On the Menu in America: Obesity -- and Economic Ruin

Most Americans say obesity is either an "extremely" or a "very serious" problem to society, even more than cigarettes, according to a recent Gallup poll. Let me tell you, this insight hasn’t come a moment too soon.

At $2.5 trillion annually, America’s biggest budget problem remains healthcare costs. The U.S. healthcare bill is three times the size of the defense budget and nearly two times the whole Russian economy. It is also roughly twice the size of the whole Indian economy, and India has a billion-plus population.

These comparisons always blow me away because healthcare is breaking America faster than promises to pay Social Security and other pension benefits. And healthcare is growing at an average of 6% per year, which means the new costs over the next decade will be a staggering $10 trillion. That is new cost over and above where we currently are.

Let me cut to the chase. What's driving these costs are epidemic rates of obesity and diabetes. Obesity is the primary cause of Type 2 Diabetes and a major contributor to chronic disease. Chronic disease, like diabetes, is the engine for much of what goes wrong with many Americans’ health. If the country knocked out obesity, I’d argue that the United States of America would roar back -- unburdened by unsustainable healthcare costs -- and the country’s economy would be a hell of a lot stronger than it is today.

If Americans became a lot more physically fit, the $2.5 trillion would shrink dramatically. Even if it dropped by a third, the country’s economy would be fixed, in my view.

Simply put, many Americans just weigh too much. They eat tens of millions of cows, pigs, and chickens each year. Probably no tribe of people in the history of humankind has devoured this many animals.

Now eating these animals is just fine. This isn’t an argument for a national conversion to vegetarianism. But raising a cow or a chicken and then butchering it is very, very expensive. Grain is more expensive now than ever and each animal requires a great deal of clean water through life, and then a great deal more through slaughtering. Americans have to substantially cut their meat consumption.

And there’s a potential additional financial benefit to doing this. America’s farmers and ranchers could still produce a full herd, but sell the new overage to overseas markets, especially China. If Americans would be willing to eat fewer hogs, cattle, and chickens -- and export what they don’t eat -- the country could work off the massive debt it currently owes China. Let their citizens consume the animals Americans don’t.

Here’s a simple, clear recommendation: Americans should cut the number of cows, pigs, and chickens they eat by one-third. This could start at the city level, with business and government leaders creating campaigns and initiatives to reduce meat consumption in their towns. If such efforts were to spread from city to city throughout the U.S., it would be breathtaking and this would fix the biggest problem facing the country’s economy. It would cost less for Americans to eat -- and eating less would cut the country’s obesity rates, its healthcare costs, and thus its national debt.

America Desperately Needs More People to “Build That”

President Obama made headlines this week when he said, “If you’ve got a business, you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.”

I’m not going to wade into the politics of this, but rather address the remark. Obama is basically praising government-sponsored innovation, the Internet being a great example. He’s right: The government created the Net. But an innovation, government or otherwise, has zero value until there is a customer for it. We wouldn’t even be talking about the Internet today if America’s rare business builders, the country’s great risk-taking entrepreneurs, hadn’t turned it into a colossal economic engine, creating millions of customers and changing our lives.

This all relates directly to America’s job crisis and the country’s ability to get out of it. Too many American leaders seem unaware that desperately needed new jobs appear only when entrepreneurs commercialize innovation and create customers. Here’s how it works: Entrepreneurs create customers and customers create jobs.

Government-sponsored innovation by itself doesn't create a single job or a single customer -- not much economic energy at all. In fact, innovation often creates more cost.

What America -- and the world -- desperately needs now are more business builders -- more people to “build that.”

Why Stockton's Bankruptcy Should Alarm Us All

The news last week that Stockton, Calif., declared bankruptcy was overshadowed by the Supreme Court’s decision to uphold the Affordable Care Act. But both stories have something in common. They point to the reality that if the United States continues on its current course, the country will go broke.

As I have written before, the U.S. spends $2.5 trillion per year on healthcare costs. That’s money the debt-burdened country already doesn’t have -- and those costs will grow to $4.5 trillion in just 10 years. So, the total projected increases over the next decade reach a staggering 10-year summed total of $10 trillion. This is far more than the U.S. spends on defense, education, or anything else. The debilitating losses from the subprime meltdown don’t even match this amount.

I am convinced America is going broke first and foremost because healthcare costs have been allowed to spin unimaginably out of control.

Regardless of what you think of the Supreme Court’s decision, the healthcare law, while expanding coverage to some groups, is primarily about how insurance money gets moved around, in my view.  I doubt the law will have much of an impact on the big-picture problems in America -- national indebtedness; possible bankruptcy; and incalculable numbers of broken health-benefit and pension promises to employees, bondholders, soldiers, teachers, police officers, and on and on.

So, if America is going broke in large part because of healthcare, what exactly does broke look like? This is a timely question -- America goes broke one important city at a time. Stockton is now your poster child and a portent of things to come. Stockton’s leaders made promises to city workers about health coverage -- as well as other benefits and retirement payments -- that they couldn’t keep. The city is $700 million short because they overpromised workers and now bondholders. 

Now, imagine this suddenly happens in a few other cities, then 100 cities, and then 1,000 cities, and you have a national economic Armageddon.

The solution for Stockton, though it is a little late right now, is to create an economic engine of GDP growth or the people there don’t have a chance. And the city’s leaders had better quit promising workers more money in health and other benefits than the amount raised in taxes they collect. A city’s math has to work. And the math in all U.S. cities has to work because, simply put, those cities make up the American economy. America will suffer or thrive with the prosperity or poverty of its cities.

You may be thinking Stockton is an outlier, but there are some 480 cities in California alone, and any number of them could be going broke today, but have yet to declare bankruptcy.

City leaders everywhere -- not just local elected officials, but business executives, philanthropists, investors, and anyone else who cares about their town’s fate -- had better take a long, hard look at Stockton and ask themselves: “Are we, too, overpromising what we can deliver to our workers in health and other benefits?” More importantly, “Do we have a plan to create sudden, quality GDP growth -- to drive our city’s sales and economic future (and build the kind of tax base that can pay for health benefits in the first place)? Is our city going to be a great place to work and do business?”

Leaders who ask these questions, then set out to find the right answers, are not only great city leaders -- they’re great Americans.