The Breaking Point

by James Dale Davidson

  Apart from its impact in contributing to diabetes by causing obesity, scientists have linked trans fatty acids to type 2 diabetes because of their effect in hampering proper function of the insulin receptor. Meanwhile, a Brazilian study showed that rats fed diets that included partially hydrogenated oils (trans fats) had higher than normal blood glucose as they matured.16 Because of the multiple morbidities associated with diabetes, it creates lots of business for various specialties in health care.

  Diabetes is one of the top two causes of blindness, requiring at least annual visits to ophthalmologists. Diabetics have eighteen times greater risk for kidney failure, thereby employing many renal specialists. It is also the leading cause of lower limb amputation, employing surgeons and creating a bigger market for wheelchairs and artificial prostheses.

  You see how it works.

  Between 40 percent to 50 percent of type 2 diabetics require regular insulin, and most of the others are users of prescription hypoglycemic agents, like the controversial drug Avandia, whose makers appear to have rigged scientific data and fibbed about its safety record. Despite having caused over 83,000 heart attacks, according to the Senate Finance Committee, Avandia is still being prescribed.17

  Regardless of the drug used, almost all diabetics require daily glucose monitoring. The US glucose monitoring market is worth $2.5 billion annually. According to the Center for Disease Control (CDC), 9.3 percent of Americans now have diabetes.18

  The overwhelming evidence that the health of Americans has been compromised by eating a low-fat, high-carb diet laden with fake but economical ingredients with long shelf lives adds an important perspective to the dramatically declining marginal returns in sick care.

  In 1980, health economist H. E. French III, PhD, wrote a study for the American Enterprise Institute, “The Long-Lost Free Market in Health Care: Government and Professional Regulation of Medicine,” in which he stated that the United States spends far more on health care than most other nations, but its health status remained below most industrialized nations. He also pointed out that even though the costs of medical care in the United States had been rising rapidly, health status had not noticeably risen in the same time period. US health care had, however, been characterized by increasing extensive regulation.19

  In the thirty-five years since French wrote his indictment of the poor cost/benefit performance of the American health care system, the nominal costs of medical care in the United States have skyrocketed more than ten times over. We now spend $3.8 trillion a year—greater than the whole GDP of Germany—to be less healthy than we were three decades ago.20

  The Real Reason Health Care Is So Expensive

  Economists have failed to agree on why this is the case. What are the main factors contributing to the plunging marginal returns in health care?

  Different theories have been offered.

  In 1967, economist William Baumol advanced a hypothesis in an American Economic Review article, “Macroeconomics of Unbalanced Growth: The Anatomy of Urban Crisis.” His explanation was that productivity in other areas of the economy was rising so much faster than in health care that increases in the incomes of health-care workers would inevitably exceed productivity growth. Therefore, the relative cost of health care was destined to continuously rise—a phenomenon that became known as Baumol’s Disease.

  There is no lack of evidence for the continual escalation of health care costs, but in my view, Baumol’s Disease is only a partial explanation. Part of the problem, as H. E. French suggested at the time of the Obamacare debate, is deteriorating health due to lifestyle choices. Seen another way, it is all part of the “absurd tax,” to quote Adam Smith, that we pay for the sins of crony capitalism.

  The medical profession has been inventing patients for decades by its collusion with junk food makers, Big Pharma, the insurance companies, professional dietitians, the FDA, and the whole round robin of corrupt crony capitalists who have conspired to feed you the Big Fat Lie.

  Why You Can’t Trust Mainstream Medicine

  At the very least, the abysmal failure of the medical community to make even the slightest inroad into the obesity epidemic opens the door to legitimate questions about whether they sincerely want you to be healthy. This was driven home to me by an exchange I had with a pediatrician when my youngest child required a health certification to enter kindergarten.

  I took Arthur to a doctor reputed to be the best pediatrician in Palm Beach County. She duly examined him, stuck him with a few shots, and then sat me down for a lecture on the importance of a sound diet to promote his health, particularly to avoid obesity. I was flabbergasted when she proceeded to tell me that Arthur should never be permitted to drink whole milk, only the fat-free stuff.

  At the time of this interview, I was already well aware that the indictment of saturated fats in the diet was based on misinformation. Studies disproving the value of skim and nonfat milk were readily available, so I found it strange that they would be unknown to an apparently intelligent doctor.

  To disabuse her of the misimpression, I duly sent the good doctor the results of a Harvard study of 12,829 children ages nine to fourteen that had been published in the Archives of Pediatrics and Adolescent Medicine. It showed, as did the other studies referenced earlier in this chapter, that drinking skim milk, not whole milk, led to weight gain. As reported in the peer-reviewed article, “Contrary to our hypotheses, dietary calcium and skim and 1% milk were associated with weight gain, but dairy fat was not.”

  Astonishingly, the pediatrician told me that “it didn’t matter” whether it was true that drinking skim milk would reduce the chance of my child becoming obese. She was obliged to advise us to follow that recommendation anyway. She said, “As board certified pediatricians, we follow the dietary recommendations set by the American Academy of Pediatrics.”

  Unbelievable.

  I concluded at that moment that the mainstream medical establishment was consciously dispensing perverse recommendations designed to create patients. Thanks to this bogus propaganda, childhood obesity has skyrocketed by 300 percent over the past thirty years: one in three American children, between the ages of ten and seventeen, is now overweight or obese.

  And while I am bashing pediatricians, who must all be married to cardiologists, I must point out another absurd recommendation that should weigh on their consciences if they have any. The American Academy of Pediatricians actually recommended that statins be prescribed for kids as young as eight years old.

  Long after these little fatties have outgrown the equivocal attentions of their pediatricians, they’ll be buying new Mercedes for cardiologists and oncologists, along with the nephrologists, ophthalmologists, and sawbones who will minister to the morbidities of diabetes.

  This seemingly cynical view accords with that expressed by Mancur Olson in A New Approach to the Economics of Healthcare. He wrote: “Why should such a wasteful and expensive system be adopted? Who is responsible for proposing and supporting it? As a hardened economist, I believe that those who profit from the arrangement are the ones who sought it. This belief grows not only out of the lore of my craft but also out of the history of the arrangement at issue, which goes back to a time when the government did not have much to do with the health care system.”21

  Today, and for many decades, government has had a lot to do with the health care system. I would say that the government has long colluded with the food industry and the mainstream medical establishment to encourage Americans to adopt an unhealthful diet that literally creates patients whose miseries must be treated at lavish expense. Pharmaceutical companies are only too delighted to treat the populations poisoned by an unhealthy diet with more poisons that compound the damage.

  As a result, we experience plunging marginal returns on health care spending, along with another danger Olson highlighted in The Rise and Decline of Nations—namely, an increase in “the complexity of understandings.”22 Because you can’t trust your doctor or dietitian to recommend a whol
esome diet, and you certainly can’t trust the FDA or the junk food companies, you have to figure it out for yourself if you hope for a healthy life for your family.

  The Obamacare program of mandatory health insurance to funnel still more trillions into the sick care maw is another long stride in the wrong direction. It rewards the crony capitalists who have sacrificed your health for their own profit.

  In light of Joseph A. Tainter’s thesis in The Collapse of Complex Societies that collapse occurs due to declining marginal returns, the plunging returns in health care alone could trigger national bankruptcy. Force-feeding more money into the system through Obamacare just continues the Big Fat Lie and brings us that much closer to collapse.

  Notes

  1 http://drnevillewilson.com/2013/03/04/lost-and-found-the-fat-facts/.

  2 http://www.dietdoctor.com/stunning-saturated-fat-and-the-european-paradox.

  3 http://www.ncbi.nlm.nih.gov/pubmed?term=%22Archives+of+internal+medicine%22%5BJour%5D+AND+1371%5Bpage%5D+AND+1992%5Bpdat%5D&cmd=detailssearch.

  4 See http://en.wikipedia.org/wiki/Framingham_Heart_Study.

  5 Krunholz, Harlan M., MD, and Teresa E. Seeman, PhD, et al., Journal of the American Medical Association 272, no. 17 (November 2, 1994).

  6 Weverling-Rijnsberger, Annalies W. E., MD, “Total Cholesterol and Risk of Mortality in the Oldest Old,” The Lancet 350, no. 9086 (October 18, 1997).

  7 Horwich, T. B., A. F. Hernandez, D. Dai, C. W. Yancy, and G. C. Fonarow, “Cholesterol Levels and In-Hospital Mortality in Patients with Acute Decompensated Heart Failure,” American Heart Journal 156, no. 6 (December 2008), 1170–76. doi: 10.1016/j.ahj.2008.07.004. Epub 2008 Sep 9.

  8 The Butter Believer, September 6, 2012, http://butterbeliever.com/fat-free-dairy-skim-milk-secrets/.

  9 See http://www.telegraph.co.uk/news/health/news/9426588/Office-workers-burn-as-many-calories-as-hunter-gatherers.html.

  10 http://www.cdc.gov/nchs/fastats/inpatient-surgery.htm.

  11 https://www.niddk.nih.gov/health-information/health-statistics/Pages/overweight-obesity-statistics.aspx.

  12 http://www.wakehealth.edu/News-Releases/2006/Trans_Fat_Leads_To_Weight_Gain_Even_on_Same_Total_Calories,_Animal_Study_Shows.htm.

  13 http://chriskresser.com/the-hidden-truth-about-statins/.

  14 http://time.com/3732605/statins-may-seriously-increase-diabetes-risk/.

  15 http://www.diabetes.org/diabetes-basics/statistics/.

  16 http://www.foodandnutritionresearch.net/index.php/fnr/article/view/28536.

  17 http://www.avandia-heart-lawyers.com/news/pringle_010908.php.

  18 http://www.cdc.gov/diabetes/pubs/statsreport14/national-diabetes-report-web.pdf.

  19 French, F. E., III, “The Long-Lost Free Market in Health Care: Government and Professional Regulation of Medicine,” in A New Approach to the Economics of Health Care, ed. Mancur Olson (Washington, DC: American Enterprise Institute, 1981), 44.

  20 Munro, Dan, “Annual U.S. Healthcare Spending Hits $3.8 Trillion,” Forbes, February 14, 2014, http://www.forbes.com/sites/danmunro/2014/02/02/annual-u-s-healthcare-spending-hits-3-8-trillion/.

  21 Olson, Mancur, ed., A New Approach to the Economics of Health Care (Washington, DC: American Enterprise Institute, 1981), 8.

  22 Olson, Mancur, The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities (New Haven, CT: Yale University Press, 1982), 73.

  Chapter Sixteen

  The Hidden BTU Content of Fiat Money

  Fundamentally, debt is a claim on future money but, since money is itself a claim on the real economy, and hence on energy, debt really amounts to a claim on the energy economy of the future. . . . Energy returns have been declining for a long time, and I believe that growth in the real economy ceased quite some years ago. . . . [T]he, financial ‘shadow’ economy of money and debt has continued to expand, opening up a huge gap between, on the one hand, the economic claims incorporated in the financial system and, on the other, the actual potential of the real economy . . . What it means is that the financial and real economies can be reconciled only if financial claims (meaning both debt and money) are destroyed on a truly enormous scale.1

  —Tim Morgan, Life after Growth

  I don’t usually make paranormal claims. But it seemed that perhaps the simplest way of introducing Dr. Tim Morgan is to tell you that he could be the reincarnation of Frederick Soddy.

  Of course, that’s not exactly like telling you that he is Polly Styrene’s serious older brother. He isn’t. But probably more people recognize Polly Styrene, the late British punk rocker, than know Frederick Soddy, a Nobel Prize winner and pioneer of atomic energy who explained radioactive decay and developed the theory of isotopes. A crater on the far side of the moon was named for him.

  More to the point, Soddy was also a pioneer of biophysical economics and a critic of fractional reserve banking who was among the first to argue that compound interest contradicts the laws of thermodynamics.

  “The ruling passion of the age,” Soddy proclaimed in the 1920s, “is to convert wealth into debt—to exchange a thing with present-day real value (a thing that could be stolen, or broken, or rust or rot before you can manage to use it) for something immutable and unchanging, a claim on wealth that has yet to be made. Money facilitates the exchange; it is,” he argued, “the nothing you get for something before you can get anything.”2

  There is an irony here. Soddy was an actual scientist who tried to import concepts from physics to sharpen the understanding of economic problems—his work had virtually no effect on mainstream economics. The discipline had veered off in another direction where physics was concerned. When the so-called social sciences were under development in the late nineteenth century, Leon Walrus and Vilfredo Pareto, economists from the Lausanne School, sometimes referred to as the Mathematical School, introduced complex mathematical notation to economics to make it seem more like theoretical physics. Yet the assumptions they introduced to make the equations work made economic theorizing less realistic. Soddy’s ambition was not to make economics more mathematical but to ground it more realistically in the laws of thermodynamics. He thought, and I agree, that a major problem with economics was that it relied too much upon mathematical truths that were divorced from the laws of physics.

  Debts are subject to the laws of mathematics rather than physics. Unlike wealth, which is subject to the laws of thermodynamics, debts do not rot with old age and are not consumed in the process of living. On the contrary, they grow at so much percent per annum, by the well-known mathematical laws of simple and compound interest . . . For sufficient reason, the process of compounding is physically impossible, though the process of compound decrement is physically common enough. Because the former leads with passage of time ever more and more rapidly to infinity, which, like minus one, is not a physical but a mathematical quantity, whereas the later leads always more slowly towards zero, which is, as we have seen, the lower limit of physical quantities.3

  Basking “Flamboyantly” in the “Stored Sunlight of Paleozoic Summers”

  Put simply, the first and second laws of thermodynamics mean that perpetual motion is impossible. No scheme or machine can create energy out of nothing or recycle it forever. Before the Industrial Revolution, Soddy tells us, people lived on the energy revenue captured from sunlight by plants, “the original capitalists.” Since then, humankind has augmented photosynthesis by consuming “energy capital” or coal (and oil), which he refers to as the “stored sunlight of Paleozoic summers.”

  The modern “flamboyant period” of using up the capital stock of fossil fuels was perceived by Soddy as a very passing phase, destined to give way to a period when the constraints on energy revenue would be acutely felt. Soddy criticized the conventional belief that the economy is a de facto perpetual motion machine capable of growing to generate infinite wealth. Indeed, he lampooned the very idea of compounding over a long period. As he put it, “If Christ, whose views on the folly of laying up treas
ures on earth are well known, had put by a pound at this rate, it should now be worth an Octillion, and Tariff Reform would be of little help to provide that, even if you colonized the entire stellar universe. . . . It is this absurdity which inverts society, turns good into evil and makes orthodox economics the laughing stock of science. If the consequences were not the familiar atmosphere of our daily lives they would be deemed beyond the legitimate bounds of the most extravagant comic opera.”4 This is a criticism echoed in a more measured way by Dr. Tim Morgan—an intellectual heir, who, however, gives no hint in Life after Growth of ever having heard of Soddy.

  I wonder if he ever heard of Polly Styrene? I suppose it is entirely possible that Morgan could have rediscovered Soddy’s themes without having encountered his work. I started writing about the drag on growth from higher energy prices years before I ever read Soddy’s prescient economic analyses that tie energy depletion and “entropy” back to the laws of thermodynamics.

  Of course, I am more interested in intellectual history than your average punk rock fan. Soddy is interesting for tossing pebbles at the high priests’ windows, while Morgan is interesting for the detail that he marshaled illustrating the radical collapse in Energy Return on Energy Invested (EROEI).

  Now that I have introduced Soddy and Morgan, please put them in your “Favorites” list. There is always a chance you might get a call from Dr. Tim Morgan. Soddy, not so much. But their ideas will be crucial in informing the Breaking Point.