Feeding The Beast

We have a habit of creating Beasts in America.  The friendly creature that at first seems so helpful and productive that we feed it and nourish it and come to rely on it, until it grows bigger, and hungrier, and soon we realize that we can't live without it. We realize that It demands sacrifice.

If you're a conservative that is probably your view of the federal government - hence the conservative concept of "starving the beast" by cutting taxes to necessitate the cutting of programs.

I now understand that perspective better because although I don't view the government as a Beast (at the moment), I do see the Beast that is the financial sector.

We have gotten to the point in this country where we have hitched so many wagons to the stock market and investment culture, most notably the retirement savings of a generation, that our entire national morality has been warped into the Cult of the Stock Market Beast.  It was good to us, and now we are obsessed with its every twitch and grimace because our livelihoods depend on its mood.  What was good for the Beast was good for everyone.

The problem is that investments have gone from being the fuel for progress to being parasites on productivity.  A pretty standard Return On Investment for a hedge fund is 20+%.  That means if I have $500,000 to invest I could make $100,000 a year DOING NOTHING.  Whereas if I was an Engineer, Farmer, Funiture-maker, someone that actually does something or makes something - I have to work for a living.

Not only that, but the investment culture, because it is naturally populated by the more powerful and more well connected, has lobbied government to tax investment income differently than regular income.  So even if I make $100,000 as a Doctor, Lawyer, Farmer, Engineer, Filmmaker, whatever, I'll pay more in taxes on that income than I would if I made $100,000 as an investor.

Isn't that kind of insane?  Investment has its purposes, but we've developed a culture surrounding it that is entirely unhealthy - it's a culture in which the stock market's response to world events and policy announcements is given tremendous weight in the public mind.  We get hordes of financial commentators worshipping the market and viscerally reacting positively to anything that makes it go up and negatively to anything that makes it go down.  We get scenes like these, in which Peter Schiff repeatedly warns throughout 2006 and 2007 that the market isn't behaving rationally and is destined for a fall, while investment-class blowhards literally laugh in his face - because anything that is making them money MUST be right and shouldn't be questioned.

If we learn anything from this economic crisis, it has simply got to be that producing goods and services should be valued more highly than having a good return on investment.  We put too high a value on the ability to shuffle money around to create more money, because we only looked at the percent return on paper.  The financial sector grew into a Beast because when we fed it money, it gave us back more money - and we didn't question how it did it, we just celebrated that it did.  Now it has turned on us and instead of shitting out money it's just shitting all over us.

Socialized Medicine vs. Privatized Health

A quick thought on health care in the U.S.

Isn't it just kind of messed up that health care is an industry at all?  Why is it normal that Police and Fire departments are public goods run by the government, but Medicine and Hospitals and Health are private for-profit businesses?

The big (and only) argument I hear against a government-provided Health Care system is that "it's inefficient", which is making less and less sense these days.  After all, how can private health care be efficient when a large portion of the money flowing through the system is being siphoned off as profit?

I would argue that the government would do a far better job of accomplishing the mission "Make our populace healthy".  Private businesses have no incentive to reach that goal - their goal is to make money.  They actually don't care if the populace is healthy or sick, and in some cases they can make more money off of sick people than healthy.  Consider this: You have a disease like Diabetes or HIV that requires a lifetime of treatment, and a private health care/medicine provider has a choice between developing a cure for the disease or a treatment that doesn't cure it, but alleviates the symptoms.  Which would they choose to pursue?  There's less money in curing a disease than there is in treating it forever.  But if you were to objectively ask which option is better for the individual and society - it would be the cure, or to prevent the disease in the first place.  Why do we have a health care system that on a basic level prefers treatments to cures or prevention?

Well, the reason we have that system is because people realized they could make money providing health insurance through Health Management Organizations and they lobbied the Nixon administration to let them do it.  You can hear the conversation Nixon had with John Erlichman about the plan to allow these HMO's here (recorded as one of Nixon's many tapes).  The important section of the conversation being:

Ehrlichman: “Edgar Kaiser is running his Permanente deal for profit. And the reason that he can … the reason he can do it … I had Edgar Kaiser come in … talk to me about this and I went into it in some depth. All the incentives are toward less medical care, because …”

President Nixon: [Unclear.]

Ehrlichman: “… the less care they give them, the more money they make.”

President Nixon: “Fine.”

Where does the profit come from?  It comes from the customers (the American public) paying more and getting less.  Now Erlichman's argument seemed to be that that meant there was an incentive for HMOs to keep people healthy, and that somehow the power of the free market was going to be harnessed to push us all to be healthier and healthier.  Clearly, that didn't happen.

The fact is that sickness, like crime, is not a commodity.  We can't make our streets safer by privatizing the police force and somehow arguing that the free market will incentivize less crime because that means the private police will make more money.  That's crazy.  It's equally crazy that we sell good health the way we sell hamburgers or sports cars.  Obviously the government doesn't need to be in the business of providing sports cars to all its citizens.  But it DOES need to be in the business of ensuring the health and well-being of its citizens.

Well, I guess some people might not agree with that.  But I find it funny that anyone would feel the government should protect them from thieves and hurricanes and China but that diseases should be handled by for-profit enterprise.

But perhaps the biggest issue today is that after the collapse of the financial sector, is the argument that Government is less efficient or trustworthy than private enterprise really one that holds any water?  Sure there are examples of wastefulness in government - but don't those pale in comparison to the completel meltdown of our economy at the hands of greedy and short-sighted investment companies?

It seems to me that the greatest examples of wastefulness and greed in public services are when for-profit business gets its hands on them.  From Halliburton's no-bid cost-plus military contracts to the deregulation of the financial sector to the creation of HMOs - the race for profit always forces the average citizen to take a back seat.  In the end, the government is the only entity that cares first and foremost about American citizens.  We've had years of people trying to tell us otherwise, but the shitstorm we are in now is making it increasingly clear that those arguments were just to trick us into handing over control of public resources to private industries.

The best thing that can happen for us right now is to wrest control of the public goods from for-profit enterprises.  Money should be made off of conveniences and things people choose to buy, not the things that we have to have to keep us safe and healthy.