04 November 2013

In Which Your Friendly Blogger Draws a Parallel Between Slavery and Universal Healthcare

The British ended slavery without a Civil War. We Americans chose to kill 600,000+ in our struggle to resist this inevitable change. (A similar percentage of the American population today would be 6 million – as if the entire populations of Wyoming, Vermont, DC, North Dakota, Nebraska, South Dakota, and Delaware were killed.)

We fought the inevitable in spite of the fact that ending slavery wasn't just the right thing to do morally. Ending that institution helped us to create a new, far better economy. 

Once Southern representatives left Congress with their secession, Northern Republicans were able to pass a flurry of legislation. They created the modern corporation, a phenomenally powerful institution. They strengthened interstate laws (which is to say the rule of the federal government) in order to support larger markets as befits larger factories. In short, they passed legislation that supported an Industrial, rather than Agricultural Economy and laid the foundation for a newly emerging Information Economy.  

The debate about slavery distracted the whole nation from what was needed for creating a new kind of economy. 

Today's struggle over healthcare that is slowing our recovery is for lesser stakes than slavery but it has a couple of parallels.

One, regardless of what anyone thinks about the economics of this issue, it is simply immoral that the majority of bankruptcies in this country result from medical bills. Forcing people to choose between the health of a loved one and financial solvency is not as bad as slavery but it does – like slavery – suggest a fairly low-level of social evolution and commitment to the individual.

Two, it distracts us from the real conversation: what economy should we create next? Very few Americans during the Civil War could see the coming wave of affluence for all the bodies lying strewn along the battlefields. In the same way, our national dialogue has been completely hijacked by issues whose outcomes are inevitable, distracting us from issues whose outcome can - and should - be shaped now. 

The economy beyond our current Information, or Knowledge Economy will be more entrepreneurial. This means even more – not less – income and wealth disparity. Creative endeavors, from novel writing to starting a business, are much more risky than career choices. Higher levels of entrepreneurship will do two things: it will create more wealth and it will create more disparity. It will be necessary to have in place mechanisms to mitigate the pain of this to losers; universal healthcare is just one way that a community can lower the cost of risk-taking and encourage more entrepreneurship.

Universal healthcare is a natural evolution to a community portfolio that includes unemployment insurance, social security, and bankruptcy laws. It belongs to the welfare state that emerged in the Knowledge Economy that gave a greater place to labor.

When it became obvious that knowledge workers - labor - were to be more important to a new kind of post-Industrial Economy, communities took two routes. One route - that of the USSR - was to do away with capitalism while creating a new economy. The other route - that of Germany and the US - was to build on the Industrial Economy while creating a new, Knowledge Economy.

As it turns out, a Knowledge Economy that gives a greater place to labor demands even greater quantities of capital than an Industrial Economy. Without a capitalist foundation the next economy flounders.

Key Institutions
2nd, Industrial Economy
Banking system, Stock & Bond Markets, Factories
3rd, Knowledge Economy
Knowledge Workers
Modern university, corporation, labor unions, welfare state

A new kind of Entrepreneurial Economy is emerging. Some conservatives (who generally are more attuned to his emerging reality than their liberal peers) see this as proof that we need to dismantle the old, welfare state that characterized the labor-centric, Knowledge Economy. This will be as big a mistake as socialists and communists' earlier attempt to eradicate, rather than build on, the Industrial Economy.

There are a host of legitimate debates about universal healthcare; among them is NOT the debate about whether we should force people into bankruptcy because of health issues. Anyone who believes that economic progress comes at the expense of quality of life shows poor understanding of either economic progress or quality of life.

But beyond that, pretending that there still is a debate about whether we should have universal healthcare sucks the air out of the national conversation we should be having, which is how to create the Fourth, Entrepreneurial Economy. 

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