Q: Their economies are sluggish at best, so are they going to suffer sooner and in worse ways than we will? We're basically doing the same thing, but at a slower rate, is that true?

A: Right. We at least are replacing our population, even though we are doing it in large part with immigrant families. But in Europe the fertility rate is very, very low. They are not replacing their populations and so the typical European country is going to see its population peak and then fall. As they move through time, the burden on taxpayers will just grow and grow. Basically, the average European country has an unfunded liability in today's dollars that's four times the size of its national economy.

Q: Obviously, something is going to have to give. What is most likely to give?

A: When you make promises you haven't funded -- and we're going to have the same problem here as well -- you either have to raise taxes or cut benefits or do both. There will be some combination but there's going to be a lot of pain. The pain is that retirees are not going to get all the health care they thought they were going to get and taxpayers are going to get hit with a higher tax bill than they thought they were going to pay.

Q: So there's no free lunch and there's no free health care, either?

A: No. There are decisions that are being made today that are going to create extreme financial difficulties for our children and grandchildren.

Q: So you think that in the United States the nationalizers of health care have not necessarily won the day?

A: Oh, no. Oh no, no, no. Not at all. Most Americans do not like the idea of government taking over the whole health care system. They're going to try to do it by stealth. Right now all seniors are on a government plan. And by the time this new program SCHIP (State Children's Health Insurance Program) gets under way, we'll have more than half the children in a government health care plan. So gradually through time, more and more people will be enrolled in government health care.

Q: If you had a chance to sit down with President Obama and badger him about government health care policy, what would be the most important thing you'd stress to him?

A: We need to liberate the patients and the doctors because right now everybody's trapped in a very dysfunctional system. There's huge waste and inefficiency. We ought to let the market work in health care the way it works in so many areas of our economy. You do that by allowing patients to control more of the dollars and by allowing doctors to re-package, re-price their services and compete the way other professionals compete.

Q: Are not the eye-care and dental-care industries looked at as freer markets that ought to be copied?

A: "Free market" is probably not the best term. For LASIK surgery and cosmetic surgery, these are markets where there is very little third-party payment. So all the payment is by the patient and the physician is completely free to choose a price, to choose a package, and they compete in those markets the way professionals compete in other markets -- and it works! The real price of those services has gone down over the last decade. You can get a package-price in advance. You know what you are going to pay. You can compare prices. You can often compare quality as well.

Q: On your blog someone asked if 21st-century democracies are capable of creating a fiscally sound set of social welfare programs that don't cannibalize or wreck their own economies in the long run. How would you answer that?

A: We're going to find out. On the plus side, about 30 countries have reformed their social security retirement plans. Chile is the most notable, but 29 other countries have also created private (social security) accounts and are in the process of reform.

But no country has really tackled the health care problem and set up a way that people can pre-fund the health-care expenses that they know they will have in their retirement years. We'll see if the countries can do that and still remain democracies.

Q: And are you an optimist or a pessimist about this?

A: Well, you have to be an optimist. Why would I be doing what I am doing?