Thursday, July 30, 2009

A Great Summary Of Healthcare

I had an extended conversation with a friend of mine about the current healthcare debate. He seemed to believe that healthcare was too important to think about economics or profit motives. I think economics is in everything, and healthcare is too important to try to ignore economics, because if you do, the whole thing will mess up. Unfortunately, I wasn't very good at articulating my point to him. Luckily, I found a great blog post explaining the economics of the thing in terms anyone can understand.

From Planet Utah:

The last time we had a serious debate about U.S. health care was 1993. At that time, the GOP took a "just say no" approach and prevailed.

This time, though, I see and hear prominent Republicans embracing universal coverage as an important element of any major reform. That's a big change, and a welcome one as far as I'm concerned. I welcome it not just because I'd like to see the U.S. have universal coverage, but because if conservatives/Republicans excuse themselves from this discussion, we're more likely to get some version of Kennedycare than a more sensible reform.

Footnote: If anyone told you that we were going to make sure everyone in America had a house of their own, and at the same time that we were going to control the growth of housing prices, you would say, "Cool. And when you're done, can you send a fat-free pizza and an invisible chocolate unicorn to my affordable new house?"

It just doesn't make sense that you can dramatically increase the demand for something and not expect the price of that something to go up. That's why you are correct to be skeptical about the Obama administration's claims that it will achieve universal health care coverage while at the same time keeping costs in check.

The Obama people would undoubtedly tell you, "But there are all sorts of steps we can take to hold the line on prices: making medical records electronic, emphasizing preventive care, researching and disseminating knowledge on the most effective treatments..." Truth is, though, no one knows whether, or to what extent, these things will work to restrain prices. But you gotta say something about how you're going to restrain prices, and it looks like this is the something the Obama administration is going to say.

And if it doesn't work? Well, that's someone else's problem. Obama still gets credit for bringing us universal health care. (Analogy: George W. Bush gets credit for knocking off the Taliban in Afghanistan; Barack Obama has to deal with the very messy aftermath.)

Anklenote: But if the government is such a big player in healthcare--and poised to get even bigger--can't it dictate prices?

Sure, and it already does that to a certain extent. It pays a lot less for services provided under Medicare, for example, than private insurers pay for those same services.

But government can't suspend the laws of physics, or economics. If you squeeze a balloon on one end, the other end gets fatter. And if you constrain payments in a massive public program like Medicare, doctors, hospitals, and other providers simply raise them elsewhere--most notably, in the fees they charge to insurers and (especially) the uninsured.

Shin-note: Okay, well, if that's the problem, then what if there were no private insurers, because government decided to pay all the bills, and what if there were no uninsured, because as the one paying all the bills, government decided to pay the bills for the previously uninsured, too? Wouldn't that solve the problem of cost-shifting?

Sure, that's what single-payer systems are all about. Government is the only game in town as far as paying for services, so when government sets a price, that's the price that gets paid. Problem solved, right?

Not so fast. When government starts setting prices--and, inevitably, setting them substantially lower than the market would set them, just because it can--you have a lot of smart, ambitious, disciplined people who otherwise would have gone into medicine saying, "You know, that's not nearly as attractive a career as it used to be. I think I'll be a shrimp boat captain instead." And you have a lot of entrepreneurial individuals and companies who otherwise would have operated hospitals and other treatment centers saying, "You know, that's not nearly as attractive a business as it used to be. I think I'll start an ostrich ranch instead." And then you start getting serious shortages of medical goods and services. You also get a decline in the quality of those goods and services, as the people providing them are not as smart, ambitious, or disciplined as the people that used to provide them.

Knee-note: Okay, well, if that's the problem, then why not just have government set prices at a level high enough not to create these disincentives? Won't that solve the problem?

Yes, but only in theory. As you might imagine, running things this way is HUGELY expensive. I mean, you're talking about taking all of the medical bills being paid today by individuals and insurers, and all of the medical fees that providers don't charge in the first place or never collect, and giving government an invoice for ALL of it.

It's a gigantic bill. Government won't want to pay it, and won't be able to without massive borrowing, massive tax increases, or massive spending cuts.

When confronted with options like this, politicians typically choose "none of the above." Specifically, they pick a number--let's say it's 65% of the total bill--and say, "This is how much we can afford to pay. Take it or leave it."

Providers will take it, but they'll also say, "If you're only going to pay 65% of the bill, we're only going to provide 65% of the service."

In practical terms, this means that if 100 people need a kidney transplant, only 65 people are going to get their kidney. Call that what you want, but most people call it health care rationing. It's a fact of life, and death, under single-payer systems. It's the reason you hear about Canadians crossing the border into the U.S. to get health care. It may be crazy-expensive here, but at least you can get it...

Punch-line: To paraphrase C. Everett Koop for about the millionth time in my blogging life, "We all agree that we want first-rate health care, universal coverage, and cost containment. Well, we can't have all three. So, let's pick two and make the best of it."

Again, though, politicians hate having to make choices like that, so they usually convince themselves that they don't have to.

I think that clears up a lot of things.

PS - Interesting fact - Utah recently achieved a bipartisan healthcare reform that most agree is a pretty monumental achievement.

Tuesday, July 28, 2009

It's All According To Whom You Talk With...

Do yourself a favor, and read Talks With Great Workers on Google Books.

Monday, July 27, 2009

Anonymity Is The New Privacy

We don't just live in an information economy - we live in an information society. More and more everyday, I am convinced that the way we gather and act upon data will determine our collective prosperity. The more we know, the sooner we know it, the better the data is - the better decisions we can make.

Here is a prime example of what I'm talking about:

Having all this data at our disposal is very empowering. I think the old adage, "knowledge is power" is absolutely true. However, we also have to remember that "with great power comes great responsibility. Knowledge and power is like any weapon - it can be used for good or for ill. No one wants to live in an Orwellian society, but it appears we are moving in that direction.

For example, consider this recent incident in the UK. The police busted a party because it was tagged as an all-nighter on facebook, and for whatever reason they felt like they should stop it. The funny part is that they intervened via helicopter at 4:00 pm - before the "crime" ever occurred. Sound familiar?

That was just an aside that I found funny, but it does have serious implications. The amount of data stored on each of our personal lives is tremendous, and it will only increase. However, there is a tendency for activists to psychologically separate the positive power of data from the negative power of data. You can't have your cake and eat it too, and you can't have the benefits of power without the risks.

I think this is a broader pattern of our society, possibly of human nature. Skip to 3:22 on this video and you'll see an interesting proof of this point.

But, returning to the point on information and privacy, what are we going to do? We need information in order to create shared prosperity. We can't just regress to the stone age. I think the solution is to think hard about anonymity. With anonymity you share your data but it doesn't identify you as an individual. In contrast, I think privacy means your data isn't shared at all. Of course, there will always be a way to figure out who you are and reveal your anonymity. I think this is where privacy policies come in. We will be thinking more and more about what goes into those legal documents, and I think that segment of the lawyer industry is going to grow a lot over the next decade, when more and more of these issues surface due to advancing technology.

I think the lighthearted reference I made earlier to the movie Minority Report is actually pretty instructive here. We need to think about the moral implications of stopping crimes before they happen, because technology is just going to move further in that direction. I think the best thing we can do is to realize that you can never get something for nothing, and to be cognizant of the risks.

A City That Thinks Like The Web

This is pretty awesome. I need to digest it a bit more and then I might edit the post with some of my thoughts. For now I just wanted to share.

Saturday, July 25, 2009

Keep Your Ideology (Mostly) To Yourself & Understand The Other Side

In America we are big fans of free speech - which is a very good thing - but a society of individuals who enjoy broadcasting their views also has downsides. People who seriously understand the problems with free speech can learn to manage and adapt, and will be rewarded for doing so.

Once people start freely saying things, they tend to disagree. When people disagree, it is obviously hard to work together. Look at the Michigan legislature - they are consistently gridlocked. Last year the government shut down because they couldn't agree on a budget. In a democracy, we have to learn to work together better to get things done and to make the right decisions. Personal virtue is the grease to the gears of democracy. After awhile, the friction gets things too hot and the whole thing breaks down. Benjamin Franklin said America will fail if it's people aren't virtuous, and I think he is 100% correct.

So why do we disagree so much? I think this is one of the most interesting questions of all time. Have you ever just stopped to think about how crazy it is that two similar people can see one issue so differently? It is really easy to just label those who disagree with you as crazy, like Ann Coulter and Keith Olberman are fond of. It is really easy to just throw your hands up and be baffled at their stupidity.

It is also lazy, and won't get us anywhere. If you are truly passionate about something and you want to make a difference in the world, here is the best piece of advice I have ever heard: keep your ideology (mostly) to yourself and understand the other side.

Let's be realistic. If some change hasn't happened yet, it is because people haven't made it happen. People need to agree that it should happen and be motivated in order for something to happen. It obviously hasn't happened yet, so you need more people to agree and be motivated. People who aren't motivated yet don't understand why they should care that much. People who don't agree that it should happen don't understand why you think it should happen. So, you need to make people understand why they should agree and why they should be motivated. How do you think you should go about doing that? Do you think you should simply be louder? That isn't so great at authentically motivating people, and it never convinces people of anything.

So many people get caught up in the mindset of "rally the troops" but it is devastatingly ineffective. It is comfortable, and it is easy, but it doesn't work. If you want to actually get anything done, you need to think differently.

First, stop being so loud about your beliefs. It is one thing to think something and another to say it. Obviously you haven't made the change you want to make, so it isn't really hurting you to try something different. Every time you communicate your ideology it becomes a bigger and bigger part of your identity. You define yourself as your cause. You feel bad about changing your mind because then other people (and you) won't know who you are anymore. This is a recipe for a lazy mind. I would rather define myself as who I really am - just me. Not any particular cause, thought, or anything else. Just being me is good enough. I believe in things but they don't define me. If what you believe is really true then it will continue to hold under rational analysis. You can't do rational analysis on something that defines you.

Second, read everything you can about the opposing point of view, and keep an open mind. This is not weakness. This is strength. Like Aristotle said, "it is the mark of an educated mind to be able to entertain a thought without accepting it." But you aren't doing it right if you just read everything and come up with answers to it. I think what Aristotle said is actually much more profound than that.

What Aristotle really means has to do with the way people hold thoughts. A thought isn't really a good enough word for it, because ideologies aren't just one single idea. They are multiple ideas woven together to form a coherent narrative and worldview. I think it the phrase "pattern of thought" is a lot more accurate.

So when you read an opposing viewpoint just to think of answers to the other side's argument, you aren't really ever entertaining the thought. To truly entertain the thought is to jump into it and allow yourself to temporarily believe it. You have to jump into the other ideology, the patterns of thought, in order to really see what other people believe. It requires a leap of faith. Try to recognize and immerse yourself in the true patterns of thought of the ideology. Then, go back and read things that you (normally) agree with, from the perspective of the other side.

This is like looking in the mirror, and I find it extremely useful. The better you are at authentically entertaining thoughts (i.e. temporarily accepting them), the wiser and smarter you will be. It takes practice just like anything else, and I am not very good at it, to be honest, but at least I think it is the right thing to do, and I'm working on it.

Ideologies are like circles - each individual thought ends up contributing to the whole worldview, and in order for it to make sense all the pieces have to be in place. One argument proves another, which proves another, which proves the first argument, and it goes around and around and never stops.

I think it is our moral duty to take of the lens of ideology and try to see things as they really are. The best way I have found to take of the lens of ideology is to put on a bunch of different lenses temporarily so you start to notice their effects on your thinking. Look at ideas from different angles, and you'll start to get a more complete picture. You'll also understand how other people thing and be able to emphasize with them, talk to them in their language, and maybe even get them on your side for some change you think should happen.

Wednesday, July 22, 2009

The New American Dream

In school, we learned that America was the greatest country in the world because anybody, if they worked hard enough, could be a success. We learned that anything is possible if you put your mind to it. There is no aristocracy in America, no class of ruling elites. All of us are created equal. This bold idea inspired the creation of our nation, but we seem to be losing touch with it.

I think we're losing touch with it largely because we hear all the bad stories, and few of the good ones. How many times have you heard about a greedy CEO who ruthlessly hurt others in a grab for money and power? How many times have you heard about politicians selling their souls in corrupt backroom deals? How many times have you heard about workaholics that strain their personal relationships but still never seem to get ahead?

Now compare that with how many times you've heard about someone who did the right thing and was rewarded for it. I bet you can't think of as many examples. As a society we are undergoing a dramatic shift in assumptions: for the first time in the American experiment, we no longer praise success - we are suspicious of it.

To illustrate the point, let me share an experience I recently had. I have been volunteering for Rick Snyder's campaign for governor of Michigan. It is likely that you haven't heard of Rick Snyder, and for a good reason: he's not a politician. He is a venture capitalist specializing in health technology from Ann Arbor, and before that (in the 90's) he was COO and President of Gateway Computers. The opposition's instinct was to label Rick an "out of touch millionaire CEO, trying to buy the office." I guess if you take things at face value, the smear sounds reasonable enough, but it doesn't tell you anything about Rick's history. If you knew Rick, you would know that nothing could be further from the truth. In fact, Rick had a modest upbringing in Battle Creek, worked for less than 2$ an hour in high school, and to top it off he paid his way through the University of Michigan and worked tirelessly to earn his undergrad, MBA, and JD by the time he was 23. From there he had a successful career through hard work and doing the right thing. Now, regardless of your views on the substance of Rick Snyder's campaign, I think we should be praising the guy for his work ethic - not blasting him for his success.

But this isn't about Rick Snyder's campaign - that was just a recent example that I wanted to share. This is about our recent suspicion of success. I'm not sure if the old version of the American Dream can ever come back, because I don't think it was really complete. I think we need to update the American Dream.

For our generation, the American Dream is about being successful and using our success to do good in the world. We should be unashamed of living comfortably, but we should also strive to use our wealth to build a better world. The concept of social entrepreneurship is really useful here: our generation sees no conflict between making money and doing good. The old way of thinking is based off the notion that there is a limited amount of wealth in the world, and that anyone who is a success grabbed more than their fair share. Our new (and true) way of thinking is based off the notion that wealth is dynamic and we can grow the pie for everybody. I am no economist, but it is pretty plain to see that people are on average better off today than they were 2,000 years ago. (At the bottom I attached a google books thing that lets you see a graph showing growth in total human wealth over time from the great book The Origin of Wealth)

There are still great disparities, but we need to realize the fundamental truth that the pie is not fixed, and we should not be skeptical of success, but we should encourage it. Why? Because we know that people that are successful are innovators, and they create wealth that rises all boats.

Wednesday, July 15, 2009

Can More Republicans Please Sound Like This?

There is so much about this video that I agree with. It is exciting to watch things like this, especially because I'm not used to hearing the right talk this way.

Tuesday, July 14, 2009

The Future of Business is Small

In the past, companies had to be big because they had to in order to stay organized. Communications and transportation technologies were slow and expensive, so they needed a hierarchical chain of command to maximize efficiency. You can't have an open discussion about an important business decision very well via snail mail.

Another reason bigger used to be better is that there were fewer competitors and they were mostly producing physical objects of some sort. If you sold 100 widgets a day, you could beat out the guy selling 10 widgets a day on sheer scale, because there wasn't much possibility for differentiation of the products. They just had to work.

But now, product differentiation and company flexibility matter a lot more.

The number of businesses has increased vastly, therefore, the number of choices have increased with it. All those choices have made a crowded marketplace, and it seems to me that people are less and less satisfied with a product just being a good deal. They want the product to stand out, to have good design, to meet some special niche need, and on top of that, they also want it to be cheap and they want it to work. When a product stands out it gives people a reason to not have to sort through every last boring alternative to see which one is marginally better.

Think of Apple for example. Mac computers cost more on average than their PC counterparts, but people still buy them. Why? They perform the same tasks as a PC but they do it with style. They are fun to use as works of art themselves, not just a means to some end.

I'm sure a lot of people will say, "You're just describing the luxury market, nothing has really changed." This is part true, but I think that we shouldn't underestimate the momentous shift caused by the internet. Before, branding was an expensive thing, you had to pay for advertising which was really expensive. Now, any company can make a snazzy looking product and advertise and brand it themselves online for much cheaper. We're seeing a branding arms race. People want to be a part of a community and companies want communities formed around their products. The internet is enabling this to happen to a greater and greater extent.

So back to my initial thesis, that the future of business is small. The reason I think we'll start to see a trend toward leaner business is that people are starting to reject mass-advertising. Friends are much more trustworthy than some marketer. With the internet, it is becoming easier to rely on real connections with people we trust to make purchasing decisions. I'm describing businesses that are more like movements. They are smaller and more flexible, so they can always outpace their bigger rivals when the markets shift. They'll be able to stay on top of trends. They'll have a more loyal customer base. They can get in touch with suppliers through similar social networks, rather than the traditional good-ole-boy network. These suppliers can come from anywhere in the world.

The global market is getting a lot more competitive, and the products that stand out, and are made by lean companies will win.

Monday, July 13, 2009

Where Does Republicanism Go From Here?

I think I may be the only person in the world who switched from Democrat to Republican this spring. I didn't do it because I like the Republican party, I did it because I admire conservative principles. I think these are the right principles to lead us forward to a new era of American productivity and prosperity, but unfortunately there are a lot of Republicans who have confused principle with policy. Different times demand different policies, and we shouldn't consider any change to be a dilution or moderation of classic conservative principles.

The most important thinker of the conservative movement was the Irish statesman Edmund Burke. He wasn't a political philosopher as we think of them today, and he published no grand treatises or magnum opuses. Instead, Burke articulated his vision of politics mostly through speeches in the British Parliament. This was particularly fitting, because one of his greatest contributions to political philosophy was that we should be wary of grand theories - reality is complicated and humans aren't capable of experiencing enough to be able to ever have the final word.

This critique was articulated on the occasion of the French Revolution, a time in which men rejected any reformist compromises and challenged everything that came before. The French Revolutionaries were certainly right to question the rule of an absolute monarch, but everyone can agree that they took it too far with the reign of terror. This bloody purification was exactly the type of excess that Burke warned against.

Conservatives are at their best when they remember that no action is better than a bad action. But this doesn't give us a license to reject every proposal that comes along, we also have to understand that no action is perfect and circumstances sometimes necessitate a swift response. I believe it is the duty of the true conservative to reflect on the unintended consequences of policies and proposals, and to be watchful for zealous moralizing.

However, the modern conservative movement, embodied by the Republican party, has lost touch with this at times. We need a reality check, the kind of reality check that Burke would have slapped us with.

We need to recognize that a large percentage of America thinks abortion should be legal. We are unable to force any big policy changes down the throat of the public. Even if we had that kind of strength, it would be counter-productive. Isn't the point of pro-life politics to reduce the number of abortions that happen in the world? Why not work within the current system, alongside pro-choice-rs, to reduce the number of unintended pregnancies? Why not make adoption more available? I may be crazy, but I even think it would be good to have honest discussions about why each side feels the way they do about the issue. The point isn't to drag them over to your side, it's to promote mutual understanding and heal old wounds. I bet the number of abortions in America would be cut in half if that kind of co-operation happened. This is just an example of one specific issue, but there are many more areas for common ground and I'm sure I'll go into some of those in the future on this blog.

We need to embark on the journey of rediscovering the wisdom of the Founders, and of great political philosophers like Burke, Plato, and Aristotle. We need to open our minds and realize that the true and profound meaning freedom is not something we are automatically blessed with by virtue of living in America. Freedom is an ideal to aspire to. We all have our imperfections, and they hold us back from being the people we want to be. But the good news is that those imperfections can be minimized through hard work and determination. Only insofar as we are wise and exercise self control are we truly free. Freedom doesn't mean "do what I wanna do, with no stinkin' government in the way." But this should already be obvious because conservatives support strong enforcement of the rule of law. We need to be unafraid of acting like it, and we need to stop pandering to the narcissism and laziness of some in our party.

We need to realize that giant corporations are just as detrimental to individual liberty and free markets as big government is. Power corrupts, and nobody with a personal interest really wants a level playing field. Everybody wants an edge. The founding fathers meant to solve this problem in government by pitting ambition against ambition, and dividing up the powers in our ingenious constitutional design. But they couldn't foresee the mammoth corporations that have been enabled to exist by communications and transportation technology. I want to see economic policies that are focused on enabling entrepreneurship and small business. I want to see stagnant markets un-clogged with stronger anti-trust enforcement. We should not regard every government regulation as a bad one. What is a law other than a regulation? Do we not need laws to have order in society?

The real issue is, the law has to be applied equally and blindly. The law can't have political favorites, and big donors. This is why Republicans should push for strong campaign finance reforms, so that another slick Barack Obama cannot break another promise. The political campaign is not a free market, it is a job application process, and the government can and should regulate it more strictly. This is crucial to lessen the moneyed interests and create a more level playing field, to maximize everyone's freedom.

We also need to renew our vision of small government. A small government is only good if it is still strong enough to protect the individual liberties of each citizen. America is at its best if we have a society of individuals creating prosperous, healthy communities by working together. Markets are essentially communities of people, trading goods and services. I think a lot of the left's skepticism of markets is actually a skepticism of overly large, exploitative corporations that have the resources to buy political favors. But conservatives know that free markets are the engine of real progress. We should enable markets to develop solutions to America's problems by getting out of their way and breaking up their clogged arteries, and getting big government and old corporate favorites out of the way, freeing room for innovative individuals to go to work and be rewarded for their efforts. The future of business is small.

On social issues, we need to make sure we're picking the right goals (results, not politics) in order to make real progress and heal old wounds.

We need to change the Republican culture to be more reflective and less ideologically driven - Burke would be turning over in his grave if he watched an episode of Hannity.

We need to be pro markets, not pro business.

We need to gain back America's trust after the Bush/Cheney/Rove years damaged it badly.