New York Transit Strike

POSTED BY: Hero
UPDATED: Friday, January 6, 2006 06:29
VIEWED: 3670
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RUE

Monday, December 26, 2005 10:19 PM

DT and Fletch,

I hope you don't mind a composite response.

I just read an interesting phrase called 'free market fundamentalism'. I think it captures an underlying assumption you both have, as evidenced by the phrases "Nothing on this earth can waste money the way a government can waste money ..." and "I feel certain that govt. would f^&k up anything it touched ..."

So I'll use health care as an example to dispute your claims, since there is a lot of data available on the internet.

There is no doubt that the US has the most expensive healthcare system in the world (both per capita and percent GDP). In addition, US healthcare expenses have risen by double-digits (year on year) unlike other healthcare systems. (This information is available pretty much everywhere so I won't link it.)

In the US in 2004, 68.1% of people had private health insurance, 27.2% had government health insurance, and 15.1% had no insurance at all. (US Census Bureau) Of those WITH insurance, approximately 1 in 5 are underinsured. CDC http://www.cdc.gov/mmwr/preview/mmwrhtml/00051237.htm

That means that a devastating illness or injury would likely result in bankruptcy. And in fact, half of all bankruptcy filings are due to medical bills, and 3/4 of those had health insurance. That amounts to 1 million bankruptcy filings per year due to medical bills. http://www.washingtonpost.com/wp-dyn/articles/A9447-2005Feb8.html

So roughly 1 in 3 Americans have no or inadequate health insurance. To highlight how unusual this is, the US is the only developed nation besides S Africa that does not ensure all citizens have health care.

A recent study (no longer available for free) found that 1 in every 5 private insurance dollars was spent on administration alone (no figures were given for the proportion of dollars that went toward profit.)

So far it sums up like this: the US pays far more for medical care and gets far less coverage than other countries.

What does all the money spent get the US consumer? The fact that so many are uninsured/underinsured impacts population statistics.

Disability-adjusted life expectancies are: Denmark 69.4 years, US 70.0, Germany 70.4, Finland 70.5, Luxembourg 71.1, Norway/UK 71.7, Canada 72.0, Switzerland 72.5, Italy 72.7, Sweden 73.0, Australia 73.2, France 73.1, Japan 74.5. Out of developed countries, the US ranks 24th in life expectancy.

Infant mortality is: US 7.2, Italy 6.1, UK 5.9, Australia/Canada/Denmark 5.2, Luxembourg 5.1, Germany 4.9, Switzerland 4.7, France 4.6, Japan/Norway 4.0, Finland 3.9, Sweden 3.5. (WHO The World Health Report 2000)

And now I have to get on with real life. I hope to post more on this topic later.

Nearly everything I know I learned by the grace of others.

SIGNYM

Monday, December 26, 2005 10:53 PM

Quote:
Nothing on this earth can waste money the way a government can waste money

Have you ever worked for government? I've worked for small pharma R&D, a state university biomedical research lab, a private consulting lab, and a government agency. In the realm of research, if you know anyhting about state university labs you know they run on a dime and a prayer. Comparing research, the university where I worked did more important research ("metabolic syndrome"in trauma/ surgery patients) on less $$ than the pharma. In terms of analytical srvices, as supervisor I need to come up with cost figures for our operations and we cost less (internally) for our own analyses than we would have to pay to send it out. So overall I saw less 'waste' in government. And all I need to do is point to Enron to know that a corporation can waste its entire assets right down the toilet. The ingredients for massive waste are simply a large organization w/ no oversight. Government accounting is supposed to eb "transparent". Unless you automatically assume that ANY government mission is a de facto "waste", then your statement is overly broad and not accurate.

Oh, and Hero- striking is simply the worker's equivalent of moving a factory overseas. Apparently you like non-equivalent bargaining.

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Please don't think they give a shit.

RUE

Tuesday, December 27, 2005 1:03 AM

Here are a few more sources and statistics:

Multinational Comparisons of Health System Data, 2002 (Anderson et al, Johns Hopkins University) is a great source on the internet for many healthcare comparative statistics. Newer studies can be located by googling on: oecd "health care".

For example from a 2005 report: http://www.oecd.org/dataoecd/58/47/35624825.pdf
"In 2003, Japan enjoyed the highest life expectancy, with 81.8 years for the whole
population, followed by Iceland, Spain, Switzerland, Australia and Sweden."

"There are also notable differences in life expectancy between OECD countries with similar income per capita. For instance, Japan and Spain have higher life expectancies than would be predicted by their GDP per capita alone, while the United States and Hungary have lower life expectancies than predicted based on income."

"In 2003, OECD countries devoted, on average, 8.8% of their GDP to health spending. However, spending varies considerably across countries ... 15% in the United States ... followed by Switzerland and Germany spent 11.5% and 11.1% of their GDP on health ..." (Remember though, 1/3 of the US is uninsured/underinsured, while everyone is insured in Switzerland and Germany.)

Japan has 23.1 MRIs /1M people, the US has 8.1, Japan has 84 CT sanners /1M the US 14.

Anyway, without belabouring the point, in the US 27.2% of the population is covered by government, and in the rest of the countries it is 100%. And it seems government insurance delivers overall better health, and is cheaper.

Nearly everything I know I learned by the grace of others.

FLETCH2

Tuesday, December 27, 2005 4:50 AM

Read what I actually wrote not what you think I wrote.

Nothing on this earth can waste money the way a government can waste money.

That's because a government can throw almost unlimited resources at a problem rather than have it fail. That is a big problem. I'm not talking R&D I'm talking big programs, ones where failure means political heads will roll. If they don't work you dont see the political advocate of the strategy resign, you see more money thrown at the problem until statistics look up and political reputations are saved.

Now on the issue of healthcare. To my mind it's a simple enough question, do you view it as an essential service like defense and therefore make it a government function, accepting that waste may be the price to ensure quality of service, or do you decide that efficiency is everything in which case maket forces can be used to your advantage?

It's a big question. If you look back before WW2 even defence was not a sacred cow program. The much vaulted "peace dividend" we had in the early 1990's was the way it was in America after a war. There was mass demobilization and cost cutting in defence. In fact if you read "Federalist" you will see the founders believed a strong standing army in peacetime was a danger to liberty.

What happened is that certain people in Washington argued that a strong standing defence was an essential service of government and that it's maintainence was so essential to national survival that almost any cost was acceptable. I find that argument odd. The 1918 flu pandemic killed more Americans than WW1, if defence of the people is a function of government then that should include healthcare as well. If you say that defence of the people is NOT a function of government then why is the defence budget so large?

Anyway, I have things to do.

SIGNYM

Wednesday, December 28, 2005 6:42 PM

Well, since I killed two threads I may as well kill another! Yes, it all depends on what you think a government SHOULD do vis a vis the economic system. But this decision can't be made solely on the basis of internal preference because eventually it will affect how that nation fits into the world economy.

So... Some nations supply the world with oil or other raw goods. Others grind their population down to less than survival wages as long as the fearless leader gets a cut from the corporations and banks. Others compete on the basis of increasing productivity. Still others provide high-end intellectual property. Others- notably the USA- are the consumers. Obviously, all economies are mixed to a certain extent.

Those nations that compete on the basis of high productivity are what is considered the "developed" nations: USA, Canda, Europe and Britain, Japan, and with China making a HUGE bid for inclusion into the upper echelon. The nations who ultimately "win" this competition are those with the highest productivity. High and increasing productivity depends on several essential elements:

dependable transportation and communication systems
a high degree of mechanization along with
a dependable energy system,
an educated, healthy, and motivated workforce
available capital
a milieu that encourages reinvestment and research

To the extent that "the government" can more efficiently provide services in a coordinated fashion (health care, education, roads, loans, etc), removing the burden of providing such services from the "bottom line" of individual corporations - that nation will be a relative success in the world market. The question in this capitalist system ultimately becomes whether productivity increases more quickly in a totally free market or whether it increases more quickly in a "directed" or semi-planned economy. Economies of scale (and the inevitable formation of monopolies from initially free-market systems) seem to argue that large coordinated enterprises are more efficient than smaller competing ones. The success of the Chinese seems to indicate the same thing: a semi-planned economy is more efficient and will utlimately overtake a totally free-market system. Less competitive/ efficient economies will ultimately suffer a degraded living standard.

Now, that doesn't mean to say that I'm in favor of this whole monopolist-government pas de deux. But I'm trying to be a realist here, and staying within the constraints of "the system" as it is, I expect the prize will go to some sort of semi-planned state.

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Please don't think they give a shit.

RUE

Sunday, January 1, 2006 9:11 PM

Fletch2,

I'm not sure what you are trying to say.

To the extent that most developed countries run huge government health programs that they "do not allow to fail", those programs run better and more cheaply than in the US. The populations are healthier. And healthcare is a smaller total economic drag on those economies.

I could have picked education, public transportation, retirement, or infrastructure as examples of the superiority of government programs over public/private or private ones. Superiority in terms of both results and total cost.

So I would appreciate it if you could explain in other terms the essense of your argument. It does not seem to address this point. Thanks.

Nearly everything I know I learned by the grace of others.

SIGNYM

Sunday, January 1, 2006 9:48 PM

I know what Fletch is saying. What he is saying is that if you are a business (or individual) that makes unwise economic choices (or meets unassailable adversity) then you'll go bankrupt. OTOH, if you are a government all you need to do is raise taxes.

However, that's not entirely true. If you're a BIG enough business (like UAL or GM/ Chrysler/Ford, or Savings & Loan sector) and look ready to fail, government will bail you out. If you're a BIG ENOUGH business, government will enact laws to enhance your profits. And, if you are a local or state government, there are limits in the amount of taxes you can collect.

National government are another story. The USA government for example has the power of the printing presses- it can literally make (print, strike) more money to back it's finances. However, even THAT has its limits. If the world eventually decides that there is too much circulating currency which isn't backed by production, then the value of the currecny falls on the world market.

So Fletch is correct in some senses. However, governments have both economic (market forces) and political constraints on their activities.

---------------------------------
Please don't think they give a shit.

RUE

Sunday, January 1, 2006 10:31 PM

I see that we are in parallel and not discussing the same things.

So, to try to tie them together - assume that all government needs is to raise taxes or print money to feed its monopolies. Then these monopolies lack feedback and should be models of waste. You have mentioned some feedback on government. But why do government monopolies reliably outperform ('faster, better, cheaper') public/private or private ones?

Perhaps there are other factors.

I would argue that the private sector has uncalculated factors that reduce cost efficiency. Size alone has plusses and minuses. The larger a business becomes, the more 'economies of scale' exist. If size alone benefits the consumer (indirectly), then the most beneficial business is the largest one possible - a monopoly. But we know that monopolies come with a severe drawback, which is lack of competition. So, is the best business model one of many small (inefficient) businesses competing, or one large (monopolistic) one?

On the drawback side, size generates more hierarchical layers, which is waste. Another drawback is that in private enterprise, size creates more highly paid CEOs, CFOs, boards, managers etc. Equivocally, size accumulates more capital which equals more power. (Whether for good or bad, the potential is there.)

And when it comes to private v public, in private business profit is part of the cost, so by definition one pays more than one gets in value.

So I see that there are unacknowledged costs to private monopolies.

And public/private monopolies contain the worst of both worlds.

Public monopolies have unacknowledged advantages. One is that they are NOT profit driven. There is no mandated difference between price and value. It helps with paperwork - government monopolies don't use as much resources on duplicative paperwork. (And I do mean monopolies, not public/private hybids.) Government hierarchies pay going wages, rather than exhorbitant ones.

These together - the unacknowledged negatives of private business with the unacknowledged positives of government programs, seem to reliably tip the results in favor of government monopolies.

I'd like to address the feedback for government monopolies, but, time is a wastin'.

Later then. Ciao.

Nearly everything I know I learned by the grace of others.

FLETCH2

Monday, January 2, 2006 3:17 AM

With regards to big enough businesses not being allowed to fail by governments GM, UAL etc. The point is that they SHOULD be allowed to fail, only through them failing and new operations taking over their economic niche can change and evolution take place.

When the government bailed out the airlines post 9/11 they said it was because of the adverse reaction to the terrorist attacks, completely ignoring that these companies had been getting into more and more trouble since deregulation. To turn a profit these companies needs to cut costs and probably raise prices, both of which are hard to do if you have overcapacity in the sector. If UAL went to the wall then the Continentals and South Westerns who have made the structural changes nescessary would take up the slack, the 2nd and 3rd sickest airlines would get an economic boost and could survive. Ticket prices will probably go up (prices in Markets go up as well as down in response to supply and demand.)

If as was argued cheap airline tickets are essential to the US economy then rather than gifting a private company public money the government should nationalize it.

As to monopoly's vs competition you are right, monopolies have economies of scale, what they don't have is innovation. AT&T once had a telephone monopoly today we have competition and quality has gone up and cost down. Cellphone companies are currently very competative and innovative in their business models.

RUE

Monday, January 2, 2006 4:39 PM

I have a question for anyone.

It was Bell Labs that invented the transistor (which garnered the three co-inventors the Nobel prize). It was Shewhart of Bell Labs who invented 'quality control'. Edith Flanigen (Union Carbide) discovered over 200 synthetic zeolites (important catalysts for the petro-chemical industry). Nylon and Teflon were synthesized by Dupont.

But now the Japanese auto industry designs and builds hybrid vehicles (a technology now liscensed by Ford in order to enter the market).

American industry - even a large monopolistic company like Bell Telephone - USED to be the beacon of invention and innovation. It was what the Japanese aspired to. Today America is far behind the curve.

What is the difference between American industry of 50 years ago and today?

Nearly everything I know I learned by the grace of others.

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