The transformation of the USA -- here comes America 3.0

A man looks over the Affordable Care Act (commonly known as Obamacare) signup page on the HealthCare.gov website. (Reuters)

The recent political deadlock and government shutdown, and the disastrous rollout of ObamaCare, show that something is seriously wrong in Washington, D.C.

What’s going on?

America is going through a transformation, on a scale that few people now realize. The last such fundamental change was from the rural and agrarian society of the Founding era (America 1.0) to the urban and industrial society which is now coming to an end (America 2.0).

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That transition was disruptive and painful, but ultimately led to a better America.

We are now making a similar transition to a post-industrial, networked, decentralized, immensely productive America, with a more individualistic, voluntarist, anti-bureaucratic culture (America 3.0).

Today’s political regime is like legacy software, built for an earlier world.

Institutions of the 20th Century welfare state that once looked permanent are crumbling. The old operating system has been kludged so many times it won’t work much longer. It has to be replaced.

The time-worn liberal-progressive wisdom is simple: See a problem, create a government program to fix it.

ObamaCare proves this approach no longer works.

Social Security lasted many years before it was structurally doomed to insolvency.

Medicare experienced cost overruns from the beginning, but was initially self-sustaining. Yet it now faces $22 trillion in future unfunded liabilities.

Unlike Social Security and Medicare, which were viable when they began, ObamaCare failed before it even got started.

ObamaCare had 82 legally specified start dates, but missed half of them. Waivers have been granted to four million Americans, according to an arbitrary, opaque and politicized process.

The employer mandate has been delayed for a year, in violation of the express language of the law.

Congress got a taxpayer funded bailout of their ObamaCare premiums.

Despite Mr. Obama’s assurances, the Congressional Budget Office found that 14.5 million Americans will lose their insurance plans.

The failed rollout is only the tip of a vast iceberg of failure.

Further, ObamaCare primarily benefits insiders, like insurance companies, who are equipped to play the Washington game.

ObamaCare is simply beyond the scope of anything the Federal government can accomplish. Health care takes up over 17% of US GDP, about $2.8 trillion annually. Attempting to centrally govern a complex economy of this size and complexity was always hopeless.

Unfortunately, while liberal-progressive thought is trapped in the 20th Century, there has been an egregious dearth of creative alternatives from the other side of the political divide.

The Republican party is engaged in a civil war between an institutional wing that shuns controversy, and insurgents who fiercely oppose ObamaCare.

But mere opposition is not enough.

Viable alternative, and a vision of a transformed public sector, and a transformed America are sorely needed.

True reform will embrace the existing trends in our society and in technology, facilitating competition and broad consumer choice.

Health care decisions belong in the hands of citizens, even when they receive government assistance For example, the law should promote health savings accounts that roll over from year to year.

Means-tested subsidies on a sliding scale should be provided to purchase qualified health insurance plans attached to HSAs.

Preexisting conditions would be covered by high risk pools in states, backstopped by block granted Federal funds.

Radically decentralizing decision-making will lead to competitive cost savings and innovation, rather than rationing care to cut costs.

The government shutdown, and the failures of ObamaCare, are dramatic symptoms of an old systems reaching its end.

But this is a time of transition, not decline. It is up to us to begin building the free and prosperous America which will be ours, if we do the work to make it happen.