Soros, Redux

In my last post I talked about George Soros and his "shock therapy" take on transforming economies. He looked at all the state-run enterprises (SOEs) in Soviet Russia and rationing systems and came up with a cutesy metaphor - something like, "you can't cross a chasm in two jumps." He advocated transforming the system overnight. It would be difficult and painful at the beginning but have good long-term results. He sent the nation of Russia into a deeper depression than the Great Depression. It was a horrible idea and the Chinese took note as confirmation of their conception of economic reform.

I think it applies to some the left-wing criticism of Obama, who came into office with financial market in a state of collapse on par with what the Russians witnessed. It made up something like half* of Wall Street profits where most of Americans were banking their retirement funds, where insurance companies of all stripes banked their premiums, and where businesses and individuals were investing in what they thought was at least marginally "safe". Obama, I think correctly, surmised that this wasn't the time for shock therapy - which is what would have happened with no TARP. These institutions were being just as "efficient" but were constructed to be just as needed by the common man as the old Soviet SOEs. There was no killing one without seriously hurting the other. It simply transcends ideas of justice that something needed to be done to at least let them die a little less violently. You don't let pillars of the economy collapse that even if they are run by idiot greedheads because they're depended upon by nearly everybody.

Health care is the same game. It's terrible and broken, but it's almost 15% of the economy. It is, right now, built around insurers in a way that you can't simply "shock therapy" rip them out and throw a NHS in without risking collapse. You have companies that provide employment to millions of people that would go out of business. Assembling the newly unemployed into the state ranks for the sake of employment would be disastrous. I think the trojan horse** of a "public plan", along with tighter regulations like price controls (which usually give me the creeps), is the way forward to gradually move to a government-run system. That said, I don't think Republicans are wrong for calling a spade a spade. If it's run with even half a brain, it will suck the lifeblood out of even "good" private (or non-profit, or co-ops) insurers trying to insure "Joe Sixpack"***. For better or worse, it would create a de facto single-payer system over time. I think the non-subsidised co-op idea is an interesting alternative that might actually do the job and get broad consensus.

The only counter-argument I have to the Republicans is that they, like the public, are perhaps not "ready" for a thoughtful debate about government-run health care and need to at least see what the system looks and feels like in America before they could support, fight, or reform the idea. There's been too much propoganda for decades lamenting the "failure" of the Euro-Canadian system that's just simply a lie. These guys have universal coverage for about half the cost as what we're paying! Despite the occasional horror stories of waiting lists for critical procedures, at least people get to wait for something they otherwise couldn't afford in America! As true as this might be, it's not terribly democratic idea to sneak "trojan horses" into policy debates to avoid the crux of the debate.

*off the top of my head

** it's a trojan horse because the Republicans are right - businesses can't compete with even a moderately competent state-run plan oiled by US treasury subsidies. The "public option", like a Soviet sprocket factory, simply can't fail no matter how much in the red it runs. In the case of health care, it would likely run into the red by doing precisely what we want it to - helping us with huge medical expenses! It just goes back to the boss, Congress, and asks for more funds that go back to "the people". AIG and other insurers fail if they run into the red for too long. Denying service is how they make a profit.

*** I promise to never use this term again. I far prefer "Laobaixing" 老百姓, or Old Hundred Names, in Chinese.