• csmi61

Government Doesn't Do Anything Right? Part II

Aside: I went to a local town hall meeting to witness the high emotions first-hand. It was very civilized. My homeowners association meeting was more heated. So don't believe everything you see on TV. what you see has been edited for maximum dramatic effect.

I previously discussed a case of government doing something pretty well - the FAA. Continuing that conversation, central to the healthcare debate has been the matter of government involvement in healthcare. I previously argued that there's a balance between government involvement and private enterprise. I believe that to be true for healthcare as well. Most recently, we've seen emotions running high against any government involvement at all, the argument being that government will ALWAYS screw things up. So to those who believe that government is always the local DMV, a few counter-examples of things the government has done for you lately:

Have you recently driven more than 30 minutes? If so, the chances are you used an interstate highway. Thank the government. Private companies would probably not have been able to create a comprehensive road network as effectively as the Federal Government did.

Have you recently made a long distance call? Did it cost you less than 10 cents a minute? Thank the government. If the Justice department had allowed AT&T to remain a monopoly, we'd be paying $1.60 like we did back in the early '80s. Sometimes the government has to regulate in order to create free markets. They don't always occur spontaneously.

Have you made a cell phone call lately? Was it reasonably clear, or did you hear the local ambulance or fire service? Thank the government. They regulate the airwaves and force design requirements on any type of radio product. This ensures that wireless systems don't interfere with one another. Private companies might have been able to create these standards, but government has provided the framework, and private industry then provides the products.

If you're reading this, you've used the internet in the last few microseconds! Thank the government. The technical foundation of the internet was catalyzed by the government, as a robust communication network. It took private enterprise to use it creatively, but government laid the groundwork.

Common to all these examples is something quite simple - if large techno-economic frameworks / infrastructures/ systems / shared public resources, need to be created, it is almost always the government that builds it or maintains the rules that keep the playing field open to private creativity.

So how does this relate to heathcare? Well, healthcare is now about 17% of our economy and growing. That's a pretty large public space. However, the "system" we have now has evolved and is now a Rube Goldberg contraption, rather than an efficient system. And healthcare is supposed to be a system, but right now we have what's called a "path-dependent" result - something that is what it is because of the path it took to get here, not because it necessarily makes sense. Unlike the examples above, it's not a very open system. Private interests control this public space in ways that distort it, and (by the way), the goverment itself distorts incentives through rules that don't provide efficiency (fee for service).

There are examples of self-organizing systems that can work incredibly well - a topic for the future. But healthcare has not proven to be one of them. And so government needs to create rules that level the playing field, create an open space for innovation and competition, so that the rules are based on an increase in the common good, rather than the distorted special interests we have now.

To do that, government has to be involved in some way, and government has to "interfere" with what we have now. Emotion is part of politics. Perhaps politics is emotion publicly expressed. The activism over the summer has been an excellent check on the potential overreach of government. But now that the weather has cooled, wouldn't it be nice if tempers cooled and some rational discussion prevailed? Unlilkely, since politics is played like a zero sum game.

Yes, governments can do a whole lot of harm when they interfere. I grew up in a country where government did an enormous amount of harm, both morally and economically. But the ideological argument that government always screws things up ignores some of the successes I've listed above. Let's be rational about this discussion and understand the balance that exists in that which actually works extremely well in this country.

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