Curing the Cost of Health Care

Back in 2005, I had surgery for my arthritic back.  The surgeon was skillful, and the recovery, according to the doctor who lives next door, the smoothest he had ever witnessed.  In its execution, it was the kind of medical event in which American medicine can take justified pride.  Then I began getting copies of the bills sent for the surgery to Medicare and my insurance company.  While I had no out-of-pocket expense for the surgery, I was horrified.  The surgeon had sent a bill for $10,000, and was paid $2,000. Frankly, considering the skill he evidenced and the office overhead he supported, I thought the payment well justified and would have found a payment even of about $5,000 reasonable.  Then the hospital sent Medicare a bill for $25,000, of which all but a co-pay of $15 was paid by Medicare, with the private insurance picking up the $15.  Part of the bill was for legitimate hospital costs – operating room, room and board, nursing care, etc. – amounting to $9,000.  Though steep for two days of hospital care, I could pity the hospital a little and grudgingly swallow the costs.  But $16,000 of the cost was for a 2-inch titanium rod and two titanium screws inserted into my back.  I was appalled.  My son, an avid bicycler, commented that an entire titanium bike costs about $3,000. Excuses were made that custom tooling was expensive, health required exacting precision, etc., etc. They would have been valid even fifty years ago, but in an age of robotics and sub-atomic precision, they simply represented excuses for inefficiency. What had caused this charge, and what could be done about it?

The answers of course were greed and the legislated inability of Medicare to control charges by medical device makers.  While Medicare is allowed to squeeze excess out of doctors’ bills, often to the detriment of the patient, it is not allowed to regulate effectively either hospital charges or device manufacturers.  That in turn causes costs to be incurred somewhat akin to the $2,000 toilet seat charges the Pentagon faces from contractors.  The result is a tragedy for Medicare, which is blamed for costs it is not permitted to regulate. But the real tragedy is for American medicine and the American people.

In the Washington Post this morning, Matt Miller writes the first frank account of this issue I have seen.  Miller writes that we are debating Medicare in a bubble, “impervious to global benchmarks that suggest our efficiency ambitions are far too timid.”  We blame Medicare for escalating costs when the real villain is the entrenched inefficiency, and greed, of the private health care sector.  Other countries’ health systems deliver more effective health care than the U.S. at far lower per-capita costs.  The traditional excuse that our high health costs result from the superlative character of our health system just doesn’t fly. Internationally, we do not rank even in the top five of national systems for effectiveness, in terms of things like infant mortality, availability of coverage, etc.  Yet the most effective systems deliver health at a far lower percent of national GDP than ours does, with a more elaborate national administration, i.e., they are far more efficient despite having a higher governmental overhead. Our percent of GDP spent on health care is about 18, while OECD countries average 8 percent and Singapore, with similar effectiveness scores to ours, spends 4 percent.

 It turns out that the top national health systems in terms of effectiveness, none of which is the U.S., use a great variety of approaches, from all private providers as in Switzerland or Japan to all public single payer systems as in several European systems, but share one trait in common: all insist that no profit be made from the treatment of those who are ill.  Yet profiting from illness is at the heart (or lack thereof) of the American pharmaceutical and medical device manufacturing industries.  It turns out that the American insistence on private, unregulated costs of medical goods, pharmaceuticals and services is itself the illness we need to treat.  As Miller notes, we have given a license to inefficiency and excessive profits at the expense of the individual citizen.  A step toward a cure would be to provide for regulation of device and pharmaceutical costs by Medicare.

We celebrate the virtues of a free market, while forgetting that the market for esoteric goods and services to individuals who don’t understand them yet must have them cannot by definition be free.  Free markets imply perfect information and freedom of choice.  Our health services markets fail us constantly, with more neurosurgeons in Boston than in all England and whole rural counties without obstetricians, with 50 million uninsured, and with $16,000 2-inch rods about which the ultimate consumer has no choice.  Then we blame the messenger, Medicare, for exorbitant costs over which it has no control.  Health services are not luxury items like yachts, where we might sometimes pay willingly for old fashioned, handmade ornaments. Other countries have already shown us alternative ways to do things right.  It’s time we lifted our eyes beyond our ideology and looked to the future of effective and efficiently provided medicine.

Common History

Back when Lyndon Johnson was first elected to the senate, his victory margin was, as I recall, about 87 highly mysterious votes that had turned up in a previously uncounted ballot box; he was quickly dubbed, and admiringly known, in Texas as Landslide Lyndon.  Folks up north thought of the event as the acme of crooked politics, and were suspicious of Johnson thereafter.  Texans knew better.  He had lost his previous run for the senate by around the same margin because of another mysterious ballot box turned up in a recount by cohorts of a West Texas political boss who was an arch rival of Johnson.  The feeling in Texas was that a turnabout was fair play.  What on the east coast was a violation of basic fair election rules was, in Texas, part of the ongoing election process.  I think of that sometimes when I’m following the European Debt crisis.

A friend of mine who often visits Germany, and has continuing conversations with friends there, tells me that his German friends see the continuing Euro mess as a straightforward matter, “There are rules, and you follow them.”  My southern European friends see things differently.  To them, Greece, and other southern European countries were systematically squeezed by northern European banks like Deutsche Bank, operating a lot like the U.S. banks that made no-questions-asked loans and then rapidly foreclosed in the run-up to the U.S. financial crisis.  Then Greece sought under the table assistance from Goldman Sachs (who better than they to know how to rig an intricate financial deal?) to stave off Deutsche Bank.  But Sachs had rigged the deal so that Greece suddenly found themselves several billion more in debt to Sachs than they had expected, more than their treasury could bear.  Greece had been caught in a pincer movement between two great white sharks.  So they adopted the classic southern “ok, now I can’t pay, what do you do?” approach, which set off the cascading events of the European debt crisis.  In other words, the crisis was set off by the loose financial practices of northern European banks, so why should southern Europe unilaterally suffer for it?

It’s now being generally recognized as a culture clash between northern and southern European values, but of course, other layers of the problem make it even more complex.  There’s also the growing suspicion on the part of southern Europeans that Germany’s long-term goal is to obtain a political hegemony over all Europe by financial extortion based on the strength of the German economy, a sort of economic Fourth Reich.  That makes countries like France or Britain less than eager to support Germany’s proposals.  All Europe is sliding into recession because southern Europe’s economies are being leached away by excessive debt loads, while German manufacturers face loss of customers for their markets by the very austerity German financiers seek to impose.  Germany itself begins to show internal policy conflicts.  German policy makers show increasing signs of wanting to help other European countries in need, but continuing reluctance to honor such divergent values.  It becomes increasingly obvious that economics alone has no solution for problems originally described in purely economic terms.

While many issues must be resolved to find solutions to Europe’s problems, one of the most interesting ones is never mentioned.  Solving the crisis will involve some degree of unequal sacrifice.  A perception of such sacrifice with a willingness to proceed requires altruism, but in turn, such altruism involves a sense of group identity.  A big reason why differences in political values between Connecticut and Texas, as well as other large cultural differences, never come to a head is that both share highly mobile populations and a crowded common history.  Texans frequently live in New England and New Englanders in Texas.  They both know what it’s like to live in the other place.  Just as important, they share common heritages, from the War of 1812, celebrated this year in both places, through to rocket probes on Mars.  "We Americans" is a common phrase.  Differences loom far smaller than commonalities.

I have never heard the phrase "We Europeans" from the lips of a European.  In Europe, Germans remain intensely German, and Spaniards Spanish.  In Italy, Florentines remain suspicious of Neapolitans.  And I have never heard a European discuss the common history of, for instance, Germany and Spain.  Each place has an exciting and memorable history, but a European history is a compendium of the histories of European countries, not a history of all together.  One never gets a sense of shared hardships overcome, shared triumphs, shared places of pilgrimage.  A European history is needed that reminds people of their common heritages and values, not their differences.  It is there: the era of the Holy Roman Empire, for example, had a more cross-national nature than anything in Europe today.  Charles Martel at Tours and the Venetian Fleet at Lepanto won great battles on behalf of all Europe.  Common memories and common heroes should abound.  But instead, European countries today compete, often bitterly, between each other for the European championship in soccer and blame each other for their problems..  No such competition and no such bitterness occurs between states in the U.S.  Until they can recognize a unity that goes far beyond a common currency, Europeans will never succeed in sharing a healthy common economy.

The Human Interest

Years ago, in a commencement address at American University, President John F. Kennedy stated, “While we proceed to safeguard our national interests, let us also safeguard human interests.”  A noble sentiment indeed, but one that seems forgotten in this 21^st century fashion of unenlightened self interest.  It deserves notice that JFK did not raise the interests of humanity while ignoring national interest, but assumed instead that they can share common values and goals.  We especially seem to have forgotten that.  Time after time, we discount human goals and values obvious to the rest of the world as,”not in the national interest.”  There is a new principle of international law, embedded in the Law of the Sea Treaty (which of course the U.S. has as yet refused to accept) called "the common heritage of mankind" principle, which holds that all nations are bound to honor and hold in trust for future generations places such as sea beds, great historical sites, etc., that are the common property of humanity.  It, too, is a noble sentiment, well worth honoring.  But it has become fashionable among some conservatives to discount any values “not invented here” as suspicious attempts to Europeanize America, as though only those values not found in other nations can be truly American.  As I walked through flower-filled public spaces in Canada this summer remembering the colorless and joyless public streets common in the U.S. (“flowers – what a waste of money!”), I thought what a tragedy for the human spirit that attitude can become.

It is an old problem, written large in this new age of mass slaughters, globalized finance, an international struggle against terrorism and planetary climate change.  It’s said that we drive on the right side of the road and use the fork in the right hand in America because, following the Revolution, we didn’t want to be like the British.  De Tocqueville noted the problem in the 1840’s.  David McCullough, in The Greater Journey, an account of Americans in Paris in the 19^th century, quotes a conversation between two Chicagoans at the Paris International Exposition of 1900 (site of the first presentation of the internal combustion engine, electric turbines, and now-priceless works of art, the fair was regarded by most as the grandest world fair ever held until that time):  First Chicagoan, “Well, it’s not as good as the Chicago Fair of 1876”; Second Chicagoan, “I knew that before I came.”  Some of us just haven’t changed.  But the world has.

Written large, the problem transforms from comedy into tragedy. My country’s skies are bluer than the oceans.  But other lands have skies as blue as mine.  So states one of the great hymns, based on the melody of Sibelius’s Finlandia.  We all share one planet, and a common humanity.  Yet we devote the equivalent of the entire corn crop of Iowa each year to corn syrup for soft drinks, while humanity around the world starves for lack of ability to pay the inflated food prices that result.  We cheerfully count arms sales to other countries that enable the mass slaughters as part of our world’s largest GNP.   We proclaim the world superiority of our educational and medical systems while we slide further and further down the international scales of effectiveness.  And in terms of climate change, we fiddle while the rest of the world (including us) burns.

Eugene Robinson, in the Washington Post, notes that the science of climate change is now confirmed to the point that previously skeptical scientists have reversed their positions, scientists previously cautious in describing the evidence are announcing that they had been significantly underestimating its effects, and a strong world consensus has emerged regarding the seriousness of the problem.  Other countries “get it.”  Yet in this country, Gallup polls show that public recognition of climate change and its consequences has actually declined, from 60 percent in 2007 down to 44 percent in 2011.  In the face of the hottest July in the hottest year on record, severe drought in Australia and emerging drought in our own Midwest, torrential rains in Russia, and floods covering one-third of Manila, many of us grit our teeth, square our jaws and hang on to full scale denial.  Robinson terms it the “You can’t pin it on our SUVs” view.

It’s time for the interests of humanity to come forward again as part of our legitimate public policy agenda.  Robinson suggests that global climate change should be part of the discussion in this current election, and I would agree with him.  I would also add subjects like the effect of our domestic policies on world poverty, and our national contribution to world violence.  We as a nation known for its impact on world affairs cannot disregard the effects of our actions on the common interests of all the world.  We cannot claim greatness without practicing it.

The Price of Liberty

When I absolutely have to wear a tie at this time of year, which I’m glad is rarely, I like, if possible, to whip out an old Snoopy tie of mine.  Snoopy, you recall, is the beagle in the Peanuts comic strip who is truly the blithe spirit among a horde of often over-wrought kids (a little book, The Gospel According to Peanuts, provides a theological interpretation, which is my lame excuse for wearing the tie to church, that Snoopy represents the Holy Spirit trying to lighten up a bunch of overly striving Earnest Christians.) My Snoopy tie shows him in swimming trunks traipsing across the beach, whistling and wearing sun glasses; on the back of the tie it says, “My body may be at work but my mind is on vacation.” I’m just returned from an orgy of vacationing, including short trips to Canada and to Chautauqua, New York, sandwiched in between two separate weeks at the beach; my mind is still back there somewhere, whistling and hiding from me. Eventually, it’s bound to show up.

Meanwhile, I’ve been catching up on old opinion columns, and in the process found a few that as usual make a mishmash of the difference between Liberty and Freedom (one of the most common vices among all of us.)  One was in a column by Robert Samuelson, which reflected on the current crisis in capitalism in a serious way that deserves consideration. First, we all need to keep in mind that Freedom is the absence of all external constraints, while Liberty is the absence from the constraints of arbitrary or despotic government.  That difference is important.  Freedom is the fervent desire of every teenager; Liberty is the mature desire of adults to live together in an orderly society that recognizes and respects the needs of the individual while providing ground rules that enable all to live and work together peaceably and happily.  Freedom implies no obligations on anyone’s part; Liberty implies reasonable and non-arbitrary mutual obligations on the part of all of us.  Freedom implies the State of Nature in which we are all equally unconstrained and vulnerable; Liberty implies the Social Contract.

Samuelson writes in two different columns about democracy and about capitalism in a way that is subtly contradictory.  In one, about the bitter political strife in this election year, he writes that Americans are torn between their love of freedom and their love for equality to the point that it constitutes the great divide between conservative and liberal thought.  He cites de Tocqueville as a source of his belief that we seek equality because of our innate greed, and that egalitarianism will eventually win.  In the other, about the crisis of capitalism, he acknowledges that the implicit bargain that capitalism makes in exchange for the freedom of its profit making is that large returns on investments will be reinvested in ways of benefit to all, and that the bargain is being broken when companies just hang on to profits without reinvesting them productively.  He recognizes that lack of reinvestment is a big factor in the current recession, to the detriment of all.

Samuelson is right when he talks about our individual greed dragging us down, but wrong to forget that we are social animals, tied together by bonds of empathy and mutual accommodation.  Biology tells us that has been the key to our success as a species.  Even a small child knows instinctively what’s fair and what’s not.  Samuelson seems not to recognize that what he characterizes as greedy egalitarianism in us is that small child shouting, “That’s not fair!”  The violators in this case are the one-percenters and the corporations who are not doing their part in keeping our society going.  Paying taxes, reinvesting, refraining from price gouging, responsible treatment of employees, all are fundamental ethical practices required for a free society.  Miss Manners, in an article years ago in the American Scholar, commented that the enactment of a law represented the failure of an ethic.  Regulations are the consequence of unethical behaviors.  If businesses desire less regulation, then the key first step for them is to become models of ethical practice. The price of Liberty is not just eternal vigilance, it’s also responsible participation. 

Deconstructing Monsters

When I was growing up, I was taught that the common nickname for the devil, “Old Nick”, came from Niccolo Machiavelli, the author of The Prince.  I pictured him as red faced, with tiny hooves peeking out from beneath his robes.  After all, being called the devil is one thing; having the devil named for you something entirely beyond.  Then I came to read his works, and about him, and discovered he was actually an Italian patriot striving, vainly at that time, for the unification of Italy and independence from the domination of France.  And much of what he had to say made sense.

That sort of led me down the path of curiosity about other famous monsters – not in any way to excuse them, but to get a glimpse at what made them tick and created them in the first place.  For example, I discovered that Vlad Dracul the Impaler, aka Dracula, ruled amid constant threats of invasion from surrounding countries and chose to create his horrible reputation as a means of deterrence, and that Hitler blamed a Jewish surgeon for the death of his mother when he was an early teen, internalizing that as hatred for all Jews.  That in no way excuses Hitler, or Vlad, for their atrocities, but it does add dimension to the internal portraits of them that I carry about.

My wife and I just returned from a short visit with friends to Chautauqua, where the topic of the week was Pakistan, another monster we are busy creating these days.  Pakistan is the ally we love to hate.  We see Pakistan as just a little short of being itself a terrorist adversary, ruled by a fanatic military that shelters our enemies and threatens our military, while insisting we provide them with large foreign aid payments for their minimal and reluctant cooperation.  Little hooves beneath the robes are easy to imagine.  One of the fascinating things about Chautauqua though, is the speakers’ ability to provide insight by continually jumping beyond their topic.

Possibly the most interesting speaker that way was the last one, Karen Armstrong.  She is more known for her work on the interrelations of religion with culture than on things like foreign policy; in fact, she disclaimed any interest or expertise in the area, though she herself has visited Pakistan several times, serving at least as a sort of good will ambassador. She bounced her way through many topics, from the childhood of Buddha to the origins of modernity; on some I agreed with her and on others have my doubts.  Perhaps the strongest of her points was that we, as individuals and as nations, each have our unique history, not easily understood by others.  Pakistan, for example, was the home of Akbar the Great, roughly a contemporary with Elizabeth I of England; Akbar was the Mughal emperor who conquered most of northern and central India and ushered in a golden age.  He was famed for his tolerance, and though he himself was Muslim, his court advisors included Hindus and Jesuit representatives of the Pope.  Revered by Pakistanis as a founder of the nation, he himself struggled with pacifying Pashtu’s and with maintaining a delicate internal balance of power.  In other words, what we see as a contrary attitude on the part of Pakistan, they see as a way of life they have dealt with for centuries.  They have struggled with India through the ages. Though they have Islamic fanatics as they have had for centuries, they also have tolerant moderates, as they also have had for centuries.  Their internal priorities include maintaining a balance between them, which at times causes us to grit our teeth, and an uneasy peace with India.

The other key point Armstrong made was the importance, when thinking about the nation-state of Pakistan, of distinguishing between the nation and the state.  The nation is the repository of our national identity that stirs our patriotic passions; the state is the vehicle for the moderating rule of government that enables us to get along both with ourselves and with other nation-states without recourse to violence.  Our need in dealing with Pakistan is to strengthen the role of civilian government and to avoid creating vacuums that give chaotic outlet to national passions, in other words, to avoid abrupt departures or sudden changes in policy that destabilize their government; easier said than done.

A third point made by other Chautauqua speakers was that the real issue we are dealing with in Pakistan is our relations with China.  Any vacuum we create in the area of Pakistan and Afghanistan will be immediately filled by China, which is already seeking dominance of the area.  How content we are with that is the real determinant of our policy there.

So, we are uneasily tied to a monster.  But on closer inspection, it is a people with their own history and needs that we can partially understand and work with. There are even parts of their identity that we can appreciate and recognize as akin to our own.  That’s a starting point. 

Guns and the Constitution

It used to be said in the early days in this country that the only books you really had to have were the Bible and Shakespeare.  Tucked in there, too, must have been some ancient history, for growing up in East Texas, I was surrounded by town names like Athens and Carthage and Palestine, and the Sabine River ran not far away.  Rural and small town people were knowledgeable both about ancient times and what was going on elsewhere in the world right then, for after all, the rest of the world was not all that different, and the technology for transmitting news, a rider on horseback, was equally available to all.  The big places, like Washington and Boston, were towns of about 25,000, the best size for a place according to Aristotle, and the lowest limit for calling the place a city according to the Census.  The Bible is still standard issue, but somewhere along the way the Shakespeare and the history and the urge to stay current seem to have gotten misplaced.  For in parts of this country, rural and small town culture is a static thing, deliberately and desperately clinging to the past.

In his fascinating mini-series on public television, about the Prohibition Era, Ken Burns brought that to the fore as an underlying force that generated the prohibition movement.  In the early 20^th century, cities were becoming large and filled with new immigrants from strange places like Poland and Lithuania (there is no Krakow, Texas), who drank a lot.  Prohibition, in addition to all its other dimensions, represented the first major battlefield in what has become a more than 100 years war in this country between urban and small town culture.  The repeal of prohibition was a major victory for urban living and a grudgingly conceded defeat for the countryside.  Where I grew up, the joke was that Tyler would stay dry as long as the Baptists and the bootleggers could stagger to the polls.

A sadder victory for rural culture has been the long-term fierce allegiance to guns.  For guns, highly useful when protecting against rabid raccoons and snakes in the country, though useless as a modern missile defense, have no rightful place in a crowded urban movie house.  Yet the right to keep and bear arms, on the farm or in the movie house, continues to be a standard tenet of and a major victory for a small town culture that reveres all things from long ago.  The tragic consequences of this week’s shooting in Colorado will most likely again be ignored as “just the act of a madman”, when the real question is why the weapons were available in the first place.

From studying the Constitution and the Federalist Papers, I know full well that the language of the second amendment supports the right to bear arms, though it was intended, according to the Federalist Papers, to support their regulation for efficiency of militia operations.  That was in a time when opposing armies bore muskets, and bears and Indians were a real threat.  There were no crowded cities where a single person bearing a musket could pose a significant threat. The countryside’s fierce allegiance to a right that is no longer viable in urban culture is both misplaced and terrible in its consequence.  I am in general reluctant to consider changes in the Constitution; it is one of the great monuments to human progress and continues to serve us well.  But it is time to change or repeal the second amendment.  It is the relic of a violent past, and a promoter of a violent present.

Entrenchment and Inequality

Alexis de Tocqueville, found shipbuilding one of the more revealing of American occupations.  In Europe, shipbuilders used scarce wood (Europe’s forests were already rapidly thinning) to repair defects in existing ships; American simply scrapped old ships and built new, faster models using their unlimited wood supplies.  He was describing America’s “throw away” culture at its birth and noting its role in fostering innovation.  It also was a key in the development of our egalitarianism.  If you didn’t like the way you were treated at work, you could just take advantage of the abundant resources of an as yet unsettled continent to start your own business, or move further west. New ways of doing business were easy to discover. A study I monitored years ago found that expertise in new technology among subordinates forced more democratic management styles among supervisors.  It’s tough to be arbitrary when your employee knows more about stuff than you do. Technology works well as an agent of democracy.

 Rapid incremental innovations leading to quantum leaps are a hallmark of American culture.  We like to think of ourselves as discoverers of basic things, but most American inventions are exploitations of scientific discoveries made elsewhere; Einstein was German, Curie French, Fulton English, Watt Scottish, Bell Canadian, Marconi Italian and genetic engineering an outcome of the English discovery of the structure of DNA. We worry that our scientists are not doing enough basic research, but that has never really been our special talent.  We import that.

Our real talent for innovation owes a lot to low entrenchment, the weight of infrastructure tied to existing technology that must be overcome for a new innovation to be successful. Trains have rail beds, cars highways and gas stations, all-electric homes a national network of power lines. The entrenchment of TV actually helped spread the internet, as cables laid to increase TV coverage became also a vehicle for the internet.   And there are social entrenchments too.  Just think how hard it is to sell mass transit and car pooling to a public hooked on solitary drives to work and the status tied to a sporty sedan.  But just as rapid innovation begets egalitarianism, entrenchment can also slow change and  beget inequality.  The owner of scarce, required resources acquires an edge, and hates to lose it to something new.  The economic capital of the country belongs to owners of the existing technology, who fight losing it to something new.  That’s how the rich stay rich and the poor stay poor.  Samuel Morse got his idea for the telegraph from a semaphore system in Europe and struggled for years to have it patented there; it was too big a change from the status quo for the French.  Meanwhile, it got rapid acceptance in America because it solved a problem and wasn’t replacing anything.

The current recession owes a lot to the struggle between innovation and entrenchment.  I am one of those scruffy, disreputable technologists who place credence in Kondratiev “long wave” economic theory; American mainstream economists look down on it, partly I suspect because it’s of Russian origin, even though Kondratiev was executed by Stalin. They argue that it sees patterns in economic data where none exist; but it’s held in higher regard elsewhere.  I appreciate the skepticism, but find the basic logic of the theory persuasive, without regard to details of the length of cycles, relative strength of credit versus technology cycles, etc.  All those things can vary without destroying the fundamentals.  Kondratiev theory in the form I accept posits that our economy is historically characterized by a succession of driving technologies that at any given time dominate major sectors of the total economy.  Think lumber followed by railroads followed by steel followed by autos followed by oil followed by computers – you get the picture.  Each of these dominant technologies has its own cycle which begins with a highly productive expansion followed by mature exploitation followed by a bubble as efficient limits are hit while capital investment continues to flow into the sector followed by stagnation and recession. I’m greatly oversimplifying and leaving out things, but again, you see that the basic idea is that economic cycles arise out of the dynamics of changing technology. The recession serves to transfer investment interest from stagnant sectors to emerging technologies that will begin the new cycle.

The recession phase is where entrenchment and inequality rear their ugly heads.  The quickest way through such a recession is rapid redeployment of capital to emerging sectors of the economy.  In the present recession, for example, fossil fuels are hitting their efficiency limit as the costs of extraction rise higher and higher, housing is facing a demographic wall as baby boomers retire and finance is facing a crunch as the overuse of broad monies such as derivatives and swaps forms a bubble.  The logical alternatives are investment in renewable energy, exploration of nanotechnologies, particularly in medicine, mass transit systems and investment in renewal of America’s failing infrastructure.  But over-entrenchment of oil and autos, for example, is slowing or preventing the rise of such alternatives.  And the excessive wealth of those invested in the status quo insulates them from immediate consequences.  In a significant way, that is at the heart of the current election debates.  Obama is spokesman for economic change and the transfer of support to emerging technologies; Romney, for continuation of the status quo. The result of the election will shape the economy of America for the next decade.

Esoteric Piracy

Most people don’t realize how relatively brief the reign of Caribbean piracy was.  When I was growing up, enflamed by the swashbuckling glories of Errol Flynn movies like Captain Blood and The Crimson Pirate and the lurid tales of Bluebeard and Captain Hook and Henry Morgan, I imagined piracy to have been around forever.  Perhaps I was right, but the peak of the Caribbean form lasted only about 25 years.  Many of them justified their piracy as part of England’s never-ending hostilities with Spain, including in their attacks Spanish treasure cities like Porto Bello, Cartagena and Maracaibo, and were licensed to do so by letters of marque designating them as privateers.  While active, the piracy did form a serious threat to the treasuries of Spain by converting the valuable cargoes from the New World into contraband, but it also wrecked havoc on the cargoes of other nations.  Then the British found the solution by hiring Henry Morgan as Governor General of Bermuda with the mandate to catch and hang all the other pirates.  It worked.

But piracy endures, often in much more esoteric forms.  This week, for example, the news is full of the Libor scandals of Barclay’s Bank, which is now spreading to banks like Citigroup, JPMorgan Chase & Co, Deutsche Bank, HSBC Holdings Plc, UBS and the Royal Bank of Scotland, and of the settlement of the suit against Wells Fargo Bank for predatory lending.   Libor is the London inter-bank offered rate, used for determining many other key interest rates, including those for mortgages, student loans and variable rate loans to individuals, institutions and governments. The banks are accused of manipulating the rate by hiding key data, thereby raising the costs for their customers and the profits for themselves. The costs, for example, of bonds to the city governments issuing them are said to be raised in some cases by millions of dollars, causing the cash-strapped governments to have to cut back on police, fire, school and other municipal services in order to cover their lending shortfalls.  Barclay’s itself settled for $450 million, but the criminal investigation of employees continues. Wells Fargo settled for $175 million the charges brought by Baltimore that Wells Fargo targeted minority customers for mortgages at exorbitant rates that they knew the customers could not pay, leading to foreclosure.  The foreclosures spiked the cost to Baltimore of city services generally, especially police and fire services, of course in the process devastating the lives of many.  Both banks deny wrongdoing.  Before them it was the Deutsche Bank and Goldman Sachs raid on Greece, the JPMorgan derivatives scandal, etc., etc. 

What these present pirates share with pirates of the past is their proclivity for pillaging the rich cargoes of the world while flying the flag of legal activity, while concurrently starving governments of their revenues, devastating cities and earnestly proclaiming their own virtue. They just have more sophisticated deniability.  Where they differ is that the wealth of prior pirates often at least partly benefited the poor. 

We truly have entered a new golden age of piracy.  Interestingly, the New York Times points their finger at a cause for this that I have mentioned before, the growing disparity between rich and poor.  In the America of 50 years ago, the ratio of CEO compensation to average worker pay was 40, and the Harvard Business Review tut-tut-ted about it.  Today it is over 140, and many aspiring managers are desperate to make the leap into CEO consideration.  The temptation to make money and a name by skating at the edge becomes overwhelming.  It is a price for inequality we should not be prepared to pay.

Rational Ignorance

In one of the great moments of Star Trek, Captain Kirk explains how he became the only cadet ever to solve the Star Fleet Academy’s ultimate challenge: he cheated.  And millions of Star Trek fans simultaneously muttered, “Oh No!”, and “Yes!”  That’s the way we humans are, torn between our desire to follow the rules set by others and our instinct to win, by hook or by crook, our own personal victories.  Edward O. Wilson, the evolutionary biologist, attributes this to a divided nature engendered by the evolution of genes both for selfishness and for cooperation.   Philosophers and theologians have from ancient times attributed it to a divided, multi-level soul, or Original Sin, or the temptations of Satan; Freud described it as a struggle between a primitive Id and a rational Ego; and Carl Sagan theorized it as a vestige of brain evolution that simply piled social “mammalian” structures on top of tooth-and-claw “reptilian” brain foundations.

Whatever its root causes, we have developed many mechanisms for making our divided nature work for us.  One major one is our ability to compartmentalize our world into mutually exclusive views that we can handle neatly with one part of our nature or another:  sacred versus secular, Oktoberfest versus the rest of the year, business versus family, rational versus emotional.  Cheating is ok on government regulations but not ok on the golf course.  We shoo away “the better angels of our nature” in order to calculate our personal profit undisturbed.  We blame others as responsible for their own problems when in fact we have initiated them, the “not my problem” defense.

One form of this compartmentalization is what economists call “rational ignorance”, the tendency not to bother to learn about or to ignore what does not affect us personally.  It’s a kind of cheating.  We cut problems down to a workable size by ignoring large parts of them.  It makes reporters think that our only concern at election time is the impact of our choices on our wallet.  It makes us ignore the impact of our agricultural, environmental and energy policies on the poor of Africa or of Southeast Asia.  It makes us not care about the locations of Pacific island countries that may be drowned by global climate change.  But as our world has shrunk and our technology become gigantic, the need for cooperation has escalated, the groups which must cooperate for survival grown larger and the meaningful relationships become ever more complex.

This week the newspapers report that African famine has led to a sharp rise in the forced marriages of young girls as families “dump” them to lower family food costs, that neo-Nazi anti- immigrant clashes have risen in Greece because of the societal unrest produced by the European debt crisis, that it took two separate multi-national teams, each of 3000 scientists, to confirm the existence of the Higgs Boson, that Kansas faces rising deficits because of prior tax cuts meant to reduce the costs of state government, that China will by 2050 have a shrinking population with a median age of 50, higher by 10 years than the median age of the U.S. and no longer able to function as the factory hands of the world, that Russia faces “a wall of water” from torrential rains, and that Midwestern farmers, the breadbasket fillers of the world,  face declining crop yields as the U.S. endures the warmest twelve months on record.  Which of these is "not my problem"?

I doubt the mind exists that could fathom the growing complexity of global relationships, but one thing is clear.  We need ways to cut down on our rational ignorance and care more about what is happening elsewhere.  Our neighborhood is now everywhere, and our neighbors’ problems are ours. We can no longer cheat on the situation by just ignoring the pains and issues of others.  Ignorance is no longer rational.  A renewed emphasis and funding of higher education is needed, and we need to lean more about our world every day. .  Concern for "our neighbors" in the lost parts of the world is needed more all the time; it means a lot, not only to them but to us as well.  Think about that as you make your political and economic choices this year.

Getting a Life

One of the most, for me, provocative little essays I have ever read was one years ago in The American Scholar, about an orange Nehru shirt and a brown knit suit.  The author, whose pseudonym was Demosthenes, wrote of a recurring nightmare in which, on a visit to Los Angeles, he was killed in a car accident, and remained unidentified. The nightmare was that he was then buried wearing that orange shirt and brown knit suit.  Demosthenes’ point was that we get so wrapped up in choosing life styles (Nehru shirts and brown knit apparel were endemic at the time) that we forget to choose actually living and, in the process, lose our real identities.  Living involves far more than a fashionable suit.

On this day after Independence Day, fresh back from a week at the beach, I am intrigued by how we as Americans so focus on the right to Liberty  enshrined in the Declaration of Independence that we forget it was only second on Jefferson’s list, sandwiched in between Life and the Pursuit of Happiness.  For after all, what is Liberty without Life, and what is the meaning of an unhappy Liberty?  Jefferson was writing about the functions of government, and since then, we’ve all agreed that he basically got it right. Nevertheless, politicians and columnists still ponder whether the role of government is to provide safety nets, or stay out of the way of business, or provide a properly regulated environment, or whatever.  The answer of course is “all the above.”

Following Jefferson’s thoughtful construction, we can see that a primary function of government should be to help enable each person’s living a life best suited to their own skills and goals and vision of happiness, in part by standing protectively in the way against things like poor education, bad health care, and inadequate access to all the shared goods and services that together form our modern civilization; in other words, to protect the right to live your own life as best you can.  We sometimes forget that the author of the Declaration of Independence felt that his greatest achievement was the furtherance of public higher education.  That view is a broad definition of safety net that goes beyond the limited poverty elimination usually associated with that term.  Equality of incomes or of outcomes is not implicit in such a safety net, but a far more powerful role of government is, beyond the “defense only” view of libertarians but short of the equality of everything views of radical egalitarians.  Much more of this broad function of government is contained under the “promote the general Welfare” clause of the Preamble to the Constitution than we often are willing to accept.

Such a broad view of the role of government as that possessed by the founding fathers cannot be achieved without cooperation and accommodations from all.  That is the task now before us as a nation: to move beyond a nearly blind focus on “Liberty as no restrictions whatsoever” to recognition of Liberty as a shared enabler of all of us living better lives together.  We have for too long chosen a radical individualism life style at the expense of our identity as a people.  It’s time to wake up.