The author neglects entirely the fact that these city-states arose without any central plan to create these economic zones. They are the result of the market and political processes we already had in place. Did some technocrat wizard in Washington say, "We should target the Northeast Corridor to produce 20% of our GDP"? No. That result was organic.
Here's an alternate proposal: decentralize power back to the states and have groups of states work out arrangements among themselves to enhance their shared cross-border economies. Reduce the federal take of taxes, leaving the money in the hands of the people who actually innovate, employ, and make economic decisions.
The primary fallacies in this central planner's thinking is that some new National Economic Planning Board will be a) completely altruistic in allocating a pile of cash to the places that will produce the most economic benefit, b) able to out-perform the decentralized economic decision-making mechanism of the market (prices), c) not be subject to the lobbying that so corrupts the Congress now.
If you parse responsibility down to the states, they're only going to build within their own self-interests, which is not very well aligned with inter-state travel. You'll get a hodgepodge of corridors, if the states even build at all.
For example, Kansas won't build a track from KC to Colorado's border. Instead, they'll route the track south through Wichita and other cities within their border. Or it will turn out like California's project 
At the city/county level, Denver doesn't have its own mass transit system -- it cooperates with several surrounding counties to make up the "Regional Transportation District" which runs buses and light rail. This sort of regional organization doesn't somehow disappear when you make it multi-state instead of multi-city.
The question isn't whether or not interstate travel is beneficial, it's how the states will use their self interest to diminish quality, effectively turning the project into a tragedy of the commons.
Depending on my origin and destination on either side of this state (it has been less common for one of those to have been in Kansas), I have used several other highways to cross it, and I haven't found them to be slower than I-70.
There are a lot of things to love about the Interstate highway system, but it's not always the superior choice.
If all this hadn't happened so long ago, it would be interesting to see who owned land adjacent to the interstate exits when the interstates routes were decided.
If your comparing the actual to some ideal then, of course, your always going to see a diminished quality. But that's just a tautology.
We have to ask ourselves does a particular plan work better or worse than some other realistic alternative.
Unfortunately, realistic alternatives almost always require trade offs with special interest groups. Sorry dude, that's just reality.
It's a simplistic analysis to compare something to an ideal optimum point and bemoan how far we've fallen from the ideal. But it's not terribly useful.
You're arguing about the highway system. Not only is it "a realistic alternative" to your state-run theory, it's actually real.
In fact, we've had this debate, in the real world, and your side lost: every state has an extensive network of state-funded highways, nearly all of which are slower and less efficient than the interstate system.
In CA, my understanding that the most used parts of interstate freeways are actually state limited access routes (highways) extended to major national cities. This is in addition to the other state routes (expressways, etc.) and other county routes that permeate pretty much everywhere. Together, this state highway system (the county being an administrative instrument of state government) is by far more efficient than e.g. taking an interstate to a major national city (skipping even large regional cities) and then off-roading everywhere else. "Efficiency" is pretty loose term in this respect, no?
On the other hand, Chris Christie (https://www.propublica.org/article/chris-christies-tunnel-ta...).
That said the states would have evolved them to meet the needs, while the federal government took a more revolutionary approach. I tend to prefer the agility of incremental approaches. That said, when you are on the right side, revolutionary change is nice too. Despite how it seems today, I'm sure there are those that would argue the money could have been better spent. Ultimately, the question is where you put your faith; we the people or we the government?
It's exactly that kind of cross-state cooperation you're talking about.
On the other hand, the high speed rail corridors in the act (which was a new network altogether) failed horribly.
Well and it seems to be working as part of any sufficiently large company.
Considered successful by some, perhaps, and probably not so much by others. Like people who don't like global warming or highway deaths, to give two examples.
For as many benefits of the Federal Government it sure incurs a cost and penalty in many other areas. Federal rules and regulations drove health care costs up because it prevented sales across state lines. The Feds help cause if not were the main cause of water crisis in California by selling water so cheap that it exaggerated growth of water intensive businesses. It forces companies to see alternatives to sugar to protect a few business interest in limited states. The list can go on and on. Oh, it also lends aid to and gives court backing to search and seizure.
I am quite sure we can afford to live with a much more limited government
Look at St. Louis: rather than creating peripheral connections through then-undeveloped (not anymore!) land to the existing I-55 (which for miles runs along the Mississippi, completely avoiding the problems I cite), they routed not one, not two, but three different interstates (often less than a mile apart) through central neighborhoods (most often those of minorities), destroying the existing networks of travel, commerce, and community. For what? To save a longhaul trucker five minutes? Pull the other one; those truckers drive north or south of the city on 270 to avoid the mess of the Poplar St Bridge and East St Louis's mind-melting spaghetti junction, and they have for decades. The destruction of minority communities, and the poorer lives that minorities live in St. Louis today, was a feature, not a bug.
Why decentralize power back to the states? What is it about the states that make them the right level to delegate power to?
A large point of what I took from the article is that states are simultaneously too large (because they encompass metro areas and rural areas that often have little in common, both in terms of economic and social outlook) and too small (because they encourage race to the bottom competition between states who in many ways have common interests).
When you devolve power to a lower body, you are doing a form of central planning because you're determining what those lower bodies should be. So we should do it right. That might mean that states aren't the only body to consider.
>> They are the result of ... the political processes we already had in place
You can't assign this causality with certainty. They may have also arisen despite the political processes we have in place.
I agree with your premise (I think); personally I prefer the ninth amendment to the tenth. Certainly however, I would favor d?evolving power to the states instead of pushing power up the totem pole through regionalism.
In software development, we've moved power from a Big Design Up Front (aka waterfall) planned by a few to a series of teams, each with core specialties, areas of control, and many degrees of freedom but still have interfaces, agreements, and goals to tie them all together.
It's because we know that the waterfall process can't have all the information up front, can't see all the risks and opportunities, and can only be as good as the experience and foresight (sometimes guessing) of the few in charge who also happen to be the furthest from the problem.
Why is it bizarre to consider a similar approach to a much more complex system?
I agree that it's a great idea to delegate powers to lower bodies. But you have to decide what those lower bodies should be. I'm just arguing that the states (as currently formed and defined) might not be the best bodies.
And, in fact, the poster child for "agile" was the Chrysler Comprehensive Compensation which was a gigantic FAILURE precisely because of all the complexity which "agile" never handled.
Complexity doesn't magically go away just because you break things into smaller pieces.
I, too, find it funny that people whose main large-project experience is C3 use it as evidence that they should be trusted with anything.
> It is perfect, as perfect as human beings have achieved. Consider these stats : the last three versions of the program — each 420,000 lines long-had just one error each. The last 11 versions of this software had a total of 17 errors. Commercial programs of equivalent complexity would have 5,000 errors.
> The product is only as good as the plan for the product.
> Take the upgrade of the software ... a change that involves just 1.5% of the program, or 6,366 lines of code. The specs for that one change run 2,500 pages, a volume thicker than a phone book. The specs for the current program fill 30 volumes and run 40,000 pages.
> Don't just fix the mistakes — fix whatever permitted the mistake in the first place.
> Ten years ago the ... group was considered world-class. Since then, it has cut its own error rate by 90%.
- All from http://www.fastcompany.com/28121/they-write-right-stuff
Not every piece of software needs such an obsessive approach - but, there are pieces of software that absolutely do need such an obsessive approach!
In other words, there isn't a single binary correct answer for every choice. There are some things that are best decided at the neighborhood level, there are some things that are best decided at the global level, and there are are many things that are best decided at levels in between.
It seems to me a national approach, with significant input from the states, seems like a very appropriate level for something like an interstate road system. Particularly given our already successful history with the National Highway System [https://en.wikipedia.org/wiki/Interstate_Highway_System].
Why is it bizarre to consider an approach that is logical and has already been demonstrated to be effective?
It is not "in software development." It is product development.
In software development, we change the team structure if we find that multiple teams do the same thing for the same customers. So, in this case, redraw the state boundaries.
All you've done is state that "my idea is good because my idea is good."
A better response would be to devolve power to CSA - combined statistical areas. These are geographic units defined by economic interactions (measured in part by commuting distances).
See, CSA's make sense because they have a rationale based in recent experience. State boundaries from over a century ago do not.
Nothing in particular, but states are smaller than the federal government. For most things, more local government is better in my opinion.
I think the key point you allude to here is that there is nothing sacred about 50 states or their boundaries.
The article suggests exactly the parent's argument: decentralize power back to the states (and redraw the boundaries so the states make sense).
Fixed that for you. The market is far more important in shaping the economy that the state.
Examples include the Louisiana Purchase, the Lewis and Clark Expedition, massive Federal armed deployments against natives, the Mexican-American War, the Homestead Act. My brain is starting to break trying to fathom how completely and utterly ahistorical your assertions are. The article even makes explicit statements that contradict your claims.
Setting aside the historical facts, there's other problems with the blithe claim that "markets and states know best."
The primary fallacies in your proposal are that decentralized states will be (a) completely altruistic in allocating a pile of cash to the places that will produce the most economic benefit, (b)able to out-perform centralized economic decision-making of planners, (c) not be subject to the lobbying that so corrupts state and local governments now.
See, that's the problem with your line of thinking - it rests entirely on the assumption that markets and smaller government units are always and everywhere better at decisions than centralized governments.
A more intelligent and balanced perspective would be that sometimes centralized decision-making makes sense and sometimes decentralized decision-making makes sense.
Can we please get past this puerile debate about centralized and decentralized decision-making? It's completely dependent on the context and requires deep thinking not comforting ideological platitudes.
> decentralize power back to the states and have groups of states work out arrangements among themselves to enhance their shared cross-border economies.
Wow, no thanks. There are already plenty of differences from one state to another. Having to deal with a radically different regulatory/trade environment from one state to the next is not helpful to business.
For those regulations where it doesn't we should reexamine and figure out a better way if possible, but I think people should better appreciate what having good government allows you to stop thinking about and start focusing on the things that matter.
Of all the websites on the internet to argue this... Are you forgetting that YC made(/makes?) their applicants move to San Francisco? Again, SF didn't randomly become a tech hub because of some will or want, they just so happened to have attractive culture and conducive laws for startups at the right time.
Are you sure that you want to claim that these differences are categorically not helpful for business?
(Aside: this is the very reason that federally mandated net neutrality is a bad idea. Alaska has less than 750k inhabitants, 300k of which live in Anchorage. Alaska is 16.13% of this country by land mass. Are you really comfortable with denying very poor and very remote communities their right to enter into a contract for ad-injected or domain-whitelisted internet at a lower price because you can't stand the thought of your Netflix being throttled?)
Well, okay, but you'll end up with most of the red states declaring bankruptcy while the blue states do significantly better. Take a look at which states are subsidizing the others... http://taxfoundation.org/tax-topics/federal-taxes-paid-vs-sp...
If you're going to vote for high spending, you certainly ought to be paying for it.
What does that even mean? The Constitution guarantees free flow of goods and services between all 50 states. We don't need trade agreements between groups of states for anything, it doesn't get any freer than it currently is.
In reality is far easier to take away rights and discriminate on the state or local level. In a perfect world, people would have high mobility and it would be feasible to move from a state that represents you poorly to one that represents you better. Over time, presumably, people would prefer states that took better care of their people and protected their rights more.
In reality, the people that need the often late and insufficient protections of the federal government are the exact people that have the least mobility in society. In these cases, the federal government can serve a useful purpose, however bloated and inefficient as it may be.
It reminds me of monolithic kernels vs microkernels. Microkernels may be more architecturally appealing and may have many benefits on paper but where the rubber meets the road, monolithic kernels have won out. You can create all kinds of hypothetical circumstances where a microkernel wins, (free market capitalism, libertarianism, etc), but without some nonexistant force to enforce some kind of level playing field, you end up with what we have: a big monolithic patchwork of one off fixes and workarounds.
Designing a society is hard, designing a huge software system is hard and there is a reason why so many corners have to get cut to make shit work. The system evolves all the time and giving lots of power to the states just helps the powerful in their divide-and-conquer campaign against the rest of us.
Now if you excuse me I have to attempt to figure out whether it is easier to move to another state or another country.
I pay no attention to my state legislature because their activities seem uninteresting and irrelevant. Most people spend their time instead focusing on the federal government because federal policies are the ones everyone thinks should solve the world's problems.
But I have no voice in the federal government. Congress is mostly crippled because it's politicians have to be all things to all of too many people in order to be elected and stay in office.
If more power rested in my state of 3 million people I would certainly feel a greater sense of empowerment. In an electorate of that size I would have some chance of helping to drive public discourse about how to design a better healthcare system or how to improve the economy in my little part of the world. I might even stand some chance of electing an independent or 3rd party candidate that actually agrees with me on more than one issue rather than having to pick from one of the two crappy candidates with funding from billionaires in far-off realms that I have available now.
I think many people feel the same as I do and suspect that, if there were a transfer of power to the states, then democracy at the state level would flourish, surpassing what we now have at the federal level, as people perceive their increased control over their government and increased investment in its activity.
Sadly, I have no hard data to back up this thesis, and have never been able to think of a good way of looking for data to either confirm or refute it.
However, the author of the article does get at a very interesting and relevant point, which is that the political system in the U.S., at both the state and federal level, is now badly out of date and does not reflect the contemporary realities of where the population centers are and how their economies work. It does seem like our country would greatly benefit from a broad reorganization of political-economy amongst the states and at the federal level as well.
Wasn't the Interstate Highway system a boon to the US economy? Wouldn't infrastrucure projects between the meta-urban regions fall into much the same pattern?
That's not the type of central planning described in the article, this is the Federal government correcting a legitimate failing of a confederation. What was in the best interest of each state was opposed to the interests of the country as a whole.
It's exactly analogous the position of a classical economist, except the states are the individual actors. Yes, markets sometimes fail, and it ought to be the duty of a central government to correct those failures when they happen but economic intervention should be rare and only when absolutely necessary.
central planning has a role to play. for certain types of projects it is appropriate and sometimes even necessary. however, the idea that central planning should be the starting point for economic development is wrong-headed in my opinion. it should be considered the exception, used when needed and not otherwise, not the rule.
additionally, I challenge the notion that interstate infrastructure projects are actually examples of central planning. they are more like examples of networks of mutual development and collaboration between diverse partners. adoption of shared technical standards, agreement on shared funding models, and legal compacts to ensure shared responsibility for maintenance and upkeep are what drives projects like the interstate highway system.
I'm super impressed. What a great example of the power of centralized planning.
I disagree. As examples, the U.S. didn't get going until the Articles of Confederation were replaced with the strong central government of the Constitution. Devolution of political power is what led to the Civil War, segregation, and now attempts to legally discriminate against gay citizens and deny votes to many more.
Devolution is generally advocated by people who don't like being democratically outvoted in the current arrangement.
for devolution to occur there must have first been a strong central authority to devolve those powers in the first place. the lack of a strong central authority can be problematic, as the situation with the articles of confederation demonstrates. that is not the situation I'm discussing though.
the example of the institution of slavery and the noxious "states rights" argument made by southern slavers at the time is a historical outlier. its such an exceptional (and not in a good way) that I really hesitate to hold it up as typical of any situation at all. its very sui generis.
the current situation where southern states (the same ones that used to be slave states, it seems), are trying to pass laws to institutionalize anti-gay bigotry is an interesting discussion that I'm willing to have on this issue. you make a good point. there are definitely people in those states who are putting forward a pro-devolution argument in favor of their stance.
as a counterpoint though, I would say that the movement for gay marriage itself began using exactly the same strategy. gay marriage advocates (and I was one in New York) lobbied their state governments to pass laws that supported their position. they were willing to do this without the support of the federal government and in fact for many years the gay marriage movement was deeply hesitant to elevate the issue to the federal level for fear that a federal circuit court, or congress itself, would shut them down. it was only once critical mass of cultural change had occurred that the gay marriage movement was willing and able to successfully make their case at the federal level and win the supreme court decision.
my point is that devolution is just a methodology for governance. it is neutral with respect to policy. which policy the people want is determined by their culture. devolution of authority allows cultural movements to work with relatively less impediment from distant central authorities that might want to shut them down. we should still participate actively in our local cultures though, in order to transform society into what we want it to be. less bigotry. more love. those are my goals for cultural transformation.
First, to expand on one point, note that the devolution also is or was used by segregationists, by pro-life advocates, and by Obamacare opponents, to name a few. But to the heart of it:
1) Consider these questions: Name your local state Representative, state Senator and their opponent(s) in this year's election. How about the leader(s) of your state house(s)? Maybe you know, but I think you'll agree that probably <10% or even <5% of voters can answer even the first question.
2) Is there a real chance those incumbents will lose? If like (most? many?) people these days there is not, then to whom are those representatives accountable?
3) If citizens have no awareness of and often no choice about their state representatives (or their activities), then state legislatures are not democratic, de facto. It makes them much easier targets for influence by the well-funded few and I know that some, such as the Koch organizations, have pushed devolution for that very reason, and conduct much/most of their activity at state and local levels.
Regardless of the principle or theory behind it, most advocates use it when it serves their purposes: When they are being outvoted in Washington and so they seek a different forum, and when a powerful few want more political control, as described above (including people left-of-center, as you point out, though my impression is that it's less common).
Personally I think it's a political tool, good for some things and bad for others, and I look at the outcomes: Which gets better results? My highest principle is people's health, liberty and welfare, not abstract theories of government.
Find a historical society that knows about the rail and they'll be all too happy to tell you why. Typically the reroute was because some business interest bought off the company and they went miles out of their way to come to him. They'll also be able to tell you about the abandoned town that should have been on the route, but withered and died after the railroad went around them (not unlike the little towns along Route 66 a century later).
Occasionally it'll be because some landholder wouldn't let them cut across his homestead, but usually it was graft.
You seem to be operating under the belief this is harder than corrupting State and/or local governments.
Hint: It is easier, not harder.
> b) able to out-perform the decentralized economic decision-making mechanism of the market (prices),
Corruption is done via the marketplace at market prices within an ideological range the constituency will accept. I'm uncertain why you think that isn't market-based.
> a) completely altruistic in allocating a pile of cash to the places that will produce the most economic benefit
If they were paid the market price to perform this function then, yes, they could do so. Nothing prevents that.
> Here's an alternate proposal: decentralize power back to the states and have groups of states work out arrangements among themselves to enhance their shared cross-border economies. Reduce the federal take of taxes, leaving the money in the hands of the people who actually innovate, employ, and make economic decisions.
Corruption at the local level is pervasive, extensive, and frequently impossible to fight due to the fact the only people with the financial resources are the ones who bought the local government in the first place [or nonprofits who cover a greater area, such as the ACLU, and able to bring in out of area money to compete against the corruption].
If you think this is a recipe for reducing corruption, I suggest you get involved in local politics and try to support a minority candidate in a heavily white area. Hell, they'll do all sorts of legal [but shady] shit like hire a guy with the same name [different middle initial] and put them both on the ballot to split the vote. You only need to pull of a few percentage points of support this way to win in many situations.
> The fantasies of central planners never end.
The fantasies of people who think decentralization reduces corruption never end either.
However, corruption at the local level affects a limited number of people, and since local politics are easy to influence, they can be changed. Local politicians get into criminal trouble all the time, so they are not immune to the law.
Corruption at the national level affects all of us, and it's much harder to change the institutions. Even worse is the bureaucracy, which cannot be changed directly by the people, but meddles incessantly with our economy.
As for escaping corruption, you can leave your city easily, your state with moderate difficulty, but your country with great difficulty.
This is not the case. The first step of "divide and conquer" is "divide."
>If I have no power over another, then my corruption affects only me.
That's how how corruption works. It's not a property of individuals, it's a property of institutions.
>corruption at the local level affects a limited number of people
At first. Then two corrupt local levels team up, and there's nobody to stop them. Corrupt organizations don't require regulatory action to form alliances. Even if you decentralize everything on paper, they will be centralized in practice, because corruption causes some people to have disproportionate means to get what they want.
I think you could argue that people are less involved in local governments, so it is easier to control them or corrupt them.
John Oliver's piece on special districts was really interesting: https://www.youtube.com/watch?v=3saU5racsGE
Tragedy of the Commons is what occurs then as well as an inability to defend oneself against those who use force.
Go move to some country with essentially a nonexistent government and see how this works out for you if you genuinely believe I am wrong.
> However, corruption at the local level affects a limited number of people, and since local politics are easy to influence, they can be changed. Local politicians get into criminal trouble all the time, so they are not immune to the law.
So your argument is to make it cheaper, easier, and dismantle the checks and balances by defunding the enforcement mechanism at the federal level?
Seriously? Do you not understand that logically plays out until the local politicians are unable to be held accountable to a higher authority?
On the other hand, it's sensible to have the federal government make transfer payments between the states in an attempt to equalize development and keep the beneficial union together.
Less attention from the people (and the press)?
More restrictive state constitutions?
I don't have a lot of hypotheses.
Just like it has happened for countless other industries without the need of the government to do anything.
Actually we should credit the sun. For without the sun we would have no earth.
Wait, wait a minute! This line of reasoning seems ridiculous!
Why? Its the same reason we don't credit the government for every accomplishment ever made. We focus on the key players. Could the government have been a key player here? Perhaps. But your line of reasoning is not the reason.
William Shockley is credited with making Silicon Valley what it is today. He was a federal researcher who hired eight other federal researchers.  They then created Fairchild Semiconductor which developed transistors for the aerospace industry.
Look up the history of Shockley, Noyce, Fairchild, Intel.
Though one may not credit the federal government for the creation of an industry, it is ridiculous to say that such an industry would exist without the government's existence. Govennment is a necessary prerequisite even if it deserves no "credit".
Though that question isn't really relevant to the question of how industry hubs form.
If you think the Congress is a cesspool of corruption, state governments are the scum at the bottom.
- The legislative leaders of New York were just convicted of felony charges. About a half dozen of their colleagues have been convicted of various corruption crimes in the last few years.
- The NJ governor basically stole Federal aid intended to rebuild the overloaded and damaged Hudson River rail tunnels that connect NYC to NJ and the rest of the country by rail.
I agree that this regional vision is pretty dumb. But, I think the Federal government has a pretty good record on planning and funding transportation infrastructure.
On that topic, don't even get me started on the wastewater agencies. At both the state and local levels, they have repeatedly failed to accomplish anything fairly or effectively.
Are you suggesting that the federal government doesn't innovate or employ (which would be wrong), or that the states are better at those things than the federal government (which would require a citation)?
And yet the people all but demand that they do more, more, more.
Please! Take more of my money and more of my individual liberty! And in return please send me more regulation, bureaucracy, inefficient waste, and general mismanagement! I can't get enough!
Take for example national infrastructure, it's hard to imagine a way for private corporations to be incentivized to create roads to even the smallest communities. The individual roads aren't going to be profitable enough on a reasonable timescale. However the value of the whole network of roads is greater than the sum of its parts.
Even if you had a private corporation that was willing, in infrastructure you have essentially natural monopolies. It's very valuable to build the first road from A to B. It's far less valuable to build the second. Look at how we've done internet infrastructure, and how little competition there is to a single one or two providers in most areas. Observe how it's hard to get high speed internet to rural locations. Tons of problems fit this structure, probably the best example is water infrastructure. Build once, use forever, structural challenges to competition.
Government is essentially the only solution to these kinds of natural monopolies that ensures that more than a tiny population benefits from their services at a reasonable price.
Other things government does that no private system is able to replicate at the same scale:
- Funding of basic (not obviously practical in any timeline) research
- National defense
- Enforcement of contracts
- Mitigating environmental externalities
Government sucks. But let's make it better. We need good government not minimal government, those two things aren't always the same thing.
The first thing that comes to mind is environmental issues. These have national implications that it's hard to see how even coalitions of states can have the same kind of impact. And if they did, you'd end up with a patchwork of regulations that makes it harder for business to work.
I'm a proponent of relatively stronger central government, but I know that's not a universal belief. After all, the national government is a coalition of all the states :)
But the federal government is distinctly different in one major way: private corporations must make money. The federal government is immune to going out of business.
I agree with your broad point. Which is why we should let the gov do whats necessary, and get it out of everything else because of how wildly it is inefficient. We need to get it out of:
- health care
- providing pensions
Its no coincidence that the areas were there is the biggest mix of gov and private are also some of the worst industries to deal with.
- health care
First, we effectively have government mandated healthcare now: hospitals aren't allowed to turn people away. Would you like to change that? Have people dying in the waiting room if they can't prove insurance? Or people not being picked up by an ambulance because they were out for a run and didn't have their insurance card on them (or worse, being profiled about whether they're likely to pay)?
I think most people, when it comes down to it, think some level of healthcare is a service everyone in the U.S. is entitled to, just because we can provide it and nobody wants to see people dying on the streets or in hospital waiting rooms.
If you disagree with that, then I guess we can just agree to disagree.
But assuming you agree that everyone should be guaranteed some level of care, then it's just a matter of efficiently providing it.
Here we get to where "insurance" is a fundamentally flawed system for delivering health care. With insurance, risk is spread out so everyone pays (cost of healthcare) * P(need of health care). The issue is everyone has dramatically different P's so it's impossible to pool the risk effectively. If you have a pre-existing condition, then your P is 100% and no insurer in their right mind is going to want to accept you.
If you get diagnosed with something, you won't be able to change insurance providers, you'll be desperately tied to your current provider, etc.
Now the government could step in as it has now with Obamacare in the U.S., and stop insurers from blocking pre-existing conditions, but then to make that economically viable you need to require citizens to pay for health insurance...
So all told, if you come from the perspective that we're a rich enough country to provide some level of health care to our citizens, then the best, most efficient way to do it, is to have the government involved.
Every. Little. Detail. about healthcare is regulated. From the years of doctors education, from where they must go to school, to who can do what procedures, to how many volts your power supply can ripple, to the brand of emergency generator your hospital is allowed to use, to they types of investments your hospital is allowed to make, to the types of antiquated file formats your hospital records must support. I am not even scratching the surface. It's not that the regulations are bad intentioned or even bad ideas, its that following them is huge, huge overhead that prevents innovation and competition. Heck, the state has essentially conspired with the AMA to limit the number of doctors. It's a classic barrier to entry exmaple that professions lobby for. And it's the reason a highly trained doctors still need to perform the majority of simple procedures. Because that how the doctors want it.
Depending on your state, there are between 800,000 and 1,500,000 pages of health regulations. The affordable care act is 20,000 pages alone, and that is just one regulation among hundreds.
Healthcare is the most over regulated industry in the United States. Bar none. And it has been a disaster.
AS for preexising conditions, my stance is that If the taxpayers want that, then the tax payers are more than welcome to foot the bill. It doesn't even make sense to have insurance companies, which insure against risk, to provide it.
For healthcare it's hard to see how a system that is even more privatized than the one in the US would do well. Healthcare is an area where there are massive information asymmetries and where price discovery is hard to do. If I need a trauma surgeon or a broken leg fixed, then I'm not going to "shop around" for the best one. For less time sensitive problems you end up with issue 2:
It's a sector where it's not obvious how to measure quality. Is the doc with the fewest patients that die the best one? Maybe he's the guy who gets the sickest patients because he's actually the best at handling the complicated cases, so more of his patients die because they start out sicker!
Education faces some of the same problems. It's notoriously hard to measure great teaching, though I'm sure we've had great teachers and "we'd know it when we see it". It's also an area where the feedback between the service you buy and the result of the service is highly decoupled in time. It can take years after you've finished your education to figure out if it was a good deal or not.
Now I'm sure there are ways in which government should leave these sectors. I have heard interesting arguments (though personally I don't agree with them) about getting out of financing student loans, or doing it differently (those I'm usually more in agreement). It's harder for me to see how I would want less government in my healthcare, I think we have a far too private system as it stands, but maybe in terms of HIPAA. I think medical data should have strong privacy protections, but I've definitely seen how the protections currently enforced are counterproductive. I also think it makes it way too hard to get a hold of your own data for personal use.
Anyway, these are issues where plenty of people have different opinions. It's good to talk them out and debate :)
Its a public private mix. Not nearly as private as say the restaurant industry, tech industry, or even airlines industry, etc. Definitely very high up there on the 'regulated' scale as well. It's funny you admit the government is inefficient, but want it to run all of healthcare? Why? What is fundamentally so hard about having a competitive healthcare economy?
You bring up a good point about information asymmetries. I think private audit and review companies would do very well in this information economy. Perhaps the government if anything could disseminate this information freely.
ECU perhaps needs to be handled different though the majority of healthcare spending is not ECU.
I think with regards to healthcare, the private insurance market has proven to be insanely inefficient. We have a patchwork of insurance laws across states, profit motivated insurance companies, and just overall opacity at every level of the system. All this and if you look at more centralized government managed systems, overall outcomes seem no worse and in some cases better. It's hard to measure quality in healthcare, as I mentioned above, but by many of those metrics the US system isn't doing radically better than, say, European systems which are largely single payer government organized or close to it. All that despite paying as much as 30% more.
There are lots of questions and issues in healthcare, it's a really complicated question. One thing that's pretty clear is that as much as 50% of your entire lifetime healthcare spend will be spent in your last 6 months of life. At that stage how can a private market work? "Hey, I'm dying let me shop around for the best ICU"?
All of the alternatives involve tradeoffs, usually in autonomy in deciding care (single payer can become a huge HMO) and difficulty in ensuring appropriate supply (waiting months for a CT scan you actually needed yesterday). I believe there are ways to solve those even with a centralized system, and I'm fairly convinced that our private market has done a poor job serving the majority of patients (unless you're fairly wealthy, and even then the structural inefficiencies of a fragmented system get in the way).
Re. private audit and review companies: It turns out a lot of docs are on Yelp and other similar services. I'll admit to looking at them when I look for a provider. But those systems have really perverse effects as well. People usually don't know what the is best thing for them to do medically, but they love it when the doc agrees with them. As a result a doc is pushed toward being more agreeable, prescribing what the patient wants instead of what they need.
Patient says, "I want antibiotics". Doc says, "but it's likely viral". Patient says, "I want antibiotics". The doc who caves gets better reviews.
Good medicine is hard to evaluate, and a patient is poorly equipped to evaluate relative quality, but he/she is also poorly informed as to what is a good price. You could say, "let's get rid of opacity." But one of the drivers for opacity is the private insurance system. No insurer wants what they're paying for X procedure to be known by their competitors, that complicates their negotiating position.
You could force regulation that would open all this up, but then aren't you just growing government involvement in healthcare regulation?
With so many asymmetries and so much opacity it's hard to see how a private system does better. That said, it's worthy of discussion and a complicated topic, so I really enjoy learning of other opinions.
Sometimes it works, sometimes it doesn't.
In general very large organizations can be problematic. Very large organizations with massive (universal) scope are at even greater risk.
Unfortunately, what's the alternative? We've tried devolving tasks back to private organizations and smaller governments. Sometimes this works, sometimes it doesn't.
I find it interesting how so many people on both side of the "big government/smaller government" debate apparently don't have the word "sometimes" in their vocabulary.