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Monday, June 20, 2005In the post below, I offered a rather disturbing picture of where we stand economically. Comes the question: What do we do about it and how do we work past it?While the cause of degeneration is different, I find something Schumpeterian in my suggestion that democratic capitalism will be its own undoing. But note that the problem is not market forces, but their stifling. What to do? Nothing. How do we work past current conditions? Let the market handle it. I wrote below about nurses' unions, among other things. Right now, there is a shortage of nurses. But there are shortages for workers in a lot of categories. Some of these spots are being filled by volunteers: When the public sector gets too expensive, you get the Rotary Club to pick up the highway for free, get parent volunteers at school and give high school seniors points toward their civic merit grade for helping out at the hospital. In a few years, we'll still have a nurses' shortage. We'll also have unemployed nurses. Why? Entitlement mentalities about health care - both on the part of unionized health care workers and patients from certain sectors have screwed up the market. As a result, there are rising numbers of uninsured. In the worst case, these folks go without care or go bankrupt. More likely, the hospital collects a small percentage and writes off the rest. Right now, we're in a curious spiral: uninsured are treated, costs for the insured go up, insurance gets too expensive, more lose insurance, repeat. We're in the process of killing our current health care financing system. What replaces it? National health care? Why not? It's worked great for Canada and England. I hear our doctors are really enthusiastic about moving to single payer. Right? Our health care system is highly artificial: employer financed health care was created as a way to lift union pay in the face of wage controls. It was the first move that made unions a subset of the rich - they didn't have to worry about illness the way the rest of us did. When wage controls came off, tax deductions for employer health care costs popped up as a way to keep the big business-union racket going with the big players avoiding what the rest of the citizenry had to deal with. But then they kept expanding the entitlement to maintain support for it. It's now collapsing under its own weight because it's artificial, designed not for pure economic motives but in response to market unrealities created by regulatory regimes. The problem is since the people who need care and the people paying the bills are different, everything got skewed. Now it's skewed enough that a lot of clinics in poorer areas are mostly doing fee for service and indigent medicine. When our old system collapses, the one fortunate thing is that a serviceable, albeit inadequate, system will be waiting to take its place. Health care provides just one place for looking at what I believe is ultimately going to happen: From Social Security to union jobs to public education, we're going to find out that the world is capitalist, no matter what you try to regulate it to be, and that the artificial systems, like any other business with a lousy business model, are going to collapse. We've done this a few times before. The depression was the roughest. But the 1990 recession provides a more hopeful model: Schumpeterian creative destruction freed resources - i.e. smart people in useless jobs - for more productive uses. The really useful thing, though, about the 1990 recession is it didn't hit the entire economy at once. I think that Enron, MCI, the internet boom and bust, etc, are the rocky start to a smoother era, one in which we experience a rolling collapse, and a rolling rebuilding. It will feel less secure than what we're used to because the notion of anything being too big to fail will be gone. But in reality, it will be more secure because the very sense of insecurity will force us to move from investing wasted energy on preserving that which is already lost to thinking more about what comes next. The good news in my predictions, if you run with folks like Marcus, is that those hardest hit in the long run will be those who preferred sending a few more folks to the unemployment line to facing the realities of the market place. The good news for us all is that in the emerging environment, those who thrive will not be the ones who wring the most out of those at the bottom but those who see what the future holds and cash in in the process of getting us there. 
posted by gbarto at 11:29 PM |
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