If we’re all oarsmen on a ship, who’s manning the sails?
The golden rule, both in economics and ethics, aims to find the balance with what we have today and we aim to have tomorrow. Knowing either can be very subjective; it’s defined relative to where you are in the world. It’s possible that boundaries exist for this very reason. To allow a society of individually capable members to construct a vision that balances the present and the future. To that effect, are boundaries actually working?
One of Drucker’s key qualitative metrics of success for an organization is each member having a general idea what the top three goals of the organization are. From the janitor to the middle manager to the CEO, being able to state 1, 2 and 3 without much effort. It could be the mission statement, but most often its much simpler; make money for stakeholders, increase speed of delivery, improve quality of care, educate X% of the population, and so on. That’s cohesiveness. The sails are set and the ship is moving.
The golden rule goes well beyond this in trying to optimize the decision making behind the three objectives. “Why?” do we set these goals in the first place and “How?” did we come to agree upon them. Put simply,
…if a society could choose a savings rate that maximized its own consumption, it would save nothing and consume everything. But that would leave future generations in a lurch as no capital would have been built to enhance future output and consumption. If, conversely, the current generation saved so much that future generations would in fact be better off than the current, then we are also violating “Golden Rule” as we are not doing unto ourselves what we have done for posterity. Thus, the “Golden Rule” condition is that the collectively-chosen or policy-imposed savings propensity is such that future generations can enjoy the same level of consumption per capita as the initial one.
When I studied economics, it was mathematically proven that in our current state, one generation (approx. a 25-year cohort) would have to maximize savings and reduce consumption to such an extreme point in order to create the foundation for an optimum savings rate for future generations. Implying our savings/consumption ratio in the past generations has been highly skewed to the lower end. Not much of a surprise.
I wonder now if we’re creating the psycho-social environment for that “sacrificial” generation to emerge. They certainly won’t view themselves this way and taking a step back and doing less will seem like the right thing to do. The trends towards reduced consumption didn’t just start with the recession. They’ve been building for a while, along with ethnic and gender equality, at least in some parts of the world. The global power struggle is still ongoing, but there’s definitely a trend towards the “do unto others as you would have them do unto you” philosophy. It’s certainly been repeated enough. Time to practice it. Daily.
John Robb’s links alone would suffice in connecting you to the myriad future world. Here’s a recent link to predictions for the decade ahead by Kazys Varnelis. Reading it in entirety is worthwhile but draining. I left feeling potentially optimistic and assuredly pessimistic. Lots of “ifs”. Here are the highlights:
China will start slowing. The United States, EU, the Mideast and East Asia will all make up a low growth block, a slowly decaying imperium. India, together with parts of Africa and South America, will be on the rise. To be clear: the very worst thing that could happen is that we would see otherwise.
I disagree on most counts here. China’s manufacturing of inelastic goods is too entrenched for it to slow. East Asia is lower growth post-recession but they are also more recession-proof due to their “immateriality” (as mentioned in the post) and service good production. India and Africa are too rife with corruption and dependent on non-resident financial funding to thrive on their own. The reverse brain drain is helping them out, but for how long?
A greater divide will open up between three classes. At the top, the super-rich will continue controlling national policies and will have the luxury of living in late Roman splendor. A new “upper middle” class will emerge among those who were lucky enough to accumulate some serious cash during the glory days. Below that will come the masses, impossibly in debt from credit cards, college educations, medical bills and nursing home bills for their parents but unable to find jobs that can do anything to pull them out of the mire.
So much of this is self-created. The party of the 1990s and 2000s (again, credit goes to the author) and even the “progressive” consumer spending of the baby boomers has brought us to this point. Many went into debt willingly expecting a positive ROI in the end, unaware of the champagne glass tower their investments were built on. While trust in financial structures is all but gone, the mental shift from consumption to value still hasn’t occurred, primarily due to the “upper middle” class continuing with business as usual.
Some cities are simply doomed, but if we’re lucky, some leaders will turn to intelligent ways of dealing with this condition. To me, the idea of building the world’s largest urban farm in Detroit sounds smart. Look for some of these cities—Buffalo maybe?—to follow Berlin’s path and become some of the most interesting places to live in the country…
…These cities will not see real estate values increase greatly. The new classes populating them will not be rich, but rather will turn to a of new DIY bohemianism, cultivating gardens, joining with neighbors communally and building vibrant cultural scenes.
What struck me was the mention of Buffalo, where I lived for the past few years. Cost of living is certainly an attraction and if you’re not into global arbitrage, it’s a great option on the national scale (same language, same culture, no need to adopt/adapt). With dilapidated storefronts ready to be revamped, a large elderly AND student population and shoestring entrepreneurship on the rise, there’s a lot of promise. Fresh blood needs to pour in waves though because of the conservative, revisionist mentality that still holds these kinds of cities back.
The divisions in politics will grow. By the end of the decade, the polarization within countries will drive toward hyper-localism. Nonpartisan commissions will study the devolution of power to local governments in areas of education, individual rights (abortion will be illegal in many states, guns in many others), the environment, and so on. In many states gay rights will become accepted, in others, homosexuality may become illegal again.
Hyper-localism is happening right now in “green” communities, spa-like baby-boomer villages, and open-source networks (think small; journalism to blogosphere for example). In Gladwell terms, it’s 10-15 years away from achieving critical mass, and when it “tips”, the trending will drive away those who began it to either accumulate wealth quickly and estrange themselves from the crowds or go back to creating mini oligopoly-like systems of government to hold onto power. Early adoption will become a skill.
As Varnelis iterates several times cautiously, this is a fun exercise blogs like to get into. It does shape bias mindsets of readers to a certain degree so being involved signals the belief that your voice is your vote. The U.S., being beat up so often based on Rome-downfall analogies, trumps Rome on the spectrum of freedom of speech. The internet only enhances that freedom. Take a bath in information and you don’t know what you’ll come out with. Join the fun.
The Dartmouth Atlas, relatively unknown to the general public, has been whispered about for decades in health care circles. It sees the light of day now:
A provision in the House health care bill, included over the objections of hospitals from New York and other cities, would order a neutral group, the Institute of Medicine, to conduct a two-year study of regional variations in Medicare spending. The bill requires the institute to recommend changes that would reward “quality and value,” and those changes would take effect automatically unless Congress objected by May 31, 2012.
This is certainly controversial and attacks have begun on the validity of the data showing major differences in costs across all regions of the U.S. for similar procedures. This is an effort to reign in those costs in high-spending hospitals.
The CEO of Beth Israel rationally thinks through the issues, especially that of patient noncompliance, which everyone health care facility suffers regardless of region.
“I don’t dismiss the Dartmouth study out of hand,” said Stanley Brezenoff, chief executive of Continuum Health Partners, parent company for major New York hospitals like Beth Israel Medical Center and St. Luke’s-Roosevelt Hospitals. “What I’m saying is there may be explanations that go beyond the simple explanation of overutilization.”
“I now have my people poring over readmissions,” he said. “What we’re discovering are things like individuals don’t take their medications, and you ask yourself what it is that we as a hospital could do to deal with that.”
The NYTimes article last week talked about President Obama’s attack on the health insurance industry. Here’s why it happened:
The report, issued by America’s Health Insurance Plans, concluded that premiums would rise 18 percent more under provisions of a Senate bill than they would otherwise in the next decade, to an average of nearly $26,000 for families and $9,700 for individuals in 2019.
Obama’s charged response:
“It’s smoke and mirrors,” Mr. Obama said. “It’s bogus. And it’s all too familiar. Every time we get close to passing reform, the insurance companies produce these phony studies as a prescription and say, ‘Take one of these, and call us in a decade.’ Well, not this time.”
Rather than trying to curb costs and help patients, he said, the industry is busy “figuring out how to avoid covering people.”
“And they’re earning these profits and bonuses while enjoying a privileged exemption from our antitrust laws,” he said, “a matter that Congress is rightfully reviewing.”
More politics. The David and Goliath game continues and you’re never sure who represents which side. It’s as confusing as health care reform itself. I publish a newsletter to try to make sense of it anyhow.
Joe Paduda of Managed Care Matters clarifies the details of the exemption from anti-trust regulations here, and here is Jay Parkinson’s take on the issue.