Tuesday, November 16, 2010

Healthcare and defense

Saw the following question posted online:

1.) Why is it that every other industrialized nation in the world isn't being crippled to their knees right now from their own socialized healthcare?

2.) What do we do to fix it here in the U.S.?

Those are interesting questions. Long answers...

I think, namely, because every industrialized nation with socialized healthcare happens to also have been industrialized at the time of WWII and therefore are participants in the global security order which evolved thereafter going into the Cold War and beyond... the US subsidizes their defense. This concept might seem archaic and belonging to a bygone era, but it's actually incredibly pertinent.

No nation becomes industrialized (meaning, generates the levels of wealth and commerce necessary to elicit the industrializing process) in isolation from the world; it requires global trade. Trade requires security. In multilateral power configurations in the past, this has meant spheres of influence being carved out and put in zero-sum competition (mercantilism). WWI and WWII were largely the result of this configuration boiling out of the pot (and the aggregate perception of zero-sumness reaching a critical threshold to the point that do-or-die warfare was considered necessary). The crushing defeats it left created opportunities for the only surviving combatants of any appreciable power (US, USSR) to compete in a new system to secure the reconstruction (and subsequent reconfiguration) of the redeveloped industrial powers into a trade order more favorable to one side than the other. Capitalism, the inherently more trade-friendly system, prevailed, and thus allowed for economic expansion. But for this to occur, the US had to take responsibility for all the security of all of western Europe and east Asia (and gradually throughout the world).

Eventually the European and Asian economies came back online, and enamored in their rediscovered wealth (minus the burden of securing their right to trade), they indulged in costly social welfare systems. And so we're left guarding the trade lanes.

One might believe that threats to the global trade order are remote today, but they'd be wrong. Every time a series of global events have exposed underdeveloped rule sets (some would call them opportunities) in the international order, there have been minute but opportunistic powers that have taken advantage of them. An example: post-Cold War, the End of History, lots of questions as to what a world with a lone super power would be like, and what the extents (and limits) of that power would be. Iraq makes a very 19th century move and invades Kuwait. The international order builds a new security rule set saying "No, you can't do that", and they enforce it. With American tanks. What happens when said super power is bogged down in two costly wars? Russia invades Georgia's breakaway provinces. Throw in Somali pirates in there too. Breakdowns, or even just lapses, in the international security order lead to these sorts of militant adventurism which in turn threatens trade and therefore economic growth.

Anyway the next logical question is why can't these developed nations share the security burden? Well, they could, and they should, but doing so would require largely dismantling their social welfare systems as they presently exist. The French are rioting over a 2 year increase in the age of retirement. Good luck with that. We should, however, be trying to involve the newer developing nations (brazil, china, india, turkey, etc) in our security structure, which is really the only way it's going to stop being just 'ours' and become 'everybodys'.

There's another component to this answer as well. D00mz you ask why the industrialized nations aren't crippled over the costs. A big part of it, I think, has to do with sheer size. These European states are tiny compared to the US. It could just be that larger the body you're trying to create this system for, the more complexity evolved, not to mention sheer mass, and therefore less cost effective. I bet a EU-wide socialized healthcare system would fall flat on its face. Why should we expect any different here in nation of 300+ million?

We should probably keep experimenting at the more manageable state level. It could be that these programs only work in systems of that scale. And frankly that makes sense; you don't have a federal fire department, it's local. Your beat cops aren't federal cops, they're local. Both of those systems are fully funded at the local level, why shouldn't healthcare? If it can't be self-sustainable at the local level, how on earth do we expect it to be sustainable at the massive federal level?

How do we fix it? I think probably a combination of diversifying the global security responsibility while experimenting in more localized social programs. Obviously we have to reduce healthcare costs, realistically through technology and sheer economic development. We also have to create smarter programs that leave each generation demographically independent, meaning a wave of baby boomers won't break their children's backs.


  1. Expecting the U.S. security apparatus to diversify its holdings is a tall order. Personally, I find the reasons appealing but the political will nonexistent. I believe you are correct that we are allowing European nations to outsource their national security needs in return for more state-provided services.

    That said, I fail to see how socialized medicine, as a federal institution, as the prime beneficiary of this outsourced labor and tech. I think it's a reach to claim that dismantling those national systems is the only path to non-American-run solvency. I'm unconvinced that local=good and national=bad.

    The nugget at the core of your argument has legs, though. Basically, we're providing a very large umbrella that costs quite a very large amount of money. But if we want to retract that umbrella and allow some others to provide shelter, we have to be willing to give up a trade system where we (effectively) call all the shots.

    Good read; thanks for sharing!

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  3. That is so true. As an author and business man, I can relate to how you said "We should, however, be trying to involve the newer developing nations (brazil, china, india, turkey, etc) in our security structure, which is really the only way it's going to stop being just 'ours' and become 'everybodys'". I hope more people discover your blog because you really know what you're talking about. Can't wait to read more from you!

  4. Did I understand that right - the US cant afford healthcare free at the point of use in part because we subsidise the defence of other countries?

    I would argue

    1. The US remains the richest country in the world, and if - politically - the will was there to provide european style healthcare then the resources are there to support that. The veterans service is the largest - and highest quality - 'social' healthcare service in the world, so the US knows how to do this better than anybody. Its not that we cant do it, its just that a majority of folk dont think its the right thing to do.

    2. One of the reasons the US remains pre-eminently wealthy is the overwhelming success of our war industry, driven by quite spectacular levels of investment and innovation. I think we probably charge as much for our services as the market will bare, but if we can charge more then lets go for it!

    If folk wanted, we could put some of the extra profits into healthcare.