The game theory of climate change cooperation

https://dl.dropboxusercontent.com/u/100243807/GameTheoryClimateChangepaper2.docx

FYI if you suffer from insomnia :), here's a recent assignment that I did with some classmates on using game theory principles to motivate cooperation on emissions reduction. It's not my best stuff, but we just want to freaking graduate in a month. :)

Maybe you saw that the UN Intergov't Panel on Climate Change (IPCC) released its updated report, and the situation is graver than the previous worse case scenario. Good times. Part of the problem is that you need to be a meteorologist and statistician to even understand their slimmed down "summary for policymakers". The environmental moment needs to hire the strategic communication consultants that the GOP uses. Hot-button terms like takers, flip-flopper, and death panels seem to resonate better with the public compared to probabilities and scenarios.

And for heaven's sake - tell us how much it's going to COST (5-20% of future global GDP if you can believe - mostly driven by coastal city defense, mega-storm cleanup, and reduced fishing/agriculture), so that it's not just about fluffy polar bears.

https://www.youtube.com/watch?v=IjUb9Y_bvE4

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http://yearsoflivingdangerously.com/

Climate Change series on Showtime.

A humane and intelligent approach to end-of-life medical care

This interview with physician Sherwin Nuland was very thoughtful and IMO is a prudent approach to the uncomfortable subject of managing end-of-life care decisions. I know medicine and death are very personal and emotional subjects, but I think if we dispassionately put the patient's best interests first and keep expectations reasonable, everyone will end up happier (especially the deceased) and society can save a lot of health care resources.

One issue that the doc didn't cover in the interview was assisted suicide, which has few rational arguments against it, and is becoming more accepted nationwide - similar to legal pot and gay marriage.

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Also heard something about end-of-life care on NPR the other day.  There was a particular city that had a big promotion of advanced medical directives.  What they found was that, as a result, medical costs went down quite a bit in their city.  Apparently when people make a positive choice about the type of life they consider worth living it is significantly less expensive than the care legally mandated in the absence of a positive choice.

The major roadblock to those advanced directives is human effort and human emotion.  Understandable and probably not an incredibly high hurdle to overcome.

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Agreed. More and more people are preferring to die relatively peacefully at home or hospice rather than "keep fighting" to the end with all the tubes and drugs in them at County General. And the irony is that the former group tends to last longer, and with less grief on themselves and the family, than the latter (obviously at much lower cost too as you said).

There are plenty of war stories where the stubborn commander refused to face reality and sentenced himself and his men to preventable death. Even worse, a stupid, egomaniac dictator doesn't understand opportunity cost, ignores his generals' pleas, and keeps throwing finite resources at an unwinnable battle, which ironically contributes to losing the overall war - see Stalingrad or Guadalcanal. We tend to mock those men and use their folly as teachable moments. So why can't we apply the same logic to medicine? Unfortunately there is such a thing as a no-win scenario, so the sooner we come to terms with that, the better it is for everyone. Would you gamble your life savings on 1 play at 1/1000 odds at the casino? Of course not - so why do we do it at the hospital? Is it because of moral hazard, or the finality/unknown nature of death?

On a personal note, what I really hate to see are relatives pressuring the dying person to "keep fighting" and "not let the disease win". It gives the false impression that the outcome is mostly in the patient's control, and it's a matter of effort/will. The patient has enough to worry about without that guilt. No one wants to be reminded that they are the source of the everyone's sadness, like it's their fault. Families may bring up outliers like Lance Armstrong, but forget that 99.99% of folks like Lance didn't make it. I'm not saying to abandon all hope, but at least don't impose ludicrous expectations. Unfortunately, the next of kin can get pretty selfish and they may not be ready to let go. But during these tough times, the best thing they can do is show as much comfort and compassion as possible for the dying.

But if it's the patient insisting on exhausting every medical possibility no matter the odds or costs, I am not sure how a physician or relative can/should dissuade them respectfully. 

Accommodating disability/identity going too far?

http://www.politico.com/story/2013/08/bradley-manning-gender-surgery-95797.html
http://www.npr.org/2013/08/28/214831473/new-accessible-playground-rules-may-not-go-far-enough

You may be surprised to hear this from a progressive, but I am getting a bit tired of what I interpret as excessive accommodation (or less flattering... tyranny of the minority). The Constitution protects life, liberty, and the PURSUIT of happiness - not an actual guarantee of happiness (especially when that may result in less liberty for others). Life is hard much of the time for most of us (even "normal" folks); why does society have to address your specific issue at what could be great cost/unfairness to others, some of whom may be even needier by reasonable measures? Part of that stems from the greater diversity and funding for interest groups of course. But maybe part of it is also a bit of egocentrism: my problems are more important than yours. Often "fights for justice/rights/equality" have degenerated into fights for disproportional, preferential treatment (pro-Israel lobby, breast cancer funding, etc.). People rarely take the time to consider that the extra stuff they get may result in involuntary sacrifices from others.

Obviously those with special needs deserve some assistance, compassion, and reasonable laws to govern their treatment. But do we give equivalent concern for other types of needs, such as language barriers, poverty, climate-geography, family situation, non-mainstream religions, or general inability to thrive in this market economy? Many of those factors are also out of the individual's control and often no fault of their own.

First of all, if we run the #s and accessibility/sensitivity measures don't cost the nation that much, then it's a moot point. But there are a gazillion types of disabilities, and some are of course easier to accommodate for than others (and do employers and orgs have to plan for all of them?). I couldn't find summarized figures, but as a case example take North Adams, MA with a pop. of 14K. The DOJ is forcing them to pay $1M over 3-5 years for ADA compliance. I am not sure if this is representative of the overall US or not, but that is $71/resident. Disabled people are about 13% of the nation (43M ppl), but of course not all of them will need every type of ADA modification. To put it in perspective, a single person with a $50K income contributed $73 towards science/tech research in their federal tax return. So North Adams was spending as much on ADA compliance (that may nor may not help anyone) as they were on research (that ironically could reduce/mitigate disabilities). So we're robbing from the future to pay for quasi-arbitrary mandates. I am sure some of those upgrades were serious and needed, but I'm also pretty sure some weren't. 

With all our crumbling schools, bridges, power grids, etc., we have to prioritize our spending by cost/benefit. Maybe that is cold, and of course we don't want to leave critically needy people hanging, but ultimately if we spend $ smarter, America will be better off. I wonder if people even collect data regarding how many Braille signs are actually used by the blind, how many CC-hearing impaired tools are actually used by the deaf, what % of workers are self-identified as disabled, or how many ADA accessible bathrooms/parking stalls/etc. are "surplus". There's no point imposing all these costs on businesses and other orgs if they're not even helping the handicapped much.

The various versions of ADA were meant to be civil rights legislation preventing discrimination against the handicapped, which is probably good. But according to wiki sources below, the Act is so vague and inconsistent (like most legislation) that it may actually make it harder for the handicapped to get some jobs, and opened the door to an avalanche of litigation. Of course the disabilities with the best advocacy assets got more favorable attention/provisions (how does one rank disabilities anyway?).

http://en.wikipedia.org/wiki/Americans_with_Disabilities_Act_of_1990

People should have equal rights and "relatively" equal access to public services and life activities. But that doesn't mean we can all enjoy them equally. People have "disadvantages", whether mental, physical, emotional, economic, or otherwise that may significantly reduce their access to privileged or even basic stuff. We can't remedy 100% of those cases, and it would probably be highly corrupt and oppressive if we tried. Sometime it's morally right and maybe socially justified to try, but we need to give it a lot more thought before imposing sweeping mandates on a community, or the entire nation.

Some of these comments apply to identity issues too. I'm sorry, but society does not have to bend over backwards just so you can "be who you are". ALL of us put on masks every day and have to conform to some other persona just to be part of society. We don't have unlimited, absolute freedom and liberty. Reasonable accommodations are fine, but that is of course subjective and I am not sure if legislators or even judges are the best people to make the call. I wonder how much of it is real personal strife and how much is just vanity or an attention grab. I really doubt most elementary kids can be certain of their gender identity; they've barely spent any time at all as that gender. I know it is a real issue for some, but I can envision a lot of misunderstanding and problems associated with this type of law. Surely it is wrong for kids to be discriminated against based on what gender they want to associate with and what society expects them to have. But the law can't prevent every wrong from occurring, and this could cause disturbance and tension for many other students and their families. Maybe the best solution is to build a solo unisex bathroom in each school? But that isn't much different than enforcing ADA building rules I guess.

MBA students have highest cheating rates

http://www.denverpost.com/business/ci_4433207

Undergrads seem to have much higher cheating rates (into the 80%s!) But the survey is limited by self-reporting, and the data range is fairly narrow (56-45% over most majors). Though those principled humanities and social sciences students were the most ethical, down at a 39% cheating rate (because they know that even a 4.0 GPA won't stop them from being poor for life LOL). Interestingly law students had low cheating rates too, or maybe they just lied on the survey!

Some possible reasons for this:
- With so much competition for top education and jobs (and those factors greatly influence lifetime earning and even quality of life), grades and scores are more critical than ever.
- Education is more and more seen as a means to an end, with grades as the goal instead of mastery of a subject (in that case, cheating would be counter-productive).
- Students are exposed to way more examples in the popular culture and mainstream media of cheaters prospering (or at least getting away with it), rather than cheaters getting punished and honest people prospering.
- Anti-cheating tech lags far behind cheating-enabling tech
- Parents and society are emphasizing individual accomplishment, status, and material wealth more than selflessness and personal character (maybe humanity has always been like this to a certain extent, but as an example of how character used to trump even survival under different social expectations: http://www.northcountrypublicradio.org/news/npr/150421710/why-didn-t-passengers-panic-on-the-titanic)

More on the "cheating culture" in the US: http://www.kqed.org/a/forum/R201204240900

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Yes good point. Students and their families feel like they are forking over so much $ that they are "entitled" to get good grades and good jobs. And they know they will be under financial pressure right when they graduate, which is a potent motivator. Apparently student loan interest rates may double this summer, unless Washington gets its act together and extends the deadline.

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Definitely growing up college degree was never a question in my household, it was a "must" requirement before my sister and I moved into adulthood. So we took out student loans and followed down the yellow brick road.

But we weren't talking $100k like some of these recent grads interviewed by NPR and Yahoo in recent months.

I wonder at what price point does college degree becomes "not worth it"?  When I was in college, $100k debt was something that was only associated with JD or MD, whole another 3-4 yrs of education.  However, apparently college tuition has soared since those days that college grads are leaving with 6 figure debts (either I'm really old or tuition has gone up at alarming rate)

I understand that the job market is getting tougher and college degree has become somewhat of a norm, but may be then it's time to change that social perception? May be we as regular persons and employers should be open to seeing more people not going to 4 yr college? I wonder if that is possible.

Also, what is the driver behind the rising cost of higher education, higher than that of rise of standard of living, inflation etc? most schools are classified as "non- prof" orgs so I assume it isn't for profit.I'm sure the schools have their "reasons" but where is it (money) going? who actually ends up with them?

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First off, tuition since my son started college 3 years ago has gone up 80% in that time.  Professors haven't had raises(unless they were promoted) in the last 10 years.  Meanwhile, the administrators enjoy an average 10% increase annually in that same timeframe.

Secondly, the reason tuition is going up is because the regents of these not for profit schools who, at one time, were committed to the education of Californians, have been taken over by privatization hounds.   

http://ucsdfa.org/ucsf-chancellor-susan-desmond-hellmann-corporate-privatizer-and-union-buster-wants-ucsf-out-of-the-uc-system/530
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And funding from tax dollars has become so precarious for some public schools that they are shifting the costs to students or semi-privatizing (professional schools can do this easier). And with the surge of cheap credit in the '90s and promise of lucrative jobs in the bull market, I guess the regents felt they could keep raising fees above inflation as students and their families became less price sensitive. Now that the recession has hit (it hit school endowments and donations too) and some families are over-leveraged, school really looks unaffordable, yet demand is inelastic because a bachelor's or above is so critical for better pay and more stable employment.

Since elite colleges are so pricey and hard to get into, some org's are looking into giving "substitute degrees" or "open universities" to students who learn over the web. Our economy is in such need for skilled tech labor, and there is an untapped talent pool in Asia (and at home) that can't access or afford top Western tech schools. So by getting similarly rigorous online classes and some sort of certificate, hopefully they can be eligible for jobs in the West too. I am sure it won't be a fix-all, but we need to rethink alternatives to the expensive and arguably obsolete 4-year university system - and no I don't mean Univ. of Phoenix. Maybe there can be more tiers of degree types beyond just associate and bachelor's.

http://www.kqed.org/a/forum/R201204091000

Regarding the UCSF situation, I think that is sick also. Since UCSF is a grad school, its cost structure is a lot different, and because it is an elite health science hub, of course it is more profitable than UC Riverside. But the UC charter is to serve the interests of the PEOPLE OF CA. And within the UC System, the strong should support the weak, meaning UCSF is supposed to subsidize UC Riverside. Just like there is a net outflow of federal taxes from places like NY and CA to places like AL and SC. That is part of being in a community, unless we want to espouse social Darwinism like the Romney types promote.

Wal-mart: the high cost of low price

http://www.contracostatimes.com/mld/miamiherald/business/special_packages/busin...

http://walmartwatch.com/home/pages/issues

I recently watched Greenwald’s critical documentary about Wal-Mart, and it was fairly well made. Of course we know the company’s reputation, rarely shop there because most of our communities realized the negative effects, and city officials felt that the backlash wasn’t worth the financial perks. I only occasionally shopped there during my college years, plagued by a pretty tight budget, but for sure I’m done with the big box stores (I’ll make an exception with Target for obvious reasons). Like the sweatshop scandals by Gap, Nike, and Kathy Lee in the ‘90s, we know that Wal-Mart is not the sole perpetrator of unethical commercial activities. Other retailers play the game just as ruthlessly (and in some cases, illegally), but Wal-Mart’s utter domination of the market and slew of fines/lawsuits in the press are potential indications that they may be the most egregious violators of the lot. Actually, I had a hard time finding articles about other big box companies’ legal issues, such as Kmart, Target, Ikea, and Home Depot.

http://news.bbc.co.uk/1/hi/business/3600976.stm (Home Depot $5.5M sex discrimination settlement, but Wal-Mart may be in for a much worse penalty, see below)

http://news.bbc.co.uk/1/hi/business/4179132.stm (Kmart executives misconduct during the company’s bankruptcy filings)

http://news.bbc.co.uk/1/hi/england/london/4179930.stm (Ikea has fought some battles for the rights to expand into new locations, but seems very employee-friendly, even accommodating Muslim workers with Ikea-labeled headscarves!)

Wal-Mart is the largest company in the world in terms of employment and sales revenue (ExxonMobil is slightly larger if you use market capital as the metric), so it’s an obvious target of criticism. Some proponents think that Wal-Mart criticism is mostly jealousy backlash. They mastered the system and won the game better than other retailers. This is fairly clear, and Wal-Mart stock gains paid a lot of my college tuition. But what did such “success” cost the world, just so certain Wal-Mart heirs, managers, and shareholders could gain so much? And yes, millions of consumers saved money on daily goods along the way – but did they pay in other ways?

I think the film emphasized isolated events and anecdotes too often, instead of offering systemic analyses of detrimental Wal-Mart business practices (but it’s a pop-documentary, not an article in The Economist). But like his previous film “Outfoxed”, the director used former employees very effectively to set the table and paint Wal-Mart as a very callous, duplicitous, negligent, and insanely greedy organization. He focuses on many “Red State” communities, and interviews mostly Middle America, apple pie Republicans/conservatives harshly impacted by Wal-Mart. This gives the criticisms more grassroots credibility and less of an anti-corporation, conspiracy theory feel, as was the case with Fox. I have the movie on DVD if you’d like to borrow, and it’s only 97 min.

Of course everyone loves a deal, and Wal-Mart capitalizes on the avarice and financial pressure that most Americans and foreigners are under for much of their lives. Very few people condone poor labor practices and corporate irresponsibility, but if it doesn’t affect them directly, they can turn a blind eye and sleep soundly at night, basking in the glory of how much cash they saved from their last spree. But people save 100% of their hard-earned cash if they control themselves and refrain from buying shit they don’t need. Unfortunately, these Wal-Mart savings don’t materialize out of thin air, and taxpayers, the environment, competing businesses, and employees/laborers have suffered dearly (and in some cases, unjustly) to provide them.

Overhead and the bottom line are crushing sometimes, yet Wal-Mart does more sales than any other company, retail or otherwise. The tacit strategy is ingenious (if we live in a moral vacuum): import dirt-cheap goods from the Third World (abused, destitute foreign labor in unsafe facilities), manipulate political leaders to offer commercial and construction incentives, build an eyesore big box just outside the city limits for zoning and tax perks, out-compete local businesses with merciless ferocity, pay desperate employees shit and offer few tangible benefits, intimidate “troublemakers” and crush any trace of labor unions, yet maintain the good old Americana image that Sam Walton engendered (but I’m sure he’s rolling in his grave now and loathes his greedy, squabbling progeny). Then build an identical Wal-Mart nearby, watch the store staffs compete with each other to the death, close down the less-profitable location, kick the superfluous employees to the curb, leave a gutted empty shell for other business that are too small to fill it, and move on to the next community – like a bunch of LOCUSTS.

Of course no one “forces” anyone to work, shop, or buy stock from Wal-Mart, and it’s “their own fault” if other businesses can’t stay out of the red. I guess it’s the same as poor people in the South were at fault after Katrina. We supposedly elected the government officials who condone or encourage illegal or unethical Wal-Mart practices. No one is calling for mom-and-pop business subsidies, like how the West helps its farmers to out-compete the agriculture of developing nations. Boycotts, protests, and strikes can work, but they’re hard to organize and execute, especially when multi-million-dollar legal hit men are set upon the wee consumers. And many customers are infants sucking on Wal-Mart’s teat, almost financially reliant (or addicted) on the cheap products provided. That’s why we can’t let market forces rule our daily lives, because the system is too vicious and manipulative so even conscientious, law-abiding individuals may not stand a chance to resist. Wal-Mart is an obvious example of the system taken to the extreme. Now for a few specifics to corroborate issues addressed in the film.

COMPANY IMAGE

http://news.bbc.co.uk/1/hi/business/4490434.stm

http://www.usatoday.com/money/industries/retail/2005-08-25-wal-mart_x.htm

In the past few years, Wal-Mart’s media blitz focused on “American values” and supposedly illustrated how the corporate giant helps people, communities, and the country as a whole. Wal-Mart promotes a great family life, provides many avenues for promotion (you have better chances if you’re a white male), and gives back to locals. Basically, they’re god’s gift to the world and the savior of the American family. But since their widespread negative press has basically tanked the “good guy” image beyond repair (Zogby poll shows 59% think they’re bad for the USA), now they’re going for star power endorsements (Beyoncé, etc.) to attract people back.

Ferocious companies do what is most financially profitable. If lawsuit settlements over the long term are less costly than improving environmental impact, employee benefits, and fair labor practices for thousands of stores, then so be it. If positive advertising and the guise of an “ethically conscious” corporation will benefit sales according to research projections, then the company will adopt that strategy. But if a company is hated but still very profitable, they have no incentive to deviate from the status quo, like Halliburton, Enron, or McDonald’s in some nations. But if poor image or bad behavior become too costly, of course the shareholders will be the first ones to make a fuss and demand reforms, any maybe not because they’re such concerned citizens: http://news.bbc.co.uk/1/hi/business/4605733.stm. Wal-Mart is a good Christian company with good Christian values and employees. But where would Jesus shop (if he shops at all)? http://www.fortwayne.com/mld/journalgazette/business/13388477.htm

As a side note, it’s ironic that Wal-Mart’s hometown of Bentonville, Arkansas is a living museum dedicated to the post-WWII Americana that we’ve all read about and seen on TV sitcoms. Ironically, their current business practices are endangering (and in many cases eradicating) such a historical treasure from US society. http://news.bbc.co.uk/1/hi/world/americas/2787951.stm

WAGES

http://news.bbc.co.uk/1/hi/business/4377344.stm

CEO Lee Scott has a lot of nice things to say about his company (http://news.bbc.co.uk/1/hi/business/3620956.stm), does accurately state that Wal-Mart pays its employees well above the minimum wage, and is actually lobbying Congress to raise the national minimum (even though the anti-labor Senate rejected a hike to $6.25, which isn’t even close to a living wage in many Metropolitan areas). I suppose he wants to do the right thing for the wrong reasons. Of course he won’t offer raises to his grunts (that would compromise their $10B/year profits), but wants lower-income Americans to have more spending money to bring to Wal-Mart. The average pay of $9/hour is well above the pathetic $5.15 minimum, but actually they force “full time” workers into 30-hour or less workweeks, which won’t pay the bills even at $9/hour. In addition, employees are encouraged to spend their fresh paychecks on Wal-Mart goods (at meager employee discounts), thereby reinvesting the money in the company (or making sure it never leaves). A hike in minimum wage is probably meant to attack Wal-Mart’s competition, who may provide proper full-time hours for their staff but can’t afford any pay raises (and don’t have the political clout that Wal-Mart has for tax breaks).

But if they pay workers so fairly, why can’t employees make ends meet by shopping at the company where low prices are guaranteed, “always”? http://www.alternet.org/story/16111/. I’ll discuss the specifics in the last section about community friction, but Wal-Mart also encourages workers to seek government aid on the side: welfare, Medicaid, etc. Ridiculous, isn’t it – why do employees need welfare if Wal-Mart pays fair wages? Why do employees of a “worker-friendly” company need to seek outside assistance? This was another important factor in the unemployment statistics battles during the 2004 presidential campaign. It is true that the USA has very low unemployment compared to other nations, but those figures of 4-5% don’t take into account chronically unemployed people, incarcerated individuals, as well as the droves of underemployed citizens (such as Wal-Mart associates who can’t pay the bills with one job). Now we see why our parents pushed us so hard to get a good education and avoid these headaches. Wal-Mart’s employee health plan is apparently really shitty, and often they must work overtime with no bonus pay. So the drain on social services by Wal-Mart employees is actually costing the government and taxpayers a lot (estimated in the billions nationwide). This makes the $5 DVDs and T-shirts a lot less desirable.

God save us, Wal-Mart wants to get into banking too:

http://news.yahoo.com/s/nm/20051216/pl_nm/congress_walmart_dc_2

GLOBALIZATION

http://news.bbc.co.uk/1/hi/business/4530522.stm

Wal-Mart has expanded to dozens of countries and even tapped the vast Chinese market. But as A was telling me, they’re less successful over there because much cheaper goods are also available in the form of Chinese street markets and contraband (can you imagine Wal-Mart as a moderately-classy retailer?). They also buy up struggling retail/food chains in foreign nations like Japan, Brazil, and the UK. I think they are trying to buy out Safeway too. Many people are complaining about the Wal-Mart “monopoly”, and sadly we are entering some troubling territory.

http://news.bbc.co.uk/1/hi/business/4243676.stm

And of course Wal-Mart capitalizes on cheap foreign manufacturing labor. As was the case with Nike and Gap in the ‘90s, Wal-Mart was investigated and sued (pending) for unethical practices in their overseas factories. Wal-Mart auditors know what’s going on, but they pretend all is well when they make their inspection visits. The local factory managers threaten the workers and order them to lie and tell the Yankees what they want to hear, or they lose their jobs. See no evil; hear no evil, so the auditors report back to Bentonville that all is well from Asia and Latin America.

Maybe you remember the case of Mexico’s protest to a proposed Wal-Mart expansion near the ruins of the Teotihuacan Aztec archaeological site. They won and the people lost. http://news.bbc.co.uk/1/hi/business/3747580.stm. But there is still hope; many US communities have successfully persuaded their local government to block Wal-Mart intrusion into their hometowns (Inglewood was a recent major victory, and my county also narrowly voted down big box intrusion).

UNION ISSUES

http://news.bbc.co.uk/1/hi/business/4175914.stm

http://news.bbc.co.uk/1/hi/world/americas/2496357.stm

Since the USA is one of the least labor-friendly of the developed nations, Wal-Mart permits its workers in overseas stores to unionize, but fiercely discourages Americans from doing so. Supposedly they permit unions but don’t recognize them (I’m not sure what this means), and claim that their workers have not chosen to unionize. Others would allege that Wal-Mart management “browbeats” them into that decision. Their environment of “open communication” with management and fair employee relations preclude the need for collective bargaining, according to them. Quebec has some of the strongest labor laws in Canada, and a Wal-Mart store there became the first in North America with union labor, though the company has fought it fiercely in court of course (http://news.bbc.co.uk/1/hi/business/3532580.stm). The courts upheld the people’s right to unionize, but moot point I guess, because Wal-Mart decided to close the store instead of succumbing to employee empowerment (http://money.cnn.com/2005/02/09/news/international/walmart_canada/). Wal-Mart treats unions like the plague, and it is one of their highest priorities to stamp out any potential “contaminations” before it affects their giant million-plus-employee, mass consumption empire.

If Wal-Mart is so employee friendly and fair to everyone, why are they so afraid of unions? Unlike the official statement suggested, it was clear that a majority of workers wanted union representation at this store, as I believe is the case with most, if not all, American branches. The documentary expanded on this issue greatly, and they claim that anti-union policies are actually systemic and advocated from Headquarters. At the slightest omission of “union”, employees in question are monitored and intimidated. A “union-busting task force” is flown via private jet from Bentonville to manage the problem (they probably handle such “emergencies” a lot better than FEMA). Surveillance equipment is set up, and other workers are forced to alienate the “troublemakers” or risk losing their jobs as well. As we all know from the American political process, lethargy and apathy usually trump activism and the desire to risk one’s neck to do the right thing. And the larger the population, the harder it is to mobilize and inspire them. It is very challenging to overcome the inertia and assemble dozens, if not hundreds, of workers to seek legal counsel and unionize. So all Wal-Mart needs to do is make a few surgical attacks to sap the momentum of the movement, and terrorize meek workers on the fence into submission. They are then cajoled into signing some bogus statement supposedly documenting their lack of desire for labor unions. Managers are actually formally instructed on union busting from above, as the United Food and Commercial Workers (UFCW) website below claims.

http://www.ufcw.org/issues_and_actions/walmart_workers_campaign_info/relevant_l...

Now I know unions aren’t squeaky clean, free of corruption, and may not always have the best interests of the workers in mind, but someone has to keep corporate greed and exploitation in check. Ever since the destruction of the mob-infested teamsters and the gradual disappearance of the American manufacturing sector, labor rights have gotten the shaft. With conservative leadership in the 20^th century (especially Reagan), the trend has shifted from the FDR model towards a more pro-corporate, laissez-faire, de-regulated climate. Unions are losing political clout and overall membership, and were blatantly threatened as recently as the GOP-sponsored California Special Election (fortunately all of the Governator’s measures fell short, by a scary, razor-thin margin in some cases). Like “liberal”, the term and connotations of “union” have become taboo in Mainstream America, mostly due to conservative politics. American wealth (especially for the richest 10%, and even more so for CEOs) has boomed since 1980, yet real wages have remained stagnant or declined. Benefits have also declined sharply (heath care especially, both in overall employee coverage and cost/quality of care, http://www.kaisernetwork.org/daily_reports/rep_index.cfm?DR_ID=32584), and none of us in my generation are counting on Social Security. It’s not a great time to work in America unless you’re a manager or skilled professional. Surely foreign workers are clawing and scratching to get a shitty service sector job here, as compared to the impoverished regions they came from. But American businesses used to treat their workers better (MUCH BETTER), and no executive can claim that “hard times” are prevented them from properly providing for their flock, while they give themselves huge bonuses. I don’t want to get into a huge economics discussion here (lack of interest and qualifications), but it’s clear that the upper crust has profited much more than the working class during said time period, and often at their expense.

http://www.nerinet.org/sc/unions.php

http://www.faireconomy.org/research/CEO_Pay_charts.html

Unions may be one of the few weapons remaining for less-educated and voiceless workers to defend themselves, their livelihoods, and their rights as human beings (a.k.a. “means of production” according to Marx). I know we hate ambulance-chasing lawyers and frivolous lawsuits, but as repugnant as they may be sometimes, they also serve to keep corporate negligence in check. Without the threat of lawsuits, I don’t think we can trust corporate ethics to double-check every product and service for safety, reliability, and accurate advertising if it endangers profits. Similarly, without the threat of strikes and collective bargaining, I don’t think we can trust companies to treat workers decently (eye of the beholder of course) and on par with American values. Health care and retirement are becoming even larger drains on company coffers. But some of us believe that such benefits are compulsory, out of loyalty to workers and respect for their years of diligent labor, and I think Sam Walton did too. The welfare states in Europe definitely agree, and even though their economic growth is not as robust as ours or China’s, I think it’s clear which nation treats workers more humanely, and which nations have smaller wealth gaps. So when push comes to shove and the shareholders are disgruntled with sagging profits, we know who will suffer. Unions are a tried-and-true way to fight back, so no wonder why Wal-Mart and other corporations are so paranoid and hostile towards any mention of them. Sometimes unions take things too far (farmers, truckers, and others striking in Europe incessantly), but their members have families and other priorities that need and deserve protection.

http://www.kaisernetwork.org/daily_reports/rep_index.cfm?DR_ID=33441

http://www.usatoday.com/travel/news/2005-08-31-nwa-mechanics_x.htm?csp=34

http://news.minnesota.publicradio.org/features/2005/03/09_postt_crosbystrike/

http://www.cbc.ca/story/canada/national/2005/07/09/garbage-toronto050709.html

Aircraft mechanics, train workers, teachers, and garbage collectors in major cities (plus many others probably) have all threatened or gone on strike in 2005 (and the NYC transit workers staged a huge, controversial one recently, costing the local economy millions during this busy and frigid holiday season: http://www.philly.com/mld/inquirer/news/nation/13445485.htm). Times are tight and we can’t please everyone (yet profits soar for many companies, and military spending is rampant). But the knowledge and services unionized workers provide are often vital for the functioning of our economy and society in general. Sometimes they ask for too much, and sometimes they are just fighting to keep what they were promised. Of course the government intervenes on many occasions, often siding with the companies, and the lobby wars between union and corporate lawyers are ugly. Sometimes the needs of the workers take a backseat to the bottom line, and sometimes they get what they ask for. The ruling over United Airlines’ pensions was a scary precedent that many other companies will probably follow (http://www.forbes.com/markets/feeds/afx/2005/05/10/afx2016620.html, http://news.bbc.co.uk/1/hi/business/3895597.stm). But without unions, corporate responsibility, and a fair judicial process, we all risk treatment like Wal-Mart employees. The free market needs at least the specter of litigation, labor rights, and fair representation, or our predatory system will deteriorate into neo-feudalism among the haves and have-nots (“wage slavery” as coined by Chomsky). Maybe we’ve already arrived there, and imagine how hard it is for people with less education than we?

DISCRIMINATION

http://news.bbc.co.uk/1/hi/business/3830003.stm

http://news.bbc.co.uk/1/hi/business/4355910.stm

http://www.now.org/issues/wfw/wm-facts.html

http://www.usatoday.com/money/industries/retail/2004-06-24-walmart-usat_x.htm

You’ve probably heard, but Wal-Mart is facing the largest class-action lawsuit in history over gender discrimination (1.6 million female employees since 1998, case began in 2001). The plaintiffs claim that the company deliberately paid women less and promoted them less frequently, as compared to male employees of equal status and performance. The case began in a San Francisco court and is currently under appeal in the 9^th District. The crux of the case is proving that management was aware of, and ignored (or condoned) the gender discrimination. Lawyers for the women’s group claim that they have documents demonstrating that the issue was raised with the Wal-Mart board members. In addition, many female employees and customers complained to executives and shareholders groups, but the company failed to take action. Other accounts of racial discrimination were also insinuated, as well as the famously leaked memo about encouraging unhealthy individuals from applying for jobs at Wal-Mart.

http://www.suite101.com/print_message.cfm/investing/82399/1138089

Another suggestive and ill-timed gaffe:

http://news.yahoo.com/news?tmpl=story&cid=509&ncid=509&e=40&u=/...

OTHER VIOLATIONS

http://news.bbc.co.uk/1/hi/business/4362489.stm

In 2003, a government investigation of 60 random stores revealed that illegal immigrants were hired as cleaners on the night shift. The company had to pay $11M in fines, but did not

http://news.bbc.co.uk/1/hi/business/4151061.stm

Wal-Mart had to pay $14.5M in a settlement over violations in gun sales in California in 2000-3. Basically, they sold guns to people or their proxies who were not eligible to own firearms by our state’s laws. Anything to make a buck, I guess. I wonder if any of those weapons were used in crimes. Currently the company is barred from gun sales in the state. And following the gun theme, New York’s attorney general is investigating Wal-Mart’s toy guns for lacking standardized safety markings that help kids from getting accidentally shot by trigger-happy NYPD officers (http://news.bbc.co.uk/1/hi/business/2938877.stm).

http://news.yahoo.com/s/ap/20051222/ap_on_bi_ge/wal_mart_lunch_breaks

And more recently, Wal-Mart was ordered to pay $172M by a California court for denying lunch breaks for thousands of employees. A similar suit in Colorado was settled for $50M. Of course the company is appealing. Other big box companies don’t even come close to the magnitude and frequency of such lawsuits and violations.

COMMUNITY/ECONOMIC FRICTION

http://news.bbc.co.uk/1/hi/business/3607509.stm

Inglewood residents effectively blocked a proposed Wal-Mart expansion that was approved by city officials. This should be a model of civil protest and activism.

http://www.bizjournals.com/baltimore/stories/2005/12/12/daily13.html?from_rss=1

Maryland’s governor (supported by the state’s Chamber of Commerce) vetoed a bill that would punish for-profit employers of over 10,000 workers that fail to spend 8% of their total payroll value for employee health care. Wal-Mart Watch is pushing to get that bill into law again. God forbid we try to keep our employees healthy, and probably many of their ailments are the result of job stress and exhaustion at Wal-Mart.

http://www.kansascity.com/mld/kansascity/business/13418146.htm

Krugman’s comments on Wal-Mart, arguing that the company is losing the PR war by trying to justify its wages and benefits practices as fair and proper, when they’re obviously not.

http://www.washingtonpost.com/wp-dyn/content/article/2005/05/13/AR2005051301423...

Wal-Mart shoots itself in the foot again, with an attack ad against Flagstaff advocates who are trying to change zoning laws to block a new store (they’ve also spent $100,000 to defeat the proposition). Their full-page spread insinuates, "Should we let government tell us what we can read? Of course not . . . So why should we allow local government to limit where we shop?" Of all the inappropriate censorship/government interference comparisons they could have raised, they chose to equate the Flagstaff initiative to NAZI BOOK BURNING in the 1930’s. A lackey of the consulting firm that designed the ad for Wal-Mart eventually apologized for their actions, offering cheap platitudes like, “People make mistakes; they move on.”

CONCLUSIONS

I’m pretty tired of writing, feeling upset, and researching at this point, but I think you get the drift by now. People around the world need and deserve cheap goods, and some people need and deserve sustainable service sector jobs. Some companies have the ability to provide such products and employment for large consumer markets and remain profitable. But can they accomplish this feat without mistreating workers, declaring war on unions/local economies, and committing a slew of ethical lapses and violations? Can we really have it both ways, cheap goods and reasonable employment that are provided in an ethical manner? Even if Wal-Mart halves its yearly profits to $5B (still a whopping gain), imagine what the other $5B could do to improve the lives of their huge workforce. Philanthropy and positive publicity will also generate consumer confidence, and potentially their sales can increase. Many people shop and/or work at Wal-Mart because they have no other reasonable choice, but other consumers are mad as hell and Wal-Mart is beginning to suffer from the backlash. Who knows how much their improprieties and negative PR have hurt them? They are still a giant (and will be for the foreseeable future), but if sales dip too greatly and lawsuits pile up to the heavens, maybe the greedy bastards in Arkansas have some changes and soul-searching to consider, if they still have souls.

As a last factoid, the documentary stated that Bill Gates has given 58% of his wealth to charities. We all know that Microsoft is not the friendliest business in the world in terms of relations with customers and competition, but Gates is doing what he can for the less fortunate, especially in Africa. The Walton heirs have a combined $100B in wealth split five ways, and have only given 1% of it to charities. It’s clear that the company leads by example.

http://en.wikipedia.org/wiki/Wal-mart

http://en.wikipedia.org/wiki/Sam_Walton

Health care reform

Universal health care in Massachussetts

http://www.npr.org/templates/story/story.php?storyId=5330854

http://www.npr.org/templates/story/story.php?storyId=5336532

http://www.iht.com/articles/2006/04/05/news/insure.php

http://www.kqed.org/epArchive/R604110900 (could it work in CA too?)

The bill has points that will satisfy both the left (sliding scale of premiums and subsidies for the impoverished) and the right (personal choice and responsibility in health care decisions). Of course the numbers and details are not totally worked out, but it seems feasible and is set to take effect this summer. Of course MA is a pretty wealthy state with good medical infrastructure and only six million people. However, they still have over half a million uninsured residents, and state legislators found that situation to be unacceptable, as well they should.

WHAT ABOUT THE REST OF US?

The USA has over 80 million uninsured citizens, and we’re the only developed country with over 15% of the population uninsured (the percentage worsens to over 30% if you factor out the elderly who have government coverage). This was a major sticking point in the past few presidential elections that neither Bush nor Kerry seriously addressed in 2004. Of course the Clintons attempted to enact “single payer” legislation and health care overhaul in the 1990’s, but were summarily beaten down by powerful physician groups and insurance lobbies. The plan had its share of flaws, and conservatives disliked the lack of patient choice and “socialistic” overtones. After Gingrich and Co.’s 1994 “Republican Revolution” in Congress, the bill was pronounced dead, and universal health care was never seriously addressed on Capitol Hill again. Meanwhile, health care costs, medical errors, and the number of uninsured Americans continued to rise at alarming rates into the 21^st century.

http://msnbc.msn.com/id/5224207

http://en.wikipedia.org/wiki/Clinton_health_care_plan

http://www.fair.org/index.php?page=1221

http://www.princeton.edu/~starr/20starr.html

We all know the system is broken, failing, and getting worse. One would be hard pressed to find the evidence to back the claim that we have the “best” health care in the world. Even if this were true, our system is the most inefficient in the industrial world (we spend much more per capita and get fewer/worse services in return). If your personal wealth permits carte blanche access to medical care, you will get great service and better health outcomes (like Magic Johnson and Lance Armstrong). If you are poor and live on a remote Indian reservation in North Dakota, or even in urban areas like New Orleans’ Ninth Ward, good luck. The US spends the highest fraction of its GDP on health care (around 15%, versus sub-10% for France, UK, and Japan). Shamefully, we rank 37^th in world health care systems according to a WHO study in 2000 (on par with Slovenia and Cuba). Universal health care nations like France, UK, Singapore, Japan, and Canada were all ahead of us, with France being the top nation.

http://www.webmd.com/content/article/26/1728_59750.htm

http://www.photius.com/rankings/healthranks.html

http://www.who.int/inf-pr-2000/en/pr2000-44.html

http://www.frbsf.org/publications/economics/letter/2005/el2005-10.html

If America is the world’s leader, the land of opportunity and good life, how can this be? Our economic system is the most robust in history, and our wealth is unmatched. Is health care a human right or a privilege? We believe in a level playing field here, but how about the ones who fall off the edge? One impoverished, uneducated child can cause major social problems years down the line. Would we rather pay a little more in taxes to improve bad schools and drug rehab, or pay lots for security to keep desperate criminals out of our gated communities and away from our families? The same goes for public health: would we rather work harder to cover the uninsured and improve care, or let people roam sick and unmonitored among us during this time of epidemic paranoia? Millions of American families are one accident or illness away from financial ruin, yet some profligate patients get all the Viagra and MRI scans they want courtesy of taxpayers. Let’s forget the uninsured for a moment, because Blue Chip titans like General Motors are going bankrupt trying to pay for employee and retiree health care too. How can they compete with Toyota and other automakers from nations with universal government coverage? Why aren’t more people up in arms about this mess and why aren’t our elected officials doing more to address the problem (Massachusetts excluded)?

http://money.cnn.com/magazines/fortune/fortune_archive/2006/02/20/8369111/

http://www.ahcpr.gov/news/costsfact.htm

http://www.nyu.edu/projects/rodwin/american.html

So we are the wealthiest and freest nation in the world, we boast the strongest economy and medical research industry (apart from stem cell work), and spend the most money (per capita and overall) on health care. The percentage of our population employed in the health care field is the highest in the world too. Yet our system is far from dominant, and actually we are terribly lacking compared to other First World countries. In the study below, we ranked worst in various medical care quality metrics behind New Zealand, Australia, Canada, Germany, and the UK (nations that spend a tiny fraction on medicine in comparison).

http://www.medicinenet.com/script/main/art.asp?articlekey=60890

http://www.thecompounder.com/HealthCareCanKill.html

Yes, it is expensive to be an American and to care for one, especially with the growing ranks of elderly and retirees. The meager money I give to Kaiser each year (and I have the cheap, $88/month “Don’t get sick!” plan) could provide care for several villages in Chad. But even factoring in cost of living, wages, life expectancy, and whatnot – we’re still getting totally RIPPED OFF for sub par health care. But we don’t have a choice, right? We need protection in case we get cancer, have a car accident, or get pregnant – not to mention LASIK and other non-essential surgeries. Some people lack even minimal access to health care, and others abuse the system and take more than they need. HMOs and doctors are partly to blame, but they’re also getting squeezed with rising costs and malpractice insurance. Whom to insure, whom to treat, who will make us more money? Tough questions. And our state/federal governments play the fool with our hard earned taxes, getting overcharged for medical reimbursement by greedy drug companies and unscrupulous physicians (yet people still prefer to blame illegals for draining our resources!?!). Bush’s recent Medicare “reform” package is a clear example, which only serves to confuse seniors, marginally reduce the cost of their pills, and yet reward drug makers with subsidies that will cost the nation trillions in the long term! Unfortunately, some people and businesses profit from a defunct, inefficient, wasteful system. Over 10% of American medical expenses are lost to “administrative costs” (a.k.a. bureaucratic waste), that is about $1,000 a person (or $275 billion plus total) according to Harvard Medical School – but it pays people’s salaries and boosts stock prices.

http://www.hmsa.com/risingcost/feature/part1/4.asp

http://www.kaisernetwork.org/daily_reports/rep_index.cfm?DR_ID=32260

http://www.townhall.com/opinion/column/brucebartlett/2005/10/18/171730.html

HEALTH CARE ABUSE (An overly-preachy side note, skip to the next section if you like)

Pharmaceuticals, biotechnology, hospitals, insurance, private practice, and whatnot are multi-billion-dollar industries, and often times they profit when we abuse or overuse health care. The establishment may resist any efforts to downsize, streamline, or reorganize such a cash cow. Those who prefer to maintain the status quo may have more voice with lawmakers than the rest of us. So what are we to do? Drug makers and health care providers might hype or even invent illnesses to try to convince us that we need to shell out many dollars for treatment (attention deficit disorder, depression, allergies, chronic halitosis, etc.). The ad campaigns brainwash us into believing that our lives will be so much better from these wonder pills, hence the rise of non-essential “lifestyle drugs” like Viagra. It’s not just about being healthy and happy, but we need these drugs to be perfectly healthy and supremely happy with our bodies. We’ve been conditioned to expect our bodies to behave exactly as we would like, at peak performance at all times, otherwise something’s gravely wrong with us. And that’s just unrealistic, if not totally ridiculous. But that is the prevailing ideology unfortunately. No wonder why pharma is the most profitable sector of the Fortune 500. We’re flawed, weak humans, not gods! It’s ok to have love handles, minor aches or infections, even deep sadness at times, and yes – someday something will kill us.

By all means, if a patient is in need, he or she deserves access to the best quality care and as many helpful therapies as possible, within reason and ethics. But NEED is the key word, and it’s a misused and abused term in health care. A billion people in the Third World need mosquito nets and antiviral AIDS cocktails (REALLY need them, as in their lives depend on it), yet we’re going batty about flu shot shortages? We all want to maximize our quality of life and avoid heath problems. We all deserve to live long, comfortable, happy lives, but we must assess the cost-benefit of our actions. With finite supply, the health care resources spent on us means that other people, maybe people in greater need, won’t get them. It’s about living responsibly and recognizing your place in the greater community (“what I want” versus what we all need). Plus the more drugs we take, the less effective they become and the more dependent we become. Some pathogens are evolving to develop drug resistance, and maybe our innovations won’t be able to keep up. Most ailments won’t kill us, and maybe we should endure them instead of running to the doctor to remedy every little discomfort.

And what happened to fixing yourself and preventative health care like exercise, smart eating, good personal hygiene (without being obsessive), and relaxation? Those are great therapies, much cheaper and more effective than Prozac, Lipitor, and penicillin. Wouldn’t we prefer to wean ourselves off such medical intervention, even if it means a reduction in extravagant doctor salaries and pharma profits? Just imagine the time we’d save and stress we’d avoid: endless waiting rooms, stuck on hold with the HMO hotline, or the reams of paperwork! And if we really get sick and need help, it will still be there for us. But Americans can be lazy, and we want the immediate, easy, quick fix pill solution rather than enacting lifestyle changes or toughing it out. Our bodies can be frail, but also amazingly strong. Somehow, much of humanity endured microbes, anxiety, and even pandemics before drugs/vaccines were invented. It might involve some hardship and discomfort, but our bodies can heal themselves better than any physician. I’m not calling for a return to medieval lifestyle or the abolition of medicine, but we can’t sterilize the world and thwart every single disease, no matter how hard we try. Most health care providers and health industry workers are good people who want to help humanity. But the system is malfunctioning because often they are forced to help themselves first (even at our expense). Something has to be done.

http://heterophily.com/blog/?p=88 (a blogger’s comments on Laura Penny’s very provocative chapter on the abuses of the pharmaceutical industry in The Truth About Bullshit)

A PROPOSAL BY ECONOMIST TIM HARFORD

Now we are in a quite a pickle, and it’s getting worse with each day we refuse to act. Even some fiscal and ideological conservatives admit that we have no choice but to nationalize America’s health plan. Private companies competing in the tight global economy just cannot keep up with ballooning worker health costs under the current system, and much of the GOP thinks they shouldn’t have to. Plus the number of uninsured Americans is just appalling, and many liberals refuse to tolerate that indecency. Can we nationalize the system and still remain true to our small government, free market traditions? We need a system that provides patient choice, grants individual responsibility for most health care decisions, and punishes/discourages waste, ignorance, and exploitation. We should be able to do the research, compare the cost-benefits, and choose accordingly, not be forced down one path or another by the HMO Nazis or doctors with conflicting interests. We need a health plan that will cover catastrophic problems with no questions asked (as the Massachusetts plan does), so people have the peace of mind that their family won’t go hungry if tragedy strikes. Patient choice and universal coverage… can we have our cake and eat it too?

http://amconmag.com/2006/2006_03_27/review1.html

http://www.commondreams.org/views02/0525-06.htm

http://www.findarticles.com/p/articles/mi_m1282/is_n24_v41/ai_8206533

Like Levitt’s Freakanomics, Tim Harford’s recent text The Undercover Economist takes a rogue approach to the analysis of everyday socioeconomic problems/mysteries in the world today, thankfully in laymen’s terms. He spends a chapter evaluating the US and UK health systems, and then proposes a better alternative that is a mix of the liberal and conservative approaches (kind of like the Massachusetts bill). He operates on the economic principle of maximizing efficiency (benefiting as many people as possible without making anyone else worse off).

http://www.amazon.com/gp/product/0195189779/103-9305564-5839827

Harford diagnoses our current health care system dilemma mainly as a problem of information imbalance or inside information (brought to light by Nobel winner George Akerlof). I know, it’s not what you’d expect, but he uses a clever analogy. Like with the used car market, only the seller truly knows the condition of the vehicle. Is it a lemon or a gem? People will try to sell a lemon for top dollar if they can. The buyer can’t help but be suspicious, and obviously wants to pay the minimum possible. But this impasse actually destroys a fair or “perfect” used car market, where buyers pay actual value to sellers and everyone is better off. Instead, everyone loses, just like health care. Based on the car analogy, we customers are the sellers and the HMOs are the buyers. They can’t tell if they’re selling insurance to clunkers like Dick Cheney, or gems like us young, healthy folks. They try to give us questionnaires or tests to gauge our health and scale their premiums accordingly (plus reject costly customers), but an information imbalance still plagues the health care market.

Health insurance is obviously very important, because we don’t know when we’ll need it. But it shouldn’t be so expensive to protect oneself against tragedy or bad luck, and we would hope that the healthy customers help pay for the sicker ones in a group plan. But with premiums so expensive, it encourages unhealthier people to buy (like lemon used cars) – the ones who will actually use the services and get their money’s worth. The healthier, poorer people might decide to cancel their insurance and pay out-of-pocket at the rare times they’re ill (sadly, this option is becoming more and more financially justifiable). So if only sickly, needy people buy health insurance, costs-per-customer will rise, and the HMOs will be stretched and forced to cut back benefits or raise prices to compensate, and they do. Fewer people buy insurance, and those who do get crappier, pricier care. Hence the downward spiral in coverage that we’ve all observed. So insurance companies combated the information imbalance with probes to identify the lemons (could genetic testing be far off?), such as price-targeting consumers with a whole range of different plans to buy (high premium, low deductible plans for the sick, low premium, high deductible ones for the healthy). But all this ends up excluding the most needy customers from care (or pricing them out of the insurance market), which defeats the whole purpose of health coverage anyway.

Obviously the malfunctioning US system is not the only one with problems. Harford is British and he also examines the Western European systems. The voluntary, market-driven US system is linked to risk instead of income (you pay more if you’re sicker, no matter how rich or poor you are – government aid aside). But health insurance is also linked to market forces and employment, which involves the greed factor and makes the US labor market less competitive, as we’ve already discussed. The mandatory, government-driven European systems are linked to income instead of risk (health insurance is a legal requirement like auto insurance, so everyone has access but you pay into the system through taxes on your wealth). Wasteful US health coverage per person costs twice what it does for most Europeans. But both systems have flaws: a voluntary system means that some will go without, but a mandatory system creates care rationing and the “moral hazard” of people living less cautiously when they know their health care is guaranteed and paid for. But universal health care is a source of nation pride for Canadians, Britons, and others who seem to respect human dignity a little more than we do. Imagine being able to walk into any clinic in the country and get treated (when your turn comes) without question and paying hardly anything? A measly 17% of American respondents were satisfied with their health coverage, but only 25% of Britons were happy, so universal coverage isn’t an automatic panacea. The UK’s National Health Service has the huge responsibility of rationing out care. They quantify and evaluate all the medical interventions out there, and decide who is eligible for what treatment based on supply, demand, and the potential improvements to quality of life. But these value judgments are hard for a government organization, people always try to abuse a free service, and some deserving people get snubbed.

People on both sides of the Atlantic complain about the quality of health care and others making choices for them (either the government or the HMOs). People want and deserve a say in their health decisions, but are we responsible enough to make informed, appropriate choices? We need incentive to do so, such as giving everyone PRIVATE HEALTH SAVINGS ACCOUNTS. People can choose what forms of health care they want to buy, and must live with the consequences of frivolity and excess. So they do their homework, consult the right people, and make sound decisions with their future in mind, like selecting which university to attend or what home to purchase. I know some people will mess anything up if you give them the chance, and this sounds eerily similar to Bush’s Social Security Privatization Act, but stick with me here.

The government would be responsible for covering catastrophic costs, so no one will be financially ruined by a sudden cancer diagnosis or broken neck, even if they don’t have much money left in their health savings account. The “catastrophe insurance” would be compulsory in the form of taxes, but actually an individual’s taxes would decrease, because there would be no need to support the inefficient US government employee and public health systems. People would use their income to pay into the health system, like we do for retirement, and everyone would get routine, equal deposits from the government. Lower-earning and especially needy people would get extra subsidies. Unused dollars in the account would accrue interest like a savings account, and could be doled out as retirement supplements or passed on to beneficiaries in your will. Like with Roth IRAs, this is clever because health care costs are generally low when you’re young, but you would build up a lot of savings and interest by the time you’re aging and in need.

Therefore, we can have our cake and eat it too: everyone is covered against catastrophe and patients have choice and access to the highest quality and range of services should they desire. Waste and ignorance are reduced because people have incentive to study their options and conserve health savings dollars for only the most critical needs. Healthy living is also encouraged so people can earn interest and accumulate their health savings for retirement. But if you really want braces or colored contact lenses, you still can, and paying out-of-pocket is always an option. Raw medical costs to us would also diminish, because the HMO middleman is eliminated and medical providers must compete in a free market for patients. So you can get more care for your buck. Of course this reform does not address health care shortages and a growing elderly population, but with less bureaucracy and other inefficiencies, we’d hope that our system would have enough resources freed up to expand and improve for everyone. The inherent conflict of interest between provider and consumer will remain (you want the best care during an emergency, but government needs to ration money), but it will be greatly mitigated. So the system will still be market-driven, but private insurance would be taken out of the equation, saving billions. It’s not a single-payer system, but more like an “everyone pays” system with a government safety net.

What do you think?

This innovative “keyhole economics” system that Harford describes is actually SINGAPORE’S of the last 20 years, which expectedly is ranked #6 in the world by the WHO. Singapore has a higher life expectancy than the US, and the health costs to each citizen are about $1,000 a year, or roughly the cost of US health care bureaucracy alone! Of course Singapore is a small, highly efficient and orderly country with vast sums of wealth and stringent government controls. Yet still they live in a safe, democratic, and capitalist society with shrewd and intelligent pragmatist leaders. They saw beyond the petty political and ideological squabbles of market-driven versus “socialized” health coverage, and decided to merge the two instead. But if we’re the greatest country in the world, why can’t we do just as well, if not better than Singapore? It can’t be all the fault of illegals, frivolous lawsuits, and terrorists, can it? Without health, nothing else matters, right?

APPENDIX

A major tour-de-force analysis from Physicians for a National Health Program:

http://www.pnhp.org/docs/TheHealthCareMess-KipSullivan.pdf#search='health%20care%20industry%20waste%20administrative%20cost'

---------

I don't think HCSA's will work; while I'm all for market dogma the fact
of the matter is that healthcare is not elastic and won't respond to
market forces in the same way that a non-durable good will. If you take
a look at what a hospital typically bills for a procedure vs. the
negotiated rate the insurance company ultimately pays there's a factor
of 10 difference; this means the rates that the providers are charging
are systematically inflated and won't be significantly affected by
universal HCSAs. A single-payer system, however, can exert serious
price pressures on providers (at the cost of bureaucracy and patient
control.) It seems (though I haven't researched it enough) that the
Massachusetts plan is a step in the right direction, though I've learned
that you can never trust a GOPer or his plans for the poor.

The reason unfunded liabilities are becoming such a problem for GM and
the like is that health care costs are rising at an accelerating rate
and doubling every 5 years. Short of traveling to Mexico for that next
bypass operation there's not much that a globalized market can do to
reign in costs; outsourcing medical imaging, etc. to the third world
ultimately serves to increase profit margins but does little to drive
down costs when the tradeoff between saving $ and saving lives is
non-negotiable.

The healthcare industry is also so heavily regulated that efficiencies
often take a backseat to things like privacy concerns or other
regulations that may or may not make sense (drug safety guidelines?).
The idea that saving $100 by getting your CT scan done across town is
absurd if costs your doctor time and/or convenience (and ultimately your
care) in terms of accessing the results due to privacy regulations, etc.
Most people who truly are in need of healthcare will either (a) pay,
whatever the cost, to get the best care they can or (b) receive
substandard care with the expense shouldered by the public. While I
have Kaiser and BlueCross/BlueShield coverage my doctors at UCSF are
never able to access my test results from Kaiser and vice-versa - I've
found that, even if Kaiser is cheaper for things like MRI, CT, or
Ultrasound, it's better to get it done at UCSF since the doctors there
have immediate access to the results and known what to do with them.

Being a savvy healthcare consumer is not a market externality waiting to
be realized - it's a fact of life. For anyone who ever gets seriously
ill there is no "choice" to become a savvy consumer - you either do or
you subject yourself to substandard care and risk death! While I
certainly can see how a healthcare consumer of the future could logon to
a web page and decide which doctor to visit based on price, I don't see
how doing so would (a) change the quality of care for the better or (b)
significantly impact the *real* cost of healthcare which stems from
regulation and management of liability and risk.

--------

Well, actually a lot of this stuff is going to show up in my
thesis. A little more info...people often think there are two
paradigms of
healthcare deliverance, privatization (US model) and government-run
healthcare (UK model). But, there is a third model, which is used
in most continental European countries, including Germany and
France. This model is the Sickness Insurance Fund (SIF), where
citizens are required to join different (govt.-private hybrid)
organizations. The benefits are things like shorter lines for the
doctor, etc. However, it does cost a bit more as a percentage of
GDP.

Of course, nothing rivals the cost of our system because we pay so
many of our bills out-of-pocket. Incidentally, the same pattern
holds in education (again, we spend way more). The crucial
difference between our system and those of Germany and France is
that our insurance companies are profit making. This is why I
ambivalent on the Massachusetts law; I haven't read it carefully,
but I'm not sure how it's going to work if insurance companies are
still profit making. I have included OECD data on healthcare
expenditure from the OECD (these numbers were tabulated last in
2003).

My thesis relates to the fact that, contrary to popular belief, the
decentralized provision of social programs like healthcare and
education in the US is totally inefficient. Furthermore, the
decentralized provision of programs leads to greater discrimination
in program implementation (e.g. blacks don't get the same access to
welfare that whites do).