I have proposed that understanding the connections that make up a system give us a greater insight into how that system will respond to the stresses of change than any kind of institutional or academic perspective. My readers have responded by demanding specific examples, so I thought I’d start with the big one: Health Care. The system we have was developed from the connections of a time that has long passed but once made sense. This becomes important because most of the current proposals reflect the connections of our time – meaning we could be making the same mistakes all over again.
A century ago, the USofA was a nation just beginning to enjoy the fruits of what was to become “The American Century”. We were a manufacturing economy, relying heavily on exports of goods made in our growing cities. Many of these cities were nothing more than enormous factories where people worked six days a week, sometimes for twelve hours a day. “Company Towns” dotted the landscape, cities that were defined by one industry that completely dominated the local economy.
In this arrangement, companies often provided all or most of the services that their workers needed. “I owe my soul to the company store,” was the haunting refrain of Tennessee Ernie Ford’s “Sixteen Tons,” a dark reality for many people. When workers began to organize and demand better conditions, pay, and eventually Saturdays off, their connection to the wider economy came almost exclusively through the company they worked for. Their house, their food, and even their identity came from companies like Carnegie Steel or the Stone Mountain Coal Company.
Demanding health care from the same mechanism only made sense at the time.
Through World War II, wage and price controls gave an incentive to companies to expand benefits to reward white collar workers they wanted to keep, since bennies weren’t covered by the law. By the 1950s, the system was firmly in place. That’s where this graph from the earlier post Grandpa’s Job becomes profound.
Manufacturing, at any share of GDP, has a similar share of the total workforce. It’s simply driven by what the workers can produce. The salaries and bennies to workers appear to always be in balance with their output, making them a relatively constant cipher on the balance sheet.
We moved away from being a Manufacturing Economy in the last 50 years. The growth of employment in services shows what the transition to being a Consumer Economy looks like, but the balance shifts dramatically – workers in this world became a much larger share of the economy as the Services share of GDP grew at a slower rate. That puts pressure on salaries, certainly, but it especially puts pressure on benefits like Health Care.
It can’t be organized the same way as before because people’s connection to the larger economy has changed. They are consumers first, not workers.
If our primary identity as consumers rankles a bit, you’re ahead of me. The phrase “Sam’s Club Republican” underlies how much our consumption, or at least what and where and how we consume, has come to define us. No one stays with the same company for life but you can be part of the Pepsi Generation forever.
The current debate on Health Care invariably comes down to how people view consumer choice and market forces as the best organizing principle of whatever system comes next. In doing so, we are relying on how we connect ourselves to the wider economy, just like the labor activists who brought us the system we have now did. That old system outlived the connections that created it for the simple reason that it grew its own connections to our lives, long after the organizing principles that created it had faded into obscurity. As you can see in the graph, Manufacturing gradually eroded but the system has to be changed more or less all at once – once it becomes obvious it has to.
Are we going to be a Consumer Economy forever? Will we have the same problem in the future by designing a complex system that is optimized for today? You may say, “If the problem is a century out, I don’t care either way because if it allows me to live to be 143 it’s definitely a good enough system for me.” But if everything moves faster than it used to, the problem might hit us sooner than we think.
Health Care does not exist in isolation, as everything from how many carrots we eat to how much exercise we get influences how healthy we are. A Consumer driven model, one that dispenses care as if it is a commodity, will probably break down in a short time. We need a system that is based on gathering, processing, and disseminating knowledge to build our own conections. Such a system would be not only a way of preventing the need to dispense care, it would be a bulwark against fads and excessive prescriptions.
How are we likely to connect to our world in the near future? We need to demand that our Health Care system has the flexibility needed to respond to changing connections. The alternative is to once again owe our soul to the company store.