SchoolsRetooled TM

Government Shutdown Over ACA…forward to the past?

October 1, 2013 at 10:17 AM Leave a comment

Our political system has become dysfunctional over the issue of access to healthcare for the people of the United States. Protectors of capitalism claim that the Affordable Care Act will undermine business. The keepers of our democracy claim that those without the money to pay the high price of healthcare have spoken, and the nation has heeded their call. The real problem is that capitalism has failed to fund a real winner in recent memory.

Healthcare inflation has been fueling our economic growth to far too long. It has accounted for expansion of private business, growth in employment, and favorable stock performance. The industry has been a rare goose that laid golden eggs. Unfortunately, it has been one that has crowded out investment in other factors of production, consuming an ever-growing percentage of our nation’s GDP. And the result has been an over-reliance on healthcare investments that paradoxically leave too many citizens of the US unable to afford to get well. The ACA seeks a cure for the latter, but Wall Street is totally freaked about losing the former.

The false dichotomy has become one of choosing between sick people and capitalism. But the real culprit is our new generation of pseudo-capitalists running the markets. We do not have a market economy that is funded by shareholders taking long positions. After three decades of supply-side economics the result has been a net divestment of the supply function. Out-of-control healthcare costs and real estate shenanigans have been the darlings for investors. Oh yeah, and serial monogamy in pursuit of each paradigm shift in tech stocks.

Today’s growth opportunities for investors on the margin are driven by boom-bust cycles in fool’s gold. Buy stocks or other financial instruments while they’re hot, sell at the right time before they crash and burn. We’ve been here before…in the 80s, a heyday of stock market gains based on insider trading. Today’s formulas are more complicated, the code among thieves more discreet, but the watchdogs must smell smoke by now. Healthcare stocks that celebrate $78,000 cures for ovarian cancer for the rich, on the other hand, seem virtuous by comparison. At least the assets are real.

The ACA is a done deal: legislated in Congress, signed by the President, and validated by the Supreme Court. But where is the strategic vision for real economic development in the US?

Entry filed under: Health Economics Rant.