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Peter Barnes: Capitalism 3.0 — Chapter 7: Universal Birthrights (pages 101-116)

The standard argument against third wave universal birthrights is that, while they might be nice in theory, in practice they are too expensive. They impose an unbearable burden on “the economy” — that is, on the winners in unfettered markets. Much better, therefore, to let everyone — including poor children and the sick — fend for themselves. In fact, the opposite is often true: universal birthrights, as we’ll see, can be cheaper and more efficient than individual acquisition. Moreover, they are always fairer.

How far we might go down the path of extending universal birthrights is anyone’s guess, but we’re now at the point where, economically speaking, we can afford to go farther. Without great difficulty, we could add three birthrights to our economic operating system: one would pay everyone a regular dividend, the second would give every child a start-up stake, and the third would reduce and share medical costs. Whether we add these birthrights or not isn’t a matter of economic ability, but of attitude and politics. ...

Health Risk Sharing

Pooled risk sharing, or social insurance, has several advantages over individualized risk. One is universality: everyone is covered and assured a dignified existence. Another is fairness: when risks are individualized, some people fare well, but others do not. There are winners and losers, and the disparities can be great.

Social insurance principles have been applied in America to the risks of old-age poverty, temporary unemployment, and disability. In every other capitalist democracy, they’ve been applied to these risks and ill health. The United States provides universal health insurance only to people age sixty-five and older. Extending this coverage to all Americans would be another pillar of the commons sector and make us more of a national community.

For the benefit of U.S. readers, it’s worth describing how universal health insurance works. Take our northern neighbor as a case in point. In 1984, the Canadian Parliament unanimously passed the Canada Health Act, designed to ensure that all residents of Canada have access to necessary hospital and physician services on a prepaid basis. Each province now runs its own insurance program in accordance with five federal principles:

* Universal. All residents are covered.
* Comprehensive. All medically necessary services are covered.
* Not-for-profit. Each provincial plan is not-for-profit.
* Accessible. Premiums are affordable or subsidized.
* Portable. Coverage continues when a person travels.

The act also bans extra billing by medical practitioners. As a result, the system is incredibly simple. For routine doctor visits, Canadians need only present their health card. There are no forms to fill out or bills to pay. The system is financed by a combination of federal and provincial funds. The provinces raise part of their funds by charging monthly premiums.

I compared monthly premiums in 2005 for families of four in California (through Aetna) and in British Columbia (through the provincial health plan). For the California family, the rate was $1,045 when the head of household is age forty-five; for the Canadian family, the rate was $88 no matter what the age of the parents (see figure 7.1). Discounts are available to low-income families.

Estimated per capita expenditures (2004; US$)
Percent spent on administration (1999)
Monthly premium for a family of four
Male life expectancy (years)
Female life expectancy (years)
Infant mortality (per 1,000 births)

It’s important to note that in Canada, unlike Britain, there’s no National Health Service. Medical providers work for themselves, or for private clinics and hospitals. Customers can freely choose their doctors, hospitals, and other practitioners. The only thing that’s been added to the commons is the risk-sharing system.

Here’s the bottom line. All Canadians get health care and peace of mind at a per capita cost that’s about 45 percent lower than ours. Canada lays out less than ten cents of every health care dollar on administration, while we spend nearly thirty cents (and that doesn’t include the time and energy patients themselves spend on paperwork). What’s more, our health care system doesn’t even keep us healthy. Our infant mortality rate is higher than Canada’s, our life expectancy is lower, and we have proportionally more obesity, cancer, diabetes, and depression. To top it off, forty-five million of us have no health insurance at all.

What can we learn from this comparison? Social insurance enables members of a community to reduce common risks more cheaply and efficiently than private insurance does. It’s thus a vital piece of social infrastructure. This is especially so when we want coverage to be universal. Some of the savings result from economies of scale and low marketing and administrative costs. Others result from simplicity and the absence of profit. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 8: Sharing Culture (pages 117-134)

Patently Unscientific

Enclosure of the commons has also been occurring in the world of science. Here, too, the Founders’ intentions were clear. Ben Franklin, no slouch when it came to the dollar, never sought a patent on his most famous invention, the Franklin stove. “As we enjoy great advantages from the inventions of others,” he wrote, “we should be glad to serve others by any invention of ours.” Thomas Jefferson, who served as first head of the U.S. Patent Office, believed the purpose of the office was to promulgate inventions, not protect them. He rejected nearly half the applications submitted during his term. (Eli Whitney’s cotton gin made it through.)

As with copyrights, this stringent approach to patents worked well for a long time. America didn’t lack inventiveness in the nineteenth and early twentieth centuries (and let it be remembered that we stole much of our early technology from the British). But from midcentury to the present, patenting has become a national pastime. The Bayh-Dole Act of 1980, which let universities get patents on taxpayer-funded research and license those patents to corporations, opened the floodgates. Corporate money rushed into academic labs, and with it came a corporate mindset. Where scientists once shared their discoveries openly, many now fear to discuss them, lest someone beat them to the patent office. Today, some say, the secrecy is so intense and the thicket of property rights so dense that the advancement of research has noticeably slowed.

The U.S. Patent Office has gone along with this, issuing patents for everything from one-click shopping on the Internet to genes that are 99 percent nature-made. Often, companies get patents not with the intention of developing them, but rather with the intention of suing someone else who might (a practice known as patent trolling). Figure 8.1 shows the dramatic rise in number of patents issued over the past few decades.

Consumers and taxpayers are burdened as well. Thanks to patents, pharmaceutical companies can charge monopoly prices for up to twenty years after introducing a new drug. This is said to benefit society by providing incentives for research, but according to the Center for Economic Policy Research, the benefit is greatly exceeded by the cost. Pharmaceutical companies spend about $25 billion a year on research, of which about 70 percent is for copycat drugs that mimic competitors’ brands and add no significant health benefits.

The federal government could fund 100 percent of noncopycat research — and place the resulting drugs in the public domain — entirely from cost savings to Medicare and Medicaid. On top of that, the savings to consumers from lower drug costs would amount to hundreds of billions of dollars each year.

To release science from corporate control, we need to take a twofold approach: apply more stringent standards for issuing patents, and provide more public funds for research (with the proviso that publicly funded discoveries stay in the public domain). The track record for publicly funded research has, in fact, been phenomenal. The entire computer industry was spawned by the U.S. Army Ordnance Corps, which produced the first digital computer in 1945. Similarly, the Internet emerged from the Defense Advanced Research Projects Agency and the National Science Foundation in the 1980s. It’s hard to imagine the modern world without either of these breakthroughs, or with the Internet being owned, say, by Verizon or TimeWarner. ... read the whole chapter




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Wealth and Want
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