The Managers of Commerce

I suppose the debate is simply how to allocate resources. How will gas, coal, oil, lumber, savings, medical services, cars....how will anything be allocated. And, of course, who will do it. If it is assumed that desires and resources have some limits, some restraints, that even the most pro-growth advocate would affirm then some management of those desires and resources must, eventually, occur. The debate then is really not how to make all things available to all people, it is how to make the limited products and services available to which selected people.

In short, how do we assign the shortages.

Now things get ugly. If we are not assigning products and services but their shortages instead, the problems of organization and governance take on a harsher and more honest appearance. The most noble of souls will admit that some of our resources and services have limits already. Most parents would prefer a live-in pediatrician, around the clock pediatric care. Most drivers would prefer a high performance car although the minority of drivers will ever even be in one. And the theoretical shortages--petroleum, potable water--loom.

There are countless foundation theories here to direct us: The poor are always with us, capitalism has a production bias and provides more goods and services, the greatest good for the greatest number, only those who work eat, from each according to his ability to each according to his needs, the birds of the air and the lilies of the field do not want. But none of these theories, save the last, prepare us for what is actually implied here: If allocation is the responsibility of someone other than the producer then there must be a significant element of coercion to take his service or product and there must be the recognition that some will get nothing. If we are going to manage the distribution of health care and there are limits, who will be deprived of the care and when? Who will be deprived of a Porsche and when? If we are anxious about limited petroleum, should anyone own a Porsche?

These are reasonable questions, especially in a culture that purports to esteem freedom above all other qualities. What is not reasonable is to approach this problem of allocation as if products and services were being expanding and not restricted. And what is not reasonable is to ignore the motives and abilities of those volunteering to make these inherently damaging decisions for us.

Watching the Injury Happen

This strange health care event continues on. Like a plane that has lost its air pressure it flies on, a death ship, everyone watching silently, everyone knowing the lifeless thing must at some point come to earth and be dealt with. The press worries about process, about precedent and protocol. The politicians have become distracted and speak strangely. The citizens watch with awe and horror. There is debate over a bill that hasn't been written; there is speculation over the effects of unknown causes. Most noticeable, there is this weird urgency, this rush to achieve this unknown thing. This elephant must deliver this malignant mouse.

This is still a different land, different from others. It still does not accept organization over independence, security over possibility. And they have no faith, no confidence in the self proclaimed experts and leaders. Something remains of that spirit and energy that created itself in Philadelphia, that expressed itself in the settling of the West, that prepared itself for the challenges of the twentieth century in the crucible of the Civil War. But how much is left? Will a courageous, noble people boil up or will we be left with just an angry, bitter distillate?

The relationship between the public and their rulers has been incrementally changing over the years. This awkward political event may reset how the people see their government--but only if it changes how they see themselves.

Diabetes, Diet and Health Care

But I don't know if you have heard that it is legislation for the future, not just about health care for America, but about a healthier America, where preventive care is not something that you have to pay a deductible for or out of pocket. Prevention, prevention, prevention--it's about diet, not diabetes. It's going to be very, very exciting. But we have to pass the bill so that you can find out what is in it, away from the fog of the controversy.--Nancy Pelosi 3/10/10



This astonishing statement by one of the nation's most powerful will draw a lot of criticism over the next weeks and months for the last sentence which sounds like a stand-up punch line. More interesting is what proceeds it. In the "it's about diet, not diabetes" is hidden the notion that there is a science and a medicine that has been obscured by current insurance and medical practice that waits only for the government to reveal it. This statemente, arrogance aside, exhibits a staggering misunderstanding of the nature of disease, its complexity and mysteries. Diabetes is a systemic abnormality that involves blood vessels, nerves and muscles and is manifested by the mismanagement of glucose, its transport and metabolism on a cellular level. The very suggestion that diet will eliminate this difficult problem smacks of imitative magic. That a powerful politician could say something as ill-informed, during a debate over a health plan she helped create, implies an illness in the body politic that might require an exorcism.

Is a Zombie an Immortal?

The nature of government has evolved. A strike at the head of the government, a huge defeat in the field, an illness--which used to be a disaster to governments in the past--is barely noticeable now. The ship of state has so much momentum and mass that a change is only a matter of small degrees.

Take the Department of Energy. Originally created in the Carter administration to encourage American energy independence (when the Americans produced most of their own energy) with a budget of 1.6 billion dollars, it now presides over an energy landscape where the Americans produce less than half of their energy and the budget for the Department is 80 billion. No one has rushed forward to challenge the Department's success, their budget or their competence. The Department itself hasn't been shaken by its failures. The Department just rolls on, growing and growing and doing who knows what. When an incumbent is defeated the first thing the newly elected upstart does is call the defeated office to line up the incumbent assistants. Washington is so huge, so complex that the the entrenched, experienced functionaries are valuable for their navigating abilities. The infrastructure persists regardless of the leadership. The system slogs on, feeding itself, growing, with dull stare and mindless slobber, towards some end.

War and Inflation

A look at any debt graph from the last century will reveal a truth of life: Inflation follows war. In fact war is the ultimate example of "the broken window" theory where production is gratuitous and does not contribute to the growth of the society. At war the whole county is devoted to producing things that blow up. What economic model could possibly be worse. Every war the Americans have fought in the last century resulted in inflation and this effort in The Middle East will too.
But this has not always been true. War has been--for the winners--a very successful national investment. History is filled with examples of war as a tool for expansion and expropriation. For the more primitive, the enemy's fields feed the troops and the victims allow the soldiers sporting diversion. The more sophisticated extort from the defeated in reparations. But sometimes warriors hit the lottery: One Roman emperor found so much silver on a foray into eastern Europe that it alone supported the military and domestic efforts of Rome for the next generation. The conquistadors were a gold mine for Spain. But the Americans have broken new ground with war: They don't steal things from the defeated. In fact they usually give things to them. While the Russians were dismantling every plant in East Germany and sending it home to Mother Russia, the Americans were Marshalling money to rebuild West Germany into a shining example of the west and, incidentally, a fine economic competitor. Ditto the Japanese' cultural U-turn.
This is a new concept and the Americans are consistent. They invaded Kuwait, saved the Saudis (who hate them), rescued the Kuwaitis (who hate them) and saved the country's oil fields from the Iraqi sabotage and, as well, saved the planet from their smouldering pollution. In spite of their slavish almost pathological relationship with petroleum, the Americans stole not one drop but cheerfully returned it to their rightful owners, the nomadic tribe that happened to be there when it was discovered. They are now in an endless campaign against an enemy with the GDP of the Tutsi.
There must be some explanation for this behavior. Perhaps it is the American respect for private property. My advice is: Do not attack and kill people unless you are willing to steal from them.

Where Is Uwe Reinhardt?

Uwe Reinhardt was the inspiration of the plan to reform health care in the 1990's created by Hilary Clinton. He was, and is, a Princeton professor of economics and,at the time, expounded a notion that any health care plan that cost more than 10% of the system's gross domestic product was inherently self digesting and would fail. The essence of his observations was that cost controls were mandatory; the health costs must be linked to the gross domestic product. In recessions, health care costs--and presumably services-- would decline proportionately.


Medicine is seen by different groups as a right, a product, a need, an expense, a business, a burden. The members of the medical fields see it as a responsibility. Reinhardt eliminated all the debate; all the history, the sentiment, the efforts to place the difficult transaction between physician and patient on a professional plane above the harsh and coarse economic facts. Reinhardt made that anxiety and that interaction completely financial and placed it peripherally as a function of the overall economy.There was a lot of criticism about the lack of medical input--there were only three physician advisers in a working staff of one thousand--but the idea never pretended to be a medical plan; it was always an economic plan first. The plan was born out of the need for economic control.


The failure of the plan was the result of a great ad campaign against it, hostility toward the distant arrogance of the plan creators and the feeling among the voting populous--correct, I believe--that the plan had much more to do about shoring up the eroding promises of Medicare than providing anyone health care.


Enter the new, improved plan. The current plan has been difficult to evaluate because so little is known about it other than the points raised in acrimonious debate. The point of interest, though, is where is Reinhardt?The specifics of this plan are different from Hillary's but the intent is the same: Cost control. The question is, with all the work done by Mr. Reinhardt, why is he not front and center, supporting the plan? And why do the adoptive supporters of the plan not call upon and revere the plan's biological father?

Project Jennifer

In 1968 the Golf-class Russian sub K-129 sank after a surface explosion in 17,000 feet 750 miles northwest of Hawaii. The Russians either were unsure of the location or dismissive of any retrieval. The Americans, hungry for technical information and codes, proposed an audacious rescue of the ship. They hired Howard Hughes to engineer the effort and the result was Project Jennifer. A huge ship, the Glomar Explorer, was designed to provide a stable "drilling platform" that would lower a mechanical claw three miles to the ocean floor to grasp and retrieve the Russian sub.
This was a gigantic effort. One of the aspects of the effort was deception, the need to disguise their intent. What emerged was a brilliant (and revealing) construct: The ship was to be an underwater miner and its goal was ocean floor manganese which existed in nodules along the ocean floor. I remember this time and it is hard to decide what part of the story is the most interesting. The engineering effort was monumental, the retrieval something out of a Bruce Willis movie but the cover story was just astonishing. Suddenly manganese mining became the imperative of every company and nation. The financial press was filled with detailed analysis of companies in this field , which were well positioned, which not. Scientific American did a big story on the ways and means of underwater mining. But my favorite response was the United Nations. With a new money source fresh in their nostrils, the U.N. began holding hearings on manganese nodules and the problem of undersea mineral rights. Who owned these minerals? Did Howard Hughes have any more right to them than someone without a boat? A committee was formed chaired by representative from The Cameroon, a landlocked African nation. This committee had a lot to say about the value of mining the ocean floor, the financial projections of such an effort and, most importantly, how the profits would be divided up among those people and nations who did nothing to retrieve the minerals but, somehow, had an inherent right to the production. The scene is delicious: A U.N. committee, chaired by a landlocked nation, making statements and rules about a mythical sea mining expedition and then making financial demands on the production.
Somehow these people never see the ridiculousness of the beggar organizing and making the rules for the charity.