Stimulating a new economy

January 19, 2009

Feldstein and Stiglitz both warn ‘what after the stimulus money is gone?’.  We have been propped up by two bubbles the last decade.  What will prop us up after we’ve used our borrowed money in two years?

Friedman puts it nicely: “If we spend $1 trillion on a stimulus and just get better highways and bridges — and not a new Google, Apple, Intel or Microsoft — your kids will thank you for making it so much easier for them to commute to the unemployment office or mediocre jobs.”

Fortunately I do see the foundation for a new economy in two specific elements of the emerging package:

A third element of the package is a wildcard: Healthcare reform.  Universal healthcare is a moral imperative, but the real value of reform is in increasing efficiency.  The current system is so expensive it is a real drag on the economy.  We must reduce costs and optimize delivery using technology, standardization, regulation and reorganization to a point where cost per insured is cut in half, otherwise we will still be at a disadvantage.  Most of this change will depend on Obama and Dashle’s reform skills, and not on how much we spend via stimulus package.

A fourth one is necessary for a world-wide recovery: Chinese people must start spending and enjoying the fruits of their labor.  The China-lends-us-money-so-we-can-buy-their-products dynamic is over.  This is obviously beyond our control, but well within the command of the central party committee.  Credit cards anyone?

3 Responses to “Stimulating a new economy”

  1. still thinking of one Says:

    One of the keys is strict regulation of end-of-life care. Is it really ethical to spend 100,000 so that a ninety year old can spend an extra two weeks lying about semi-conscious? I’m sure her relatives don’t care about the expense to society, but that’s the government job to once in a while override selfishness of individuals in favor of collective good. The treatment of terminally ill patients is extremely large (if not the largest) part of health care spending. Delegating treat/no treat completely to hospitals and doctors are not the solution as they make a huge amount of money on those patients, as long as they are insured, which most of the elderly are, by Medicare.

    • maristi Says:

      Agreed 100%

      And this is where real leadership is required. People don’t accept an HMO making end-of-life decisions for them, much less will they the government. So no regulation, reorganization or stimulus is going to change this. Only a change in attitude from patients and their families. In other words, the only way is for Obama to make us confront our own death, and how we want to spend our last days, and just how much of a burden we want to be.

      Not an easy task, probably impossible, so I just hope we can save 20% by simplifying and automating billing and records, another 10% lowering doctors’ fees and drug costs, and another 10% lowering errors and malpractice and the subsequent torts.

  2. maristi Says:

    Here’s something encouraging, now that Dashle is out:

    Kitzhaber is a name being floated for HHS Sec. His claim to fame is his plan in Oregon famous for introducing rationing of care.

    His argument boiled down is ‘no, we won’t cover a bone marrow transplant for one person, because instead we can spend that money to give adequate coverage to 20 people who don’t have it right now’.

    Seems like an excellent way to frame the problem.

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