(k) plan. What this means is that your choice of investment vehicles is limited to those offered by your employer. And if you’re doing outside investing, you can’t consult your financial advisor on how to invest your 401(k) money because they’re not allowed to advise you on funds they’re not managing. Again, it’s a system disguised as a reasonable method to encourage people to save money when, in actual fact, it’s actually an extremely effective instrument of torture for anyone with half a brain.
It’s these kinds of exercises in doublethink that make tax time in the US a fairly stressful affair. The system is designed to keep as much money as possible in people’s hands throughout the year, and as a result it’s more than likely that an individual will have a tax bill come April 15th. Contrast that with Canada: not to sound like an accountant, but I’ve always felt Tax Day to be an occasion for celebration. Unlike our American cousins, Canadians are usually getting money back. Pay up your RRSPs from post-tax dollars, pay your medical bills with post-tax dollars, and then submit a heaping pile of tax credits on your T1! Cha-ching!
Not to sound conspiratorial, but I have a theory why the US focuses on keeping money in people’s hands and undermining their ability to plan their finances effectively. It’s all about keeping people either spending money or giving it to the government. Save too little in your FSA? Well, Uncle Sam will claim additional tax revenue, thank you very much! Save too much in your FSA? Well, you can either spend it on stuff right before the year ends (i.e. stock up on Advil for next April) or forfeit it to Uncle Sam! Need to set up a 401(k) for your employees? Well, you’ll need to pay a company to administer it!
It’s all about keeping the wheels of commerce turning in the short term and ignoring the long term. With savings rates hovering around zero, it’s only a matter of time before the music stops and someone is left without a chair. One can only hope that those residing outside the US won’t be the ones to suffer when that happens and US consumer spending dries up.
