The Number That Should Stop You Cold
Let me give you a number that I think about constantly: 168 million. That is how many Americans currently receive a government transfer payment of some kind. Men, women, children. Half the population of the United States is getting a check from the government. Half.
Now before you dismiss this as political commentary, understand that I am talking about this because it has direct, concrete consequences for your money, your retirement, and your financial independence.
How We Got Here
In 1980, 22 million Americans were on Medicaid. Today that number is over 84 million. That is not a rounding error. That is a fundamental restructuring of the American economic relationship between citizen and state. And here is what nobody on either side of the aisle wants to admit openly:
- Both parties grew this system
- Republicans talk about fiscal responsibility and then expand transfer programs when in power
- Democrats are at least honest that they want more government involvement
- The result is the same regardless of who is in charge
Why Politicians of Both Parties Love Dependency
I have been saying this for years and I will keep saying it. Socialism is the perfect business model for politicians. It does not matter if there is an elephant or a donkey on their campaign sign. Here is the logic that every career politician understands even if they will never say it out loud:
- Dependency creates loyalty
- When people rely on a government check, they will vote to protect that check
- The greater the dependency, the greater the political power
- Programs, once created, almost never go away
I said the same thing about the Affordable Care Act when it passed. Once that structure was in place, it was never going away. That was not cynicism. That was an accurate read of how political incentives actually work.
What True Capitalism Actually Threatens
Here is why this matters to your portfolio and your long-term planning. True capitalism is an existential threat to the political class. Think about what capitalism actually does:
- Rewards personal responsibility
- Rewards risk-taking and innovation
- Rewards private initiative
- Makes people independent of the state
Independent people cannot be controlled through dependency. They make their own decisions. They build their own financial lives. Politicians lose leverage over them. That is precisely why what we call capitalism in America today is not really capitalism. It is a managed system full of regulatory capture and barriers to entry that protect established interests while telling everyone else the game is fair.
I have seen this firsthand in my own career. Want to manage institutional money? Better have a lobbyist. Better know the right people. Better be willing to play the game. I was not willing to do that, and I found another way. But most people do not.
What This Means for Your Financial Decisions
I am not telling you this to make you angry, though anger is a reasonable response. I am telling you this because understanding the actual terrain is the only way to navigate it successfully.
Here is what I know after decades of watching this system:
- Government programs expand, they do not contract, plan accordingly
- Inflation is a feature, not a bug, of a system built on transfer payments and deficit spending
- Your financial independence is your protection against being subject to whatever the political class decides next
- Regulations sold as market reforms are almost always instruments of stifling competition and protecting entrenched players
I do not live in denial about where we are. We have been a socialist-leaning economy for a long time. I have been saying it, and the data keeps proving it. My job is not to pretend otherwise. My job is to help you build a financial plan that works in the world as it actually exists, not the world as the talking heads on television describe it.